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Stripe built a payments powerhouse by focusing on e-commerce. Now it’s following its customers into bricks and mortar.

The San Francisco-based company is introducing a new service for in-person payments.

Two women standing in a Glossier pop-up shop at Nasty Gal Santa Monica
A 2015 Glossier pop-up shop. The beauty brand plans to use Stripe’s new in-person payments service.
John Sciulli/Getty Images for Nasty Gal
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

For years, Stripe has been synonymous in the startup world with online payments. But it wants to be known for more.

The San Francisco-based upstart, founded in 2010 by brothers Patrick and John Collison, is hoping to make a big splash into brick-and-mortar retail next and is unveiling a new product called Stripe Terminal that it believes will take it there.

The new offering, fueled by the acquisition earlier this year of a software startup called Index, aims to make Stripe a payments solution for fast-growing internet businesses that sell products and services in person as well as online — a trend that has gained momentum in the past couple of years.

Digital-first brands like Warby Parker and Glossier are planning to use the new product for in-person payments, Stripe says.

“The question we started asking ourselves was, ‘Can we make the offline world as simple as the online word?’ and we think it’s very much possible,” Stripe co-founder and president John Collison said in an interview with Recode.

Stripe does have a reputation for being “very good at ... extracting a lot of complexity” from setting up payments systems, said Jordan McKee, research director at 451 Research. And there is “an appetite to simplify” inside big companies, he added, noting that it’s not uncommon for multinational corporations to have as many as 500 employees working globally on payments systems alongside two to three dozen different vendor companies.

But Stripe is not the first to market. Netherlands-based Adyen, which recently went public and is now valued around $21 billion, has already been selling the vision to merchants of being able to use one system to track all online and brick-and-mortar sales together, and to do so across the globe.

“They’re the one that I would point to that is executing that vision today,” McKee said. “That’s sort of the holy grail in the payments world and there are many, many merchants that want to get there.”

Collison said Stripe is going after a different customer than Adyen: Most notably, fast-growing, digital-first companies that have only recently started expanding into physical retail or are considering doing so. Adyen, on the other hand, touts large traditional brands like L’Oreal and Burberry among its customer base, though it also does business with large internet platforms like eBay and Etsy.

Stripe also believes its technology is a differentiator. The company is promising that its new product will make it easy for stores to customize what shoppers see on the checkout screen, whether that’s a special discount offer or other messaging. Merchants will also be able to manage — and send updates to — all of their checkout equipment from one online account. Stripe has partnered with companies like Verifone to be able to sell their checkout equipment that will work with its payment service.

Pricing for the new service starts at a 2.7 percent fee, plus five cents, per transaction. (Update: Stripe, which previously said it would also charge a monthly subscription fee for card readers in use, has decided not to.)

Beyond consumer product businesses, Stripe is also targeting business-to-business software platforms whose own customers operate brick-and-mortar chains. Mindbody, which makes software for wellness businesses like yoga studios and spas, will be a customer of Stripe.

Stripe’s entrée into this new business will undoubtedly raise the question of whether it will now compete directly with an even larger Silicon Valley payments company: Square. Stripe’s Collison mostly dismissed the notion, saying, “There’s quite little overlap between the customer bases.”

McKee, of 451 Research, mostly agreed, but pointed out that Square’s ambition to acquire larger and larger business customers could change the equation years down the line.

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