$35 billion fintech Stripe just inked a deal with hospitality PoS-maker Lightspeed — and it's a case study in navigating the tricky world of payments
Lightspeed is a point-of-sale software provider for hospitality companies, restaurants, and niche retailers, and it just launched a payments product in partnership with payments startup Stripe. Lightspeed's partnership with Stripe is big, but there are still gaps in the payment world that Lightspeed will need to fill with other payments processors. CBD merchants, for example, are restricted from Stripe's network. Here's what the Lightspeed partnership with Stripe means in the context of payments, and where Lightspeed plans to go next using Stripe's other products. Click here for more BI Prime stories.
Montreal-based point-of-sale software company Lightspeed announced a new partnership with the buzzy $35 billion startup Stripe last week. But Lightspeed's Stripe partnership, which will power Lightspeed's online and in-store payments product, isn't so cut-and-dry, highlighting some of the complexities of the payment world. Behind the scenes, payments are complicated with a multi-pronged network of players on the value chain. There are layers of payments processors, facilitators, and, ultimately, both online and in-store checkouts that the end consumers see. It can be hard to sort out who owns what in the multi-layered process that happens behind the scenes each time a consumer makes a purchase. Not only that, but what's being sold can also impact the type of payments companies you work with. In this case, Stripe Connect won't be able to power all of Lightspeed's payments. Lightspeed's customers are mostly hospitality companies, restaurants, and niche retailers that are based across the globe. Their products and services are very broad and range from reptile pet supplies to CBD. However, payments related to the sale of CBD, gambling, or adult entertainment, for example, are restricted from the Stripe platform, according to its website. In a blog post, Stripe explains that given their partnerships with financial institutions like Visa and Mastercard, it needs to work within the requirements of those companies. So in that case, Lightspeed would choose to use a different payments facilitator. "We might have to create partnerships with more specialized payments companies that will accept merchants that sell CBD, or adult, or a number of things that could be restricted items," Lightspeed CEO Dax Dasilva told Business Insider. Prior to the Stripe deal, Lightspeed also had partnerships with payments infrastructure startup Finix (which just raised a $35 million Series B led by Sequoia Capital) and FIS' Worldpay. Sequoia Capital also invested in Stripe. Finix allows companies to build their own payments systems instead of relying on an outside firm like Stripe. Lightspeed declined to confirm what partners it would depend on for different types of transactions, while a Finix spokesperson confirmed that Lightspeed remains a customer. Platform2 Lightspeed offers online and in-store PoS systems to hospitality companies and retailers. Its products include inventory management, accounting, customer loyalty programs, and also payments, which initially launched last year. Lightspeed Payments will now be rolled out in partnership with Stripe Connect and Stripe's in-store PoS terminals. Stripe Connect is a payments platform designed for other platforms and marketplaces like social media companies, ride-sharing services, and ecommerce players. With its infrastructure, clients with multiple buyers and sellers can onboard new sellers and manage payments in and out through one system. Connect customers include Facebook, GitHub, Lyft, and Shopify. Stripe charges its Connect customers 2.9% plus 30 cents for every successful card transaction processed on behalf of those kinds of companies on its network. In an earnings call last week, Lightspeed finance chief Brandon Blair Nussey noted that the company expects the cost of the Stripe partnership to be comparable to its existing processing relationship. Lightspeed, like Lyft and Shopify, is a platform for sellers, but Lightspeed caters to more complex businesses, Dasilva, the company's CEO, told Business Insider. It works with bike shops, golf courses, jewelry stores, and other businesses that have large or high-value inventories and multiple sales channels, like rentals or on-site restaurants. In addition to providing online payments via Stripe Connect, Lightspeed's brick-and-mortar customers will use Stripe Terminal in-store payments hardware. Lightspeed and its customers will be able to customize Stripe's terminals with their own branding. Stripe opens the door for Lightspeed to do more, like lending Part of the reason Lightspeed is partnering with Stripe, Dasilva said, is because of the other products Stripe has to offer. In addition to payments, Stripe has rolled out card issuing capabilities, small business lending through Stripe Capital, and a corporate card product. Lightspeed, in turn, is considering doing its own lending to businesses through Stripe Capital, among other things. "There are different tools for us to do things like same-day funding, credit, and lending," Dasilva said. "That's certainly one of the attractions of the partnership is the innovation curve that we'll get to ride of Stripe," Nussey