What is Stripe's moat? It's developer friendly but from my experience management will only care about the cost.
The fact that we can think "what's so hard about that?" is declaring Stripe's moat without even knowing you did it.
So a shitty UI with a million random buttons looks complicated and hard and users respect it, but an intuitive UI looks so simple and clean it's like the software's barely doing anything!
Anyone looking to compete with Stripe will have the same thought process and probably won't bother.
And if they do then they will have to execute as successfully as Stripe over an extended period.
Edit: Just to add that the podcast was "The Knowledge Project" [1] - just a fascinating conversation.
Sure you'd like an identical service to Stripe for a lower fee but the moat is that doing what Stripe does isn't easy at all. You're paying for that fact.
But for a lot (the majority?) of businesses probably want to focus on other things.
It's expensive when you're small because it's replacing significant engineering resources in a company.
HN loves Stripe's Payments API, but in my experience from having worked on payments at a large ecommerce unicorn, APIs from companies like Adyen and Checkout.com are just as easy to work with.
Stripe's real moat is that they offer so many useful products around payments and finance that integrate really well. You can get fraud detection, billing, invoicing etc. from other merchants, or you can build your own, but it's probably cheaper (and much simpler) to use Stripe for all of that.
At the moment this is true from small to medium sized companies. Past a certain size you will most likely be using multiple Payment Service Providers anyway, so the vertical integration is not as useful.
Why is that? Is it something Stripe achieved over time?
My employer never bothers switching to any competitor because Stripe match any deal that their competitors present to us.
Could you, a single person and $500m of seed funding match Stripe's prices? Not without hemorrhaging cash.
One of Amazon's moats is low pricing as well, which can only be achieved with eye-watering scale (their margins are 0% in some categories, they make it up by delaying payments to vendors and pocketing the interest).
Not only was the offer from Braintree way better, they gave us a better deal on PayPal fees as well.
Stripe’s focus on their supplementary offerings, like Billing (which used to be effectively free) and Checkout show that they’re trying to eat more of the transaction percentage. Try mentioning PayPal button on a Stripe Checkout page and you will be muted from talking in their YouTube broadcast.
Overall, I’m bearish on Stripe and look forward to shorting them on the public market, whenever that day comes.
It'll probably go down very well with potential investors.
What negotiation are you referring to? Interchange pricing is fixed; they are not negotiating discounts on that.
If you mean Stripe has VC funding to be a loss leader then, correct, but that’s not a moat. Moats are what protect profitable businesses. The resultant scale could be a moat but Stripe is still a small slice of the payment processing market.
Their play here is to upsell premium services. Developer friendliness and moderate pricing (it’s actually not that low) are hooks to get in the door of startups.
Every ecommerce company and retailer looks at payment fees as money left on the table.
The more money Stripe take on, the more they need to return to investors, and so the more pressure to make margin. That is the opportunity for the future.
I too doubt it would come from a bank, nor from Visa and Mastercard... but could another exist? Yes!
If it came from a big player, I'd be looking at Shopify.
It's like the soft drink market. You don't have to be #1 or #2 and you can still do quite well.
Stripe might never be on top but it'll print money fairly easily for a long time.
The developer-friendly bit is just a marketing/sales tactic (make the developers swoon to force the hand of co's to implement it).