As the second payment services directive (PSD2) and open banking regulations come into effect across Europe this week, online payments providers like Stripe could be set to see a spike in demand for their services.
Open banking will force banks to publish application programming interfaces (APIs) to allow their customers to share their banking information with approved third parties.
At its core Stripe, along with rivals like Braintree and Adyen, specialise in providing payments processing infrastructure through a set of APIs. The Stripe API processes payments through its own servers - so you don't have to store sensitive data or worry about being PCI compliant - checks for fraud and takes a small percentage. It is used by companies like Deliveroo, Boohoo and the Guardian to enable payments on their sites.
Stripe's job, as UK country manager Iain McDougall explained to Computerworld UK this week, is to "outsource regulatory complexity for customers and to abstract technical complexity to integrate with financial infrastructure."
This focus on APIs certainly validates the path Stripe has forged to a $9 billion valuation since being founded by Irish brothers Patrick and John Collison back in 2010. "I think the move to a more API-ified world does provide us with a degree of validation - that is what we do," McDougall said.
"So we view these moves as an extension to that, by being experts in this area and allowing customers to outsource that complexity to us."
Now Stripe is looking to take advantage of open banking by positioning itself as the natural payments infrastructure for a new wave of fintech startups.
"I think it provides opportunity in a range of areas. Most obvious is the next generation of fintechs whose business models exist in and around the access of data and information that open banking provides," McDougall said. "So challenger banks or simple aggregators of financial information to dashboards."
What McDougall is saying is that Stripe, as a payments platform built in the world of APIs, can now position itself as the infrastructure for any new businesses looking to enter a newly open financial services sector without having to do a lot of the heavy lifting of being regulated. Open banking "amplifies the benefit that we can provide to organisations," as he succinctly put it.
Open banking also creates opportunities for Stripe to create new products and services for its customers, such as account and identity verification, which will be so integral to gaining public support for open banking in the months and years to come.
"That we do for businesses as a matter of course, but now we have an opportunity to productise some of those services," McDougall said. Watch this space.