said in the recent earnings call. "And of course, they do have a capital solution. So that's one of the things that attracted us to the partnership." "Lightspeed initially wanted to become a payment facilitator, which means that they would play a very direct role in the payment processing value chain," Jordan McKee, research director of customer experience and commerce at 451 Research, told Business Insider. But acting as a payments facilitator ("payfac" in industry lingo) requires substantial investments in tech and headcount. So software companies like Lightspeed, GitHub, and Lyft often opt for payfac providers like Stripe. "Stripe is now the payment processor that Lightspeed Payments is built on top of," said McKee. "What that means is that Lightspeed is now out of the flow of funds, so they don't have to deal with some of the regulatory burden and the risk management associated with that."SEE ALSO: A startup aimed at disrupting payments and taking on Square and Stripe just raised a $35 million Series B led by Sequoia Capital SEE ALSO: We talked to 4 VCs who backed fintechs like Stripe, Square, and TransferWise about the hottest trends to watch in the payments space Join the conversation about this story » NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.
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The coronavirus has been a catalyst for big changes in the way consumers spend and pay....The coronavirus has been a catalyst for big changes in the way consumers spend and pay. Ongoing trends like contactless payments and buy now, pay later are accelerating. New trends are emerging, like consumers' preference toward buy online, pick up in-store. Here's how banks, credit card companies, fintechs, and investors are thinking about the new norms in how we shop and pay. Click here for more BI Prime stories. From banks to credit card companies to retailers, the coronavirus pandemic has impacted virtually every player in the payments industry. Ongoing trends, like buy now, pay later and contactless payments, have been accelerated. And new norms in the way we shop, like buy online, pick up in-store, are emerging. We've spoken with execs across the payments ecosystem to understand what's changing, and how they're looking to establish the 'new normal' as shops reopen and stay-at-home orders lift. Here's everything we know about the future of how we'll shop and pay in a post-COVID world. Reimagining retail for a post-COVID world $85 billion e-commerce giant Shopify is trying to make banks irrelevant for small businesses. Its chief product officer lays out why. Here are 8 companies, from giants like Shopify to seed-stage startups, that are getting a massive boost as shops and restaurants embrace curbside pickup E-commerce giant Shopify just launched a way for retailers to transform stores into fulfillment centers by quickly adding curbside pickups Retail will need to be reinvented after the pandemic. PayPal cofounder Max Levchin lays out the future of brick-and-mortar, and the 'software fight' that will go on behind the scenes Buy now, pay later Startup QuadPay is dramatically expanding its reach by partnering with payments giant Stripe to offer shoppers the ability to buy now, pay later at any store Tencent just snapped up a $250 million stake in Afterpay. Now the 2 are gearing up to bring buy-now-pay-later options to China's massive e-commerce market. Buy now, pay later startups are surging. But Affirm CEO Max Levchin says the industry will see a shakeout as the pandemic hits borrowers. Buy now, pay later startups are 'having a moment' — here's why retailers like Walmart and Target are betting on installment payments to keep consumers spending Banks, credit cards, and contactless payments $1.9 billion fintech Marqeta is on a hiring spree and eyeing M&A as its partners like Square, DoorDash, and Instacart rely on virtual card issuing Digital bank N26 just raised $100 million. Now, it's rolling out features like contactless payments as users seek a safer way to pay. A Mastercard exec lays out how a surge in contactless payments is giving the company an unexpected boost as people rethink touching cash Credit card rewards programs are getting upended as travel grinds to a halt. Here's what Chase and American Express are doing to keep 'top of wallet' status. Digital-only banks like Chime are seeing record signups amid the coronavirus pandemic. Here's how they drive revenue without lending or charging overdraft fees. What top investors are looking out for 2 investors at legendary VC firm Andreessen Horowitz predict the new ways we'll shop and pay, from livestreaming e-commerce to contactless transactions 4 top VCs explain why Stripe, Square, and Finix are going to be big winners in a post-COVID-19 world Click to buy One-click checkout startup Fast used this pitch deck to nab $20 million from investors like fintech giant Stripe. Here's a look at how it laid out its vision for taking on Apple Pay. Careers Virtual ice-breakers and weekly wellness surveys: PayPal's head of talent lays out how the payment giant is hiring and training new employees and interns Join the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak
One-click checkout startup Fast used this pitch deck to nab $20 million from investors like fintech giant Stripe. Here's a look at its vision for taking on Apple Pay.
