Stripe is easily one of the most innovative and exciting companies to follow in the fintech world, as they have a notable reputation for being very forward thinking and risk taking. Their primary focus is being a payment processing company for e-commerce sites, partnering with companies such as Shopify, a website curator for e-commerce businesses. Stripe along with D1 Capital have recently led a fundraiser which resulted in approximately €96 million for Ramp, which is a fintech startup which creates corporate cards to help companies manage employee expenses. Ramp is now valued at about €1.3 billion, they said in a recent statement from this past Thursday. This is an incredible feat for Ramp considering that they were founded only two years ago in New York, now being one of the top competitors with American Express, which is an American financial services company offering customers services such as credit cards, rewards points, and personal savings accounts. This investment should come as no surprise, as the pandemic has led to a significant surge in the use of fintech companies for contactless payment and banking options, as well as e-commerce sites to have packages delivered right to your door. The downward trend for typical brick and mortar stores was already prevalent, but the pandemic seems to be the final nail in the coffin as it appears that a return to former glory will be nearly impossible from this point forward.
Data platform PitchBook has recorded that 2020 was a record setting year for global fintech investments, and Stripe is one of the perfect companies to be doing so. In a recent statement, Ramp said that they will use these funds in order to obtain more capital to continue international expansion, as well as hire more employees and work on developing more services for their customers. According to Reuters, “The startup makes money by taking a portion of the interchange fee that merchants have to pay to card networks like Visa for a transaction that a customer makes. It also charges a fee for access to its advanced software tools.” Instant transfer and transaction fees are one of the main reasons companies such as Ramp and Venmo are able to be so competitive in the fintech space, as they are able to have ridiculously thin margins that commercial banks offering similar services just can’t compete with. According to a recent report conducted by Ramp, transaction volumes on their services have grown by over five times in the past six months.