Fintech giant Stripe announced a new charge card program from its commercial card issuing product, TechCrunch reported.
Stripe launched its Stripe Issuing product in 2018, and it has helped companies issue over 100 million cards in the US, the UK, and the European Union. Some of its clients include Shopify and Ramp.
Previously, Stripe-issued cards could only be used to spend money from a pre-funded account. The recent expansion into charge cards will help companies distribute virtual or physical charge cards to their customers that will allow them to spend on credit rather than using just the funds available in their accounts.
“Our new charge card allows FinTechs and software-as-a-service (SaaS) platforms to provide access to a reliable source of credit for the many small businesses they work with
Stripe Issuing provides the core components of a charge card program such as funds flow, network connections, printing, and integration APIs and it aims to streamline all necessary compliance, bank partnerships and ledgering.
Stripe cited a survey showing that 77 per cent of small- to medium-sized businesses (SMBs) are worried about access to funding.
However, despite the demand and benefits to providers, building a credit offering from the ground up is hard, the company said, as platforms have multiple requirements such as collecting repayment, handling lending compliance, and navigating licensing requirements.
The offering is functional in the US on beta stage and is being used by companies such as Ramp, Emburse, Karat, and Coast. Stripe will soon launch charge card programs in the EU and the UK.
Denise Ho, head of product for BaaS at Stripe, informed that anyone can sign up for the new program, even if they are not an existing Stripe user.
The payment processor will make money off of interchange fees. As customer volume grows and users spend more money, Stripe will earn more. There will also be compliance fees associated with the program.