One-click login and checkout startup Fast just raised a $20 million Series A led by the...One-click login and checkout startup Fast just raised a $20 million Series A led by the $36 billion fintech giant Stripe. Fast's one-click login product is live, and in the coming weeks, it will roll out it's checkout product. Fast's existing investors include Global Founders Capital, Index Ventures, and Kleiner Perkins. Fast's co-founder and CEO Domm Holland told Business Insider that the key to a pitch deck is to keep it simple, go sparse on text, and leave opportunities for investors to ask questions. Here's the 15-slide pitch deck the startup used to raise its Series A. Check out Business Insider's Pitch Deck Library here. Password management and online checkout have always been pain points for online shoppers. Fast, a one-click login and checkout startup, is looking to solve that problem. And it just raised a $20 million Series A led by the $36 billion fintech giant Stripe. "The issue that we're actually solving is that there's basically a missing layer of the internet, which is the identity layer," Domm Holland, co-founder and CEO of Fast, told Business Insider. Fast integrates with online merchants to offer customers the ability to log in and checkout with one click. The first time a consumer sees the Fast checkout button, they can sign up for free. After that, they can check out with one click everywhere they see the Fast button. So to grow its user base, Fast will look to integrate with as many online merchants as possible, from e-commerce retailers to online media companies. While Fast's one-click password product is already live, with this latest fundraise, it will now roll out one-click payments and checkout features. "Much of our growth over the next 12 months is basically putting the button on as many websites as possible," said Holland. Part of that growth will come through its partnership with Stripe, as starting next month, all of Stripe's merchants will be able to integrate Fast into their checkouts. Long-term, the startup will look to build more online shopping products for consumers, like order tracking and returns management across different online stores, Holland said. To be sure, Fast isn't the only one looking to solve this problem. PayPal, for one, offers a one-click checkout product, and credit card issuers like Visa and Mastercard have partnered up on a one-click checkout, too. But Holland says that a key differentiator for Fast is its platform-agnostic approach. Apple Pay, which also integrates into merchant check-out windows, is Fast's biggest competitor, Holland said. But its checkout product can only be used by iPhone users and when shopping online, only on Apple's Safari browser. Fast's Series A, which closed at the end of March, comes at a time where venture investors are shying away from early-stage companies, focusing much of their capital on existing investments. But founders could take this opportunity to meet with as many people as possible, albeit virtually, realizing that relationships may take longer to build, Holland said. For founders looking to raise, keeping potential investors in the loop is also key. "You want to be lines, not dots, and you want to show traction," said Holland. "The first thing I always say to anyone who's going to be fundraising is start putting out investor updates and send them to everyone who you would want to have in the round." And while it's easy to try and answer all possible questions in a pitch deck, Holland instead advises to keep it light on text. "You should be structuring a pitch deck in a way that you actually know what question they're going to ask you because it's missing a bit of information that you expect that they will want," Holland said. Not only will this keep investors engaged, it will also demonstrate the founders' ability to articulate the pitch and answer questions live, Holland added. Stripe's funding comes just months after Fast's November seed round, which was led by Index Ventures with participation from Global Founders Capital and Kleiner Perkins. Here's the 15-slide pitch deck it used to raise its Series A.SEE ALSO: Startup QuadPay is dramatically expanding its reach by partnering with payments giant Stripe to offer shoppers the ability to buy now, pay later at any store SEE ALSO: $35 billion fintech Stripe just inked a deal with hospitality PoS-maker Lightspeed — and it's a case study in navigating the tricky world of payments SEE ALSO: 4 top VCs explain why Stripe, Square, and Finix are going to be big winners in a post-COVID-19 world
