Stripe to Offer a Corporate Card, Joining Brex and Others

(Bloomberg) -- Stripe Inc. is launching its own corporate credit card less than one week after the payments processing giant introduced a new lending product.

The Stripe Corporate Card will cater to the small businesses and startups in the U.S. on Stripe’s payments platform, the San Francisco-based company said on Tuesday. The card will aim to solve what the company says is a challenge for smaller companies that have trouble securing cards to buy supplies and to issue to employees. The card also means Stripe is getting into the same space as Brex Inc., the corporate card startup which recently garnered a $2.6 billion valuation.

“We’re really targeting all businesses on Stripe but are focusing on fast-growing startups and small businesses,” said Cristina Cordova, a Stripe business lead who’s been working on the card. “A lot of these businesses are using their personal cards.”

Small business cards are projected to reach about $700 billion in transactions by 2022, according to payments consultant Mercator Advisory Group. The industry has long been dominated by traditional credit card giants like American Express Co., but new tech players are increasingly attempting to muscle in. 

Besides Stripe, most recently valued at $22.5 billion, Brex has raised more than $300 million after launching its corporate card from investors including Kleiner Perkins and PayPal founders Peter Thiel and Max Levchin. Ramp Financial, a New York-based startup, raised $7 million in a seed round that valued it north of $30 million this summer. And DivvyPay Inc., an expense management company based in Utah, has raised more than $500 million.

Because American Express and JPMorgan Chase & Co. are formidable incumbents, it makes sense for younger companies to target startups with corporate card products, said Brian Riley, director of Mercator’s credit advisory service. “The fintechs don’t have a strong play into the mainstream businesses, but there are different niches they can go in to,’’ he said. Still, there are risks because small businesses and startups can sometimes flame out. “The challenge comes in the burn rate and how many unicorns really survive,” Riley said.

This is not Stripe’s first card offering, but is its biggest so far. An earlier card targeted companies with large contract workforces, who needed to allow non-employees to make purchases. The Stripe Corporate Card will be available to businesses in the U.S. with international expansion coming soon. As long as a business has an account with Stripe, even if the companies don’t process payments on the platform, they will be able to apply.

To contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Jillian Ward

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