Stripe has extended the services it offers to European customers with the launch of Issuing, a new product which it says will allow businesses to quickly and easily issue credit cards. The roll-out of the online service, the first of its kind in Europe, is the latest example of a fintech business delivering a service not widely offered by established banks, which are facing increased competition as customers look for more flexible digital finance solutions.
Issuing launched in the UK and 20 countries across Europe last week, and allows a business to swiftly issue its own cards and control the parameters of the credit on those cards via an API. The service is already in use in the US, and Stripe cites the example of car rental company Zipcar, which uses the product to provide “gas cards” in the glovebox of their rentals that can only be used to buy fuel, as a use case.
“Creating and distributing new cards in Europe has long been so complex and opaque,” said Stripe’s EMEA business lead Matt Henderson, who says the company can cut the time it takes to issue a card from months to a matter of days. He added: “We’ve been astonished by the breadth of use cases businesses in the US have found for our Issuing infrastructure, and can’t wait to see what our European users build with it.”
Fintechs filling the gap left by traditional banking
Traditional banks have often been sluggish in response to their customers’ demands for more digital banking products, which provides an opportunity for fintechs such as Stripe. “[incumbents] are sometimes quite slow to act,” explains Toni Vitale, a partner at Gateley Legal. “They probably like other people to test the water out, to test the market out for them.”
Open banking has been around for many years, and the banks are waking up to it really slowly. Toni Vitale, Gately Legal
Businesses are increasingly looking for alternatives to traditional banks. A survey of UK SMEs carried out by Ipsos Mori and Open Banking shows that 50% of those approached have used services offered by open banking providers as they look to future-proof their business operations. Vitale says financial institutions are only now beginning to take note of this change. “Open banking has been around for many years, and the banks are waking up to it really slowly,” he says. “I think they’ll only start to take notice when they think some of these intermediaries and financial payment providers like Stripe are actually taking revenue away from them.”
Card issuing now, more services to follow?
By becoming a card issuer, Stripe is expanding the services it offers to its customers, and an industry source who spoke to Tech Monitor believes the company is only just getting started as it looks to capture business from banks. Currently, Stripe offers credit to businesses that use its platform. Unlike a traditional lender, it makes decisions based not on a credit check but solely based on the borrower’s interactions with Stripe. The source said Stripe could soon extend this service into the consumer banking market and build its credibility as a lender. “Moving into the space of lending is going to open up a huge amount of opportunity for them,” they said. “You move into securitisation, you move into forward flow, you move into all these other more complex, more structured financial products.”
They added: “That is really what the whole cards issuing piece is about. It’s about offering a product rather than offering business-to-business services, it’s now moving into the business-to-consumer space too.”