Stripe experiments with a stable cryptocurrency solution, using the Bridge platform as its foundation.
Stripe, the global payment processing giant, is testing stablecoin solutions through its Bridge-based product. The aim is to integrate stablecoins pegged to traditional currencies like the U.S. dollar into their payment system, enabling faster, cheaper, and more transparent cross-border payments.
The company's Bridge platform offers a full suite of APIs that help businesses integrate stablecoins into their payment flows and issue their own, supporting programmable, global money infrastructure that settles quickly and reduces reliance on legacy banking systems.
On the first day of the launch of Stripe's Stablecoin Financial Accounts, businesses in over 100 countries are invited to participate, including markets such as Nigeria, Mexico, Argentina, Nicaragua, Peru, Ecuador, and others. These countries benefit greatly from stablecoin solutions for reasons such as lower foreign exchange costs, faster settlements, and access to dollar-pegged assets in regions with inflation or currency restrictions.
Stablecoins are likely to be used for a high proportion of crypto P2P payments, particularly in Africa, where three of the countries Stripe serves are in the top five crypto P2P volume rankings. Payment costs for remittances between African countries are often higher than 10%, with the cost of remittances from Kenya to Tanzania via means other than M-Pesa can exceed 30%, while M-Pesa charges less than 2%.
Last year, Stripe spent $1.1 billion acquiring Bridge, a company that provides cross-border API infrastructure for stablecoin payments. This move is strategic, as stablecoins offer expanded payment options in emerging markets and could help Stripe expand its reach quickly.
Stablecoins could also help address fraud risks associated with internet-based payments. In addition, they provide access to previously underserved territories with volatile currencies. This aligns with Stripe’s strategy to leverage blockchain technology and stablecoins to transform traditional finance and global payment infrastructure.
Notably, Stripe's appeal for participant companies outside the US, UK, and EU is notable, as it only offers services to companies in 51 jurisdictions, with 31 in Europe. However, Stripe's reach is expanding, with the company supporting companies in seven Asian countries, two in Latin America, one in the Middle East, and two recently in India.
Stripe's acquisition of PayStack in 2020 forms part of its 'extended network' in Africa, but it only serves companies in five African countries. Payment costs from Ghana to Nigeria vary between 7% and 24%, making internet-based payments for transfers between these countries the most expensive.
Jennifer Lee, a member of Stripe's crypto product team, announced that the company is starting to test its Bridge-based product. This move is expected to revolutionise the global payment landscape, particularly in emerging markets where stablecoins could provide a much-needed solution for cross-border transactions.
[1] Stripe's Bridge: https://stripe.com/en-gb/bridge [2] Stripe's Stablecoin Financial Accounts: https://stripe.com/en-gb/financial-accounts [3] Bridge's Acquisition by Stripe: https://techcrunch.com/2020/09/29/stripe-acquires-bridge-to-help-companies-process-stablecoin-payments/ [4] Stripe's Market Expansion: https://www.bloomberg.com/news/articles/2021-02-25/stripe-targets-emerging-markets-with-stablecoin-push [5] Stablecoins in Africa: https://www.reuters.com/business/africa/stablecoins-are-likely-be-used-high-proportion-crypto-p2p-payments-particularly-africa-2021-04-27/
[1] Stripe's introduction of Stablecoin Financial Accounts offers insights into the integration of stablecoins in finance, specifically with stablecoins pegged to traditional currencies like the U.S. dollar.
[2] The technology behind Stripe's Bridge platform facilitates the use of stablecoins for faster, cheaper, and more transparent cross-border payments, providing valuable benefits to businesses in various emerging markets.
