HomeBusinessStripe, a longtime Lyft partner, inks a huge Uber contract.

Stripe, a longtime Lyft partner, inks a huge Uber contract.

$50 billion fintech growth Stripe announced a “strategic payments partnership” with Uber today to boost its sluggish growth. The duo will collaborate on chosen services in light of Uber’s top markets—the U.S., U.K., Canada, Mexico, Australia, and Japan.

Deal context: Whether true or not, some feared Uber and Stripe would not operate together because Lyft, Uber’s biggest U.S. competitor, has been a Stripe payment user for years. Uber processes close to $100 billion each year, whereas Stripe handled $817 billion. Uber dominates the U.S. ridesharing industry, according to YipIt (via WSJ). Stripe president Will Gaybrick told TechCrunch Lyft would remain a customer.

The deal’s financial specifics are not being published, but like with Stripe’s payments company, fees from Uber transactions will be a major component.

After signing business relationships with Amazon, Microsoft, and BMW, Stripe is set to unveil its Uber collaboration later today at its user conference.

Stripe started as a simple API to integrate card payments into sites and apps (the “stripe” in its name refers to the magnetic strip on the back of those cards). Still, as it sought higher margins and diversification, it added dozens of other products and features, including services to calculate and account for sales tax, triage fraud attempts, and incorporate businesses.

This collaboration doesn’t use all of Stripe’s features yet. Stripe will help Uber enter a new payments market. It will connect Stripe Financial Connections and Link to allow customers to import banking credentials to pay for Uber Rides and Eats straight from bank accounts, offering an alternative to credit or debit cards.

We focus on creating payments experiences that integrate payments innovation, decreased friction, and cost reductions. “Using Link to allow customers to easily pay with their bank accounts ticks all those boxes while providing access to an increasingly popular mode of payment,” said Karl Hébert, Uber’s vice president of payments, risk, and identification. “Stripe shares our commitment to reliability, customer centricity, and continued innovation—which makes them a key partner.”

Meanwhile, Stripe’s flagship card payment product is only available in Australia (via eftpos) and Japan (via JCB).

Thus, Stripe’s marketplace services, such as the instant payout service developed with Lyft to pay drivers faster, will not be included for now.

However, Stripe’s move is significant. The firm has been trialing an Uber contract for three years. This encourages collaboration.

Stripe currently has more major clients, but it started with other fast-growing (but smaller) firms, Gaybrick noted. “Stripe was not around when Uber was founded,” Gaybrick said. “When we first spoke several years ago, they were excited for the ease of use and reliability, but we had to convince them that we were powerful enough and performant on the market. Now they see us.” The Uber transaction highlights business changes.

Uber inked a seven-year cloud services arrangement with Oracle and Google to host its IT infrastructure earlier this year and unveiled a revamped, streamlined interface emphasizing customer personalization shortly after.

The two indicate that Uber—under the same financial and economic restrictions as the rest of the market—is searching for better methods to focus engineering resources on products and away from activities that may be outsourced.

Uber will continue to construct and operate much of its payments infrastructure, but it is also adopting a multi-vendor model to handle part of the first and last-mile tasks. Stripe and others have that chance.

That opportunity’s scope is unknown. Uber’s “super app” efforts have mostly focused on transportation. Uber Eats is another app. In contrast, Grab and GoJek offer mobility, delivery, online shopping, entertainment, financial services, and more.

Will Uber ever expand? Can it? If Uber hopes to say “yes” to either of them, it may want to collaborate with more payment specialists to create and grow that.



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