Stripe’s strategic investments in artificial intelligence (AI) and machine learning (ML) significantly fueled the financial infrastructure platform’s rapid expansion during 2024. According to a letter released Thursday (February 27th) to the Stripe community by co-founders Patrick Collison and John Collison, these initiatives have been crucial to the company’s success.
“These bets continue to pay off, increasing revenue for existing customers, encouraging more businesses to switch to Stripe, and helping new companies reach significant scale unprecedentedly quickly,” the co-founders wrote.
Stripe’s total payment volume for 2024 soared by 38%, culminating in a substantial $1.4 trillion, the letter revealed. In a separate announcement on Thursday, the company disclosed a tender offer designed to provide liquidity to both current and former Stripe employees. The offer was made at a valuation of $91.5 billion, with the company planning to repurchase shares alongside investors. Bloomberg News reported that Stripe’s valuation was $65 billion after a share sale earlier in February 2024.
The AI-driven boom, which is driving Stripe’s remarkable growth, encompasses: thriving demand for Stripe Billing’s capabilities in subscription management, and functions as a “revenue engine for the AI era”; strategic partnerships with AI firms that are reaching their annualized revenue milestones at an accelerated pace, outpacing software-as-a-service (SaaS) companies; and the development of AI agents, which utilize the company’s solutions for optimized checkout processes and virtual card spending.
“Overall, we are ensuring that Stripe is well-positioned to serve the next chapter of the economy,” Patrick and John Collison stated in the letter.
Looking at another trend in the ever-evolving payments landscape, the co-founders noted the significant rise of vertical SaaS solutions, which have equipped small businesses to actively compete with franchisees. This, in turn, has created escalated demand for Stripe to power the involved platforms’ payment services. “This in turn highlights why internet-native, programmable financial services are so important: they’re the foundation that vertical SaaS platforms need to flourish,” the Collisons wrote.
Another significant industry development highlighted is the rise of “industrialized fraud.” Perpetrated by sophisticated teams of engineers, managers, and data analysts, this costs the average online business approximately 3% of its gross revenue. Stripe combats this threat with its reputation network by leveraging a diverse array of data from its transaction history, including credit card details, email and IP addresses, phone numbers, shipping addresses, and device information. This comprehensive data set enables Stripe’s systems to identify and flag suspicious behaviors. The Collisons noted, “Data from $1.4 trillion in annual payments volume means that each payment makes the next payment safer, a flywheel spinning with now-considerable momentum.”
The letter also draws attention to the significance of stablecoins, with Stripe assisting enterprises in developing their stablecoin strategies. Stripe is witnessing stablecoins being utilized for managing corporate treasuries, facilitating remittances, fostering dependable savings in countries facing financial instability, and enabling payments from companies with low card penetration rates. The co-founders noted that “Stablecoins have four important properties relative to the status quo. They make money movement cheaper, they make money movement faster, they are decentralized and open-access (and thus globally available from day one), and they are programmable.”
Stripe continues to invest heavily in research and development. The company expects that AI, stablecoins and other forces will “reshape the landscape,” according to the letter. Its solutions are helping established businesses modernize their operations or reinvent their business models, the letter said. Businesses are adopting these solutions to make more money by optimizing every part of each transaction and to keep up with the evolving payments landscape. “Businesses need to adapt to the proliferation of new payment methods and business models, the growing sophistication of fraudulent actors, the ever more exacting expectations of consumers, and the transformation in the commerce experience instigated by AI,” Patrick and John Collison wrote.
