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When Stripe announced last month that it would process payments in 130 global currencies, co-founder John Collison hinted that Stripe was investigating another type of currency – this one entirely digital. Of course he meant Bitcoin, and on Thursday Stripe confirmed it.
The online and mobile payments startup has launched a bitcoin payments pilot with a few select customers, including Canadian encrypted data backup service Tarnsap, and it plans to launch a full beta trial in the near future. It’s set up a splash page where customers can sign up to participate.
Stripe is also testing Automated Clearing House (ACH) payments, which will allow direct transfers from bank accounts. But the bitcoin revelation is definitely the more intriguing news. While an increasing number of online merchants accept bitcoin today, they go through specific cryto-currency brokers like CoinBase. When – and if – Stripe’s bitcoin payments service comes out of beta, it would just become another transaction option in its growing menu of payment choices, accessed by merely tapping into Stripe’s API.
Stripe recently closed an $80 million funding round, and like its primary competitor Braintree (which was just scooped up by PayPal) is focused on processing transactions for the new wave of online marketplaces, sharing economy startups and mobile apps. It counts among its customers Lyft, Foursquare, Rackspace and Shopify. Given the more digitally progressive nature of many of the companies Stripe works with, their customers are naturally more inclined to use new digital payment methods like bitcoin.
Tarsnap is a good example. Its tagline is “online backups for the truly paranoid.” Using a crypto-currency is a logical choice for customers bent on encrypting their data. Tarsnap creator Colin Percival wrote in his blog:
“There is a significant commonality between Tarsnap and Bitcoin — both rely crucially on strong cryptography, and anecdotally it seems that many Bitcoin users rely on Tarsnap to back up their “wallets” (I have no concrete data since I can’t tell what data people are backing up) — so it’s not surprising that many Tarsnap users would like to pay with bitcoins. There is an even stronger connection to many of the “alternative cryptocoins”, since many make use of the scrypt key derivation function which I developed for securing Tarsnap’s passphrase-protected key files. I don’t have any plans to support those other cryptocoins yet, however — although if Stripe adds support for them I have no doubt that Tarsnap will make use of it.”
For now it looks like Stripe is converting Bitcoin into hard currency for its merchants, not handing bitcoins over to its partners. That makes sense because its startup customers are likely more interested in offering payment flexibility to their end customers than they are in participating in bitcoin speculation. And while Stripe is jumping on the bitcoin bandwagon, from my interviews with Collison, I don’t get the impression he expects it to become a major part of Stripe’s transaction volume.
Collison told me that Stripe is focused primarily on credit cards because that’s still the primary means of payment among its startup customers in North America and Europe. But Collison said Stripe will continue to explore other payment methods such as ACH and digital currencies. He even held out the possibility of tapping into mobile carrier-run payment networks like those in Africa.