Stripe, the private financial infrastructure giant, has unveiled a new charge card program through its commercial card issuing product, Stripe Issuing. With this expansion, businesses can now create and distribute virtual or physical charge cards that allow customers to make credit-based purchases instead of using funds from their accounts. The move comes as Stripe continues to grow its suite of products, with Issuing already being one of the company's fastest-growing offerings.
Previously, Stripe-issued cards were limited to spending from pre-funded accounts. However, the addition of charge cards allows companies to offer credit to their users, meeting a significant demand within Stripe's Issuing product. This new capability benefits Stripe by opening up a new revenue stream and enabling the provision of financing options to customers, all while maintaining operational efficiency.
Stripe's charge card program provides an opportunity for platforms that utilize Stripe Connect to offer a range of embedded financial services. These services can now include financial accounts, working capital loans, and charge cards. With Stripe Issuing handling the core components of the charge card program, such as funds flows, network connections, and printing, platforms can streamline compliance, bank partnerships, and ledgering processes.
Stripe's charge card program is currently being used by Ramp, Emburse, Karat, and Coast, with beta availability in the United States. Over the next few months, Stripe plans to launch charge card programs in the European Union and the United Kingdom. By partnering with startups, Stripe guides them through the process, ensuring compliance and risk oversight to prevent any potential issues. Additionally, Stripe aims to provide clients with the flexibility and control they need while maintaining necessary guardrails. Stripe acknowledges that clients may desire more control over the underwriting process in the long term. Currently, Stripe assists clients in setting underwriting policies and ensuring compliance. However, the company recognizes that clients may eventually want to develop their own underwriting capabilities, and Stripe plans to work towards enabling such flexibility as its offering matures.
The new charge card program is open to anyone, regardless of whether they are an existing Stripe user. Stripe will generate revenue through interchange fees, earning more as customers' volume and spending increase. Compliance fees associated with the program will also contribute to Stripe's revenue stream.
By expanding the capabilities of its Issuing product, Stripe empowers platforms to offer credit-based solutions while maintaining operational efficiency.