Fintech giant Stripe is getting into the credit game

Stripe wants to make it easier for businesses to access credit.

The private financial infrastructure giant announced a new charge card program today from Stripe Issuing, its commercial card issuing product, Denise Ho, head of product for BaaS at Stripe, told TechCrunch exclusively.

The company originally launched its Issuing product in 2018 and since then, it’s helped companies such as Shopify and Ramp issue more than 100 million cards in the U.S., the United Kingdom and the European Union. The product is today one of Stripe’s fastest-growing, Ho said – supporting half a million transactions a day. Fintechs like Klarna “build entire businesses on it,” the company claims. 

Previously, Stripe-issued cards could only be used to spend money from a prefunded account. Its expansion into charge cards, according to Ho, will companies the ability to create and distribute virtual or physical charge cards that allow their customers to spend on credit rather than using the funds in their accounts. 

“Among our suite of products, Issuing has been doing really, really well,” Ho told TechCrunch. “And the No. 1 top demand within issuing has been the ability for Stripe to enable our platforms to offer credit to their users.”

This has a twofold benefit for Stripe – giving it a new revenue stream as well as the option to offer new financing capabilities to their customers “with little additional operational cost,” Stripe touts. (Operational efficiency is in vogue, after all.)

For example, platforms that use Stripe Connect offering can white label products from Stripe and provide a range of embedded financial services, such as financial accounts, working capital loans and now charge cards as well, Ho said.

Further, she added, Stripe Issuing provides the core components of a charge card program — such as funds flows, network connections, printing, and integration APIs — and then aims to “streamline” all the necessary compliance, bank partnerships and ledgering. 

Ramp, Emburse, Kara and Coast are among the current users of the charge card program, which is available in beta in the US. In the coming months, Stripe will launch charge card programs in the EU and the UK.

“In the U.S., the banks are the ones that have been our sponsor … and that’s regulated,” Ho explained. “And because you’re letting the small businesses spend, that is a form of lending so that lending compliance has to come from the bank.”

For its part, she said Stripe is partnering with startups to help guide them through the process and help provide the necessary compliance and risk oversight so that they don’t get in over their heads.

When it comes to underwriting, Ho said that Stripe has received feedback that its clients ultimately want to own the underwriting decision.

“What we do is we help them put together the set of policies and ensure that these policies are actually compliant,” she said. “So we offer both sort of flexibility and the control but with guardrails.”

Over time, Ho said its clients may want “more modules” to do their own underwriting so that’s something Stripe will work on over time as it matures its offering.

Anyone can sign up for the new program, she said, even if they are not an existing Stripe user.

For its part, Stripe will make money off of interchange fees so as customers’ volume grows and users spend more, Stripe will earn more. There will also be compliance fees associated with the program.

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