Last July, Stripe announced Stripe Issuing, which is an API for creating physical and virtual cards. While this isn’t exactly breaking news, it deserves a deeper look. For those who have not heard of this product, (which is still invite-only) it helps businesses to issue their own corporate cards for employees and customers. Here’s a high-level summary of its features:
- Companies can set spending limits for its employees
- Virtual cards allow remote workers to pay using their smartphone
- Signup process is seamless and quick
For physical cards, Stripe handles the printing and shipping, and virtual cards become available immediately and can be managed through digital wallets such as the Apple Wallet. The cards are issued through Visa and Mastercard.
What This Portends for Financial Services
Clearly, Stripe Issuing is a boost for companies that need to have tight spending management and have traditionally had to control this through inefficient processes. In Stripe’s words:
“Traditionally, card issuance has involved extensive development time, complex requirements, long-term contracts, and significant upfront fees. But with Stripe Issuing, we help abstract the complexity so you can start creating cards faster and scale more efficiently.”– Stripe
This sounds great and all, but why is it a big deal? This infrastructure allows any organization to issue their own card seamlessly, in essence taking a step toward acting more like its own bank. In fact, Stripe has said that this product enables new digital banks to run their entire credit stack.
I believe new use cases will emerge out of this, including:
- Next-gen budgeting apps that counteract mental accounting biases that cause people to overspend when they pay with credit.
- Immediate payments to employees using corporate cards. Likely more relevant to employee bases that live paycheck-to-paycheck and otherwise resort to payday lenders to fill short-term budget gaps (Stripe already provides this to Lyft via Instant Payouts).
- Dynamic expensing that allows employers to track and manage employee spending while maintaining flexibility to change spending limits.
- Business models predicated on unlimited access to a particular product using a specific card. Similar to MoviePass, but with more sustainable use cases.
In fact, we are already starting to see companies built on top of this infrastructure. Last week, Zestful announced that it raised $1.1 million to help HR teams manage employee perks and benefits using Stripe Issuing’s API. The full range of potential use cases enabled by this infrastructure will require seamless digital wallet management and high ease of use.
Over the next couple of years we will continue to see tech companies continue to chip away at the status quo in financial services and enable the future of commerce to develop more quickly. If you’re working on a project in this space please reach out.