Fintech

Stripe sees creators as the next big opportunity in payments

The creator economy has exploded during the pandemic and shows no sign of stopping. Substack, Spotify and Twitter are becoming part of Stripe's growth strategy.

Logos of creator companies working with Stripe

Stripe's creator clientele is expanding.

Screenshot: Stripe

When Patrick and John Collison founded Stripe in 2009, the company focused on customers much like themselves: technology-minded entrepreneurs who wanted to easily add payments to their websites to build an online business.

Now Stripe is focusing on a different class of online entrepreneurs: creators.

Stripe analyzed data across 50 creator services using its service and found that 666,000 creators on those businesses have earned $9 billion to date. In 2020, revenue on these businesses grew 117%, largely fueled by the pandemic. This year, the number of creators joining these businesses grew 48%, and creator businesses on Stripe have generated more than $3 billion in the same period.

A range of creator services are using Stripe: Substack's paid newsletters; Twitter's Super Follows and Spaces, which enable paid premium content; Spotify's paid podcast product; and Clubhouse's paid audio product.

"Stripe, since its founding, has been for business founders," said Alex Vogenthaler, product lead for Connect and Enterprise at Stripe. "Now there's this new class of founder that's emerging."

Twitter Spaces and Clubhouse Stripe is working with audio-chat rivals Twitter and Clubhouse.Screenshot: Stripe

Other companies are cashing in on creator payments. Patreon wraps in payment processing as part of the fee it collects on subscriptions (and uses Stripe for U.S. payouts). Wise and Sony announced a deal Wednesday to distribute payments to music creators using Sony's Orchard service. And Linktree, a link-in-bio firm, signed up with PayPal in August to handle payments for creators.

Stripe is running most of its creator services on a simplified version of its Stripe Connect software called Express Connect. The software also enables businesses to provide creators with a dashboard to see their earnings, payouts and tax forms.

Stripe also has a team with dedicated product management, engineering, user research, marketing and sales responsible for working with creator businesses, Vogenthaler said.

Education businesses generated 49% of creator revenue in Stripe's analysis. This includes sites like Teachable, which has classes on coding, hand lettering and drone flying, and Interval, which enables fitness instructors to stream classes online.

Education's big proportion is largely due to these businesses starting earlier, Vogenthaler said. People are also used to paying for education as opposed to, say, tweets or audio chats. "The value exchange in education is very clear," Vogenthaler said. "'I want someone to teach me yoga or I want someone to teach me a foreign language.' I think those are just easier business models" to understand.

The Clubhouse payouts interface A sample screenshot shows a payouts interface for a Clubhouse creator.Screenshot: Stripe

While the actual processing of payments is not that different from Stripe's processing for other types of payments, creators do have specific issues. Small tips, for example, could be eaten up by processing fees with cards. To address this, Stripe is working with some businesses to offer other payment methods such as bank transfers or for customers to pay for a digital currency in larger amounts at once — think Starbucks Card balances or Uber Cash — and then tip multiple creators, to reduce payment costs.

"If you get someone to top up $20 into the ecosystem, once you're spreading that 30 cent fixed fee around on multiple transactions, it makes it much more affordable," Vogenthaler said.

To encourage that kind of activity, Clubhouse makes it clear to customers how much the creator gets and how much payment fees cost, Vogenthaler said.

One other type of creator business Stripe works with is Karat Financial, which provides credit cards and other services for creators.

While most creators just want a way to get paid, a new wave of companies like Karat is providing services tailored to creators such as loans, bank accounts and payroll, Vogenthaler said.

While 85% of creators Stripe analyzed were in North America, the fastest growing countries for creators were the Czech Republic with 270% year-over-year growth, Romania with 215% and Brazil with 171%.

Fintech

Plaid is striking back after Stripe entered its core business

Onboarding customers through identity verification and ACH transfers is a hot sector in fintech, and the two fast-growing fintechs are set to battle it out.

Plaid is looking to help banks and fintech companies with anything related to the onboarding of a customer onto a financial product, said Plaid CTO Jean-Denis Greze.

Photo: Plaid

Plaid is moving into identity verification in a crucial expansion beyond its roots connecting banks and fintechs — a move that could put it in more direct competition with Stripe, another company known for its financial software tools.

In conjunction with its Plaid Forum customer conference this week, the company is also announcing two products focused on ACH transfers as it moves into payments.

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Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

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