Stripe Tests a Cash Advance Service

The e-payment company Stripe –now valued at 20 billion dollars– unveiled a new payment terminal just last week, and seems to be taking another step towards market expansion. They would now be crafting a cash advance service for business.

Stripe recently raised $245 million in funding, and is now worth nearly $20 billion, not far from their direct rival’s capitalisation (Adyen was valued at over €17 billion in August). Stripe is now testing a new product, called Advance, with some of their partner companies.

This American Unicorn will be relying on the data they hold regarding their business customers (history, transactions, etc.) to assess their creditworthiness. Eligible customers may then be sent the amount within one to two business days after filing a request. So far, no detail has been disclosed as to the limits and costs applied to these cash advances. Their repayments will be taken from daily sales.

Comments – Stripe speeding up the pace of their development

This funding round help Stripe reach out for international expansion, and especially aim for Asian markets, while expanding their range of merchants-oriented products and services. This cash advance service stresses their intent to come up with new offers, in addition to their payment solution and make the best of the transactional data they have access to. They would then be crafting a full-fledged offer for merchants.

Besides diversifying their activities, Advance allows Stripe to secure additional margins: a strategic choice also made by rival companies. Square lent more than $3 billion to their customer companies via Square Capital since May 2014. PayPal lent roughly the same amount in less than three years, through PayPal Working Capital. Recently, they started sending the amount just minutes after the application has been filed. Stripe Advance may also be viewed as a tool for securing existing customers’ loyalty, especially those unable to apply for bank loans.