Digital finance giant Stripe has introduced a brand new charge card program today under Stripe Issuing, making it easier for small businesses to get credit.
Stripe had recognized the financial concerns of startups and small businesses long ago. It understands the huge difference even a small influx of capital can make. In fact, that’s why in 2018, Stripe set up a whole branch called Stripe Issuing to help companies create and manage commercial card programs without any set-up fee.
However, until now, these cards could only be used to withdraw from a pre-funded account, like a debit card. But with their new virtual charge card program, they are stepping into the credit industry.
These cards will work just like regular, bank-issued credit cards do. You’ll be able to spend up to a pre-decided credit limit and then pay back the outstanding amount at the end of each month.
Why Did Stripe Choose To Enter The Credit Industry?
Multiple factors came together to persuade Stripe to enter the credit industry. For starters, their Issuing products have been doing really well in the past few years. Companies like Ramp and Shopify have already issued more than 100 million cards in their European Union, US, and UK. Every day, these cards support millions of transactions, and there are so many businesses that are entirely built on Stripe cards.
The only request every user has had from them is to create a product that lets these companies offer credit to their users.
Not just that, in a survey conducted by PYMNTS, it was found that more than 77% of small- to medium-sized businesses (SMBs) are worried about their funding.
The survey also pointed out that many small businesses rely on loans to keep their business up and running. However, after the Silicon Valley collapse, 9% of SMBs are reportedly facing problems securing a loan to keep their business going.
Clearly, there’s a huge market that’s craving for an easier way to access credit. So Stripe decided to strike right in time and save the day. It’s a win-win deal for both. The customers will have easy access to funding, and Stripe will have a brand new venture.
It looks like Stripe is trying to step up the game and expand with additional revenue streams. Recently, the company acquired Okay—a productivity analyzing tool for engineers— for an undisclosed sum.
Companies like Coast, Ramp, and Karat are already using the service.
Stripe will also help these businesses set up their policies and ensure they are compliant with the country’s financial laws. Since many Stripe customers have requested full control over the underwriting decision, Stripe has decided to hand it over once everything is set in place.
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Krishi Chowdhary
Journalist
