We’ve been using Stripe at Kibin since 2011, and it’s been amazing to watch the company evolve. What started as a better developer experience for payments is now a full-fledged payments platform that puts the competition to shame. A few years ago I wrote about why we were moving the bulk of our payment processing to PayPal. The gist is we wanted to put more volume through PayPal so that we could qualify for a larger Working Capital loan.
It’s been awhile since we’ve taken a PayPal Working Capital loan. And it no longer matters if we concentrate our payment processing to PayPal because we qualify for the largest loan available. But recently Stripe came out with “Advance”, essentially their own “loan” offering. I say loan here but it’s really a purchase of future receivables. The fee that’s charged on top of this purchase is essentially the discount you’re selling those future receivables for.
Today, while poking around Stripe, I noticed their Advance offering again. They had three options for us, the highest being $25,000 for a $2,500 fee and an 8.8% withhold rate (how much of each transaction you must dedicate toward paying back the advance). This was shockingly competitive to anything I’ve ever seen.
For perspective, our last PayPal Working Capital loan we took $82,000 for a $13,194 fee and a 20% withhold rate. Think about that for a moment.
Stripe’s fee equates to 10% of the total advance while PayPal’s is a whopping 16.1%. And Stripe’s withhold rate is only 8.8% compared to PayPal’s 20%. Stripe is massively more competitive on both fronts. PayPal is more than 60% expensive and requires you to pay back the advance more than twice as fast. PayPal charges an even higher fee if you want a lower withholding percentage. Ouch!
It’s not just the advance offering that puts PayPal to shame. Stripe kills it on UX, ease of implementation, dispute process, and subscriptions. They’ve also launched other products I haven’t yet used like point-of-sale terminals and a new insurance offering for charge backs (pretty innovative).
I’m excited to see Stripe perform as a public company, because they’ve been absolutely killing it as a private one. I’d love to be a shareholder.