THE BUY BUTTON REPORT: The introduction of SRC will turn the online retail payments industry on its head — here's how payments players can win in the new checkout landscape
This is a preview of The Buy Button research report from Business Insider Intelligence. Purchase this...This is a preview of The Buy Button research report from Business Insider Intelligence. Purchase this report. Business Insider Intelligence offers even more consumer coverage with Payments & Commerce Pro. Subscribe today to receive industry-changing payments and commerce news and analysis to your inbox. Payments firms have introduced buy buttons to streamline the online checkout process, but so many have done so that it can have the opposite effect. This led companies to introduce buy buttons so consumers could skip the cumbersome, labor-intensive steps required to input contact and payment information online, and to allow them to shop online more freely. But the array of options has become overwhelming. Firms such as Mastercard, Visa, Apple, Amazon, Walmart, point-of-sale (POS) financing providers, and many more have developed buy buttons for their payment methods. This glut undercuts the convenience buy buttons are meant to introduce, as consumers don't know which option will be available where, and they must search crowded checkout pages for their desired option. To address this problem, the major card networks have joined to introduce Secure Remote Commerce (SRC), which will provide a singular consistent buy button. EMVCo — which is owned by American Express, Discover, JCB, Mastercard, UnionPay, and Visa — developed SRC specifications, resulting in a standardized buy button and payment process that can be deployed by any merchant and accept credit and debit card payments from the six card networks. The consistency that the SRC-powered buy button can provide for consumers, which has been compared to the way in-store terminals accept payments from numerous networks, may remove the issues created by the overcrowded buy button market and transform the online retail payment process. In The Buy Button Report, Business Insider Intelligence lays out what SRC and its buy button are, how the button works for both consumers and merchants, and the obstacles between it and widespread adoption. We then analyze what the environment for buy buttons looks like after SRC's introduction, what the impacts of its debut are, and what firms will benefit and be hurt by it. Finally, we present recommendations for card networks, competing digital wallets, merchants, and payments service providers (PSPs) on what they can do to succeed now that the SRC-powered buy button has launched. The companies mentioned in this report are: Adyen, Affirm, Afterpay, Amazon, American Express, Apple, BigCommerce, Cinemark, Discover, EMVCo, FIS, Global Payments, Google, JCB, Kendra Scott, Klarna, Mastercard, Movember, PayPal, Rakuten, Sears, Shopify, Splitit, Stripe, UnionPay, Visa, and Walmart. Here are some of the key takeaways from the report: The sheer number of buy buttons available has resulted in a fragmented market and potentially undercuts their value. The SRC-powered buy button has the potential to streamline online checkout for consumers and boost conversion for merchants. Its value to both parties is predicated on its availability and acceptance, making gaining adoption a key initiative for its success. The new buy button could drive e-commerce sales, increase access to various payment and checkout solutions, and disrupt the existing buy button landscape. In full, the report: Examines the buy button market prior to the introduction of the SRC-powered buy button. Lays out what the new buy button is, how it works for consumers and merchants, and what obstacles there are to its adoption. Identifies how the SRC-powered buy button will impact the payments landscape, which includes its effects on conversion, online shopping on emerging devices, e-commerce fraud, and more. Considers how payments stakeholders can succeed now that the buy button has introduced by looking at both firms that back and use the buy button, and those that compete against it. Interested in getting the full report? Here's how to get access: Purchase & download the full report from our research store. >> Purchase & Download Now Sign up for Payments & Commerce Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week. >> Get Started Join thousands of top companies worldwide who trust Business Insider Intelligence for their competitive research needs. >> Inquire About Our Enterprise Memberships Join the conversation about this story »