In a rough economy, Stripe seeks growth in Asia

While Stripe is cutting staff, it is also well underway with an expansion in the Asia Pacific region, where it's spotting signs of demand for its payment technology. 

"In tough times everybody is looking to drive new business," said Paul Harapin, Stripe's APAC lead. "Everybody is worried about the macro situation, and that creates opportunities where firms are looking for new markets and revenue streams, and where there is a need for payment technology." 

Stripe has launched in Thailand, enabling businesses to accept payments and access products that support subscriptions, recurring transactions, digital checkout, e-commerce, invoicing, reconciliation, fraud detection, business software and other products.

The planned expansion comes during a challenging time for the company.  Stripe this week also announced it was firing about 1,000 workers, cutting its staff to about 7,000, or its employment level from February 2022. Stripe's valuation, which has long been one of the highest in the world among fintechs, has also fallen about 27% to about $74 billion, according to Bloomberg. Many financial technology firms have seen their stock price or valuations fall during the past year. The declines are partly due to a correction from the run-up during the pandemic, when there was a dramatic shift to digital commerce, and partly from inflation and concerns over an economic downturn.

Stripe did not comment on how its downsizing would impact specific initiatives. Stripe's public relations office shared CEO Patrick Collison's email to Stripe employees, which said: "Nothing is going to radically change, but we're going to make some important edits that make sense for the world that we're headed into, and tighten up our prioritization substantially." 

And many payment companies have continued to invest in new markets and products even as their valuations decline. 

"There are quite a few problems that need to be solved, so innovation and investment continues," said Mario Shiliashki, CEO of PayU Global, a payment technology company that focuses on high-growth markets in Latin America, Africa and Asia. 

The APAC opportunity

Stripe and other payment companies like Visa and Adyen made recent moves in the APAC region, where there are signs of growth in fintech. Total investment in fintech in Asia Pacific reached a record $42 billion in the first half of 2022, according to KPMG's Pulse of Fintech, noting that this is more than double the $19.2 billion invested in the first half of 2021. It's a jump KPMG attributed to aging infrastructure, which creates pressure to improve payment technology.

"The credit cycle will go up and down, but there are opportunities for the long term," Shiliashki said. 

Stripe offers its services in about four dozen countries globally, including APAC markets such as Australia, Japan, Hong Kong, New Zealand and Singapore. Stripe is also in preview in the Philippines, Indonesia and India.  

Thousands of merchants have signed up for Stripe in Thailand, the company says. The online property platform Baania, the luxury furniture retailer Chanintr, the holiday resort Coconut Beach Bungalows, the accounting software platform FlowAccount and the digital creator platform Storior are among the companies that were part of the beta test in Thailand and are now live. 

Thailand is the second-largest economy in Southeast Asia "and one of the fastest-growing digital economies in the world," Harapin said. 

Stripe's internal research has shown a window for expansion in APAC countries, particularly in adding technology that supports cross-border payments. Australia, for example, is the fastest-growing market for Singapore businesses selling on Stripe, with 200% growth between 2020 and 2021. 

And the number of "nondigital native" firms based in Singapore selling abroad grew 39% between 2020 and 2021. 

This expansion covers more products that aren't traditionally sold online in these regions, such as clothing, food and beverage items. Stripe contends this change creates opportunity for its core business of enabling merchants to add an online payment portal, or what Harapin calls the "GDP" of the internet. 

"There is a huge amount of innovation that's going on," Harapin said. "In Southeast Asia, India and in the region there's a leap from the traditional ways of banking and finance to a digital mobile-first model." 

Stripe worked with the Central Bank of Thailand and the Central Bank of Indonesia to establish its footprint in those nations. The work with regulators has been largely constructive in those countries, according to Harapin. 

"What we have seen is a case where governments are saying, 'This is what we want. How are you going to deliver it?' " as opposed to countries taking a more adversarial view to fintechs, Harapin said.

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Stripe is also expanding into India, where other payment companies have come up against regulatory roadblocks. India requires outside payment processors to store data locally. That creates added expense and led to a battle between U.S. card brands and India's government. Mastercard and Visa eventually did comply with India's data storage rules, and Stripe also plans to comply and store data locally.

"It is a significant decision to build out a local presence to meet India's data location requirements," Harapin said, adding the vast opportunity is part of what motivated the decision. 

Stripe's competition

The opportunity in APAC countries has driven other recent moves from American and European payment companies over the past two weeks. Visa, for example, in late October partnered with Brankas, an Indonesian open finance company, to support credit and payment products. The two firms are selling to companies such as digital banks, buy now/pay later firms, e-commerce platforms, insurance companies and alternative lenders. These clients will be able to access cardholder data, revealing spending trends and information that can determine creditworthiness.  

Also in late October, the Dutch payment company Adyen announced plans to boost its APAC headcount, as well as pursue local licenses to expand its financial services. For the first half of 2022, APAC contributed 11% of Adyen's net revenue, and the region is Adyen's fastest growing at 53% over 2021.

"Providers such as Stripe and Adyen are entering these markets with their modern technology platforms, challenging the incumbents in particular for payments business," said Ron van Wezel, a strategic advisor in retail banking and payments for Aite-Novarica. This potential cuts into a market where local banks have dominated, he said. 

And merchants that sell cross-border and expand to multiple markets must also reckon with added complexities to their international B2B supply chain involving suppliers and downstream partners, according to van Wezel.  

"The complexity of managing mass collections and disbursements increases," van Wezel said, adding this requires investment to reduce costs and payment delays, optimize foreign exchange, increase automation, and improve reconciliation. "Bringing such solutions to APAC can be a big deal."