Stripe launches in Singapore

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BIIMajor payment gateway Stripe officially launched in Singapore on Tuesday following a successful beta test over the course of the past year. The move marks the company’s eleventh fully live market and first foray into Asia. Now, any Singaporean merchant will be able to enable Stripe for online payments for 3.4% plus $0.37 per transaction, though the firm is offering volume-based pricing for larger merchants.

Stripe is likely poised for success in Singapore thanks to the nation's fast-growing digital economy. Last year, 2.1% of Singaporean retail sales took place online, with the market valued at $1 billion — a massive amount considering the nation’s small population — according to a Temasek and Google report. That figure is expected to grow to $5.5 billion by 2025, with 6.7% of retail sales occurring online. That growth gives Stripe a large addressable base, particularly because growth will likely be driven in part by more online merchants launching and offline merchants pursuing new channels.

In addition, Stripe offers users a strong value proposition and proven success. In its beta test, Stripe has already partnered with a number of major firms in Singapore, including ride-sharing app Grab. In addition, two-thirds of the companies backed by venture capital in Singapore are already using the service. The gateway could attract additional customers through other value-added services, like Apple Pay and Android Pay support, which could be popular in Singapore’s growing contactless ecosystem, and value-added services like business management tools and fraud protection that could drive small businesses to the platform over competitors. 

It’s likely Stripe sees Singapore as a launchpad into the rest of Asia. Stripe is currently running beta tests in Hong Kong and Japan — two markets which, like Singapore, could see success because of their developed digital ecosystem. But Singapore houses many international companies and serves as the regional headquarters for a number of Southeast Asian startups, which makes it a strong starting point if Stripe wants to break into other Southeast Asian countries like Indonesia, according to TechCrunch. And though those markets could pose unique challenges to Stripe, the firm could gain an early mover advantage in those fast-growing regions because of its easy integration and global functionality.

Evan Bakker, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on payments gateways that explains what they do, the benchmarks on which they compete, their growth drivers, and the key players. It also assesses the potential for gateways to impact legacy processors. 

Here are some key takeaways from the report:

• Payment gateways help e-commerce merchants accept online transactions. They serve as the online version of a payment terminal and front-end processor for online and mobile sellers. Gateways typically sell bundled services, including payment acceptance, data reporting, and fraud management.
• Gateways have an opportunity to capitalize on the growing online processing market. BI Intelligence estimates that the US online processing market — from which gateways extract some of their revenue — will be worth about $10.7 billion this year. The market will grow to $17.5 billion by 2020, driven by the increase in online shopping. As online sales rise, gateways' addressable audience — e-commerce merchants — is getting both larger and more valuable, affording gateways an opportunity to seize and compete for more potential revenue.
• Gateways pose threats to the old guard as more merchants embrace the online-to-offline (O2O) business model. Many of the most successful tech companies, like Uber and Airbnb, leverage an O2O model, in which customers pay for in-person goods and services digitally. With an early-mover advantage among these types of retailers, gateways might begin to displace revenue from legacy processors because they will substitute rather than complement in-store processing volume.

In full, the report:

• Explains how gateways function and compete with each other in the payments ecosystem.
• Identifies the factors enabling gateways to capture long-term growth.
• Forecasts the size of the online and in-store processing markets to give context on the industry gateways operate within.
• Lists the key gateway providers and explains what makes each successful.
• Assesses the disruption opportunity for gateways and how this will affect legacy processors.

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