Stripe, a longtime partner of Lyft, signs a major deal with Uber

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Growth at $50 billion fintech Stripe has slowed this year, but one of its key turnaround strategies got a decent boost today: Stripe announced it has entered into a “strategic payments partnership” with Uber. The pair will initially work together on selected services in eight of Uber’s largest markets, including the US, UK, Canada, Mexico, Australia and Japan.

Some context on this deal: Uber’s big US rival Lyft has been a long-time marquee customer of Stripe for payments, and whether that was true or not, there was a reason some assumed Uber and Stripe wouldn’t work together. However, Uber is a much bigger beast, with close to $100 billion transacted annually (Stripe processed $817 billion last year). And Uber isn’t just a force globally, but specifically in the US, where an estimate from YipIt (via WSJ) puts Uber’s rideshare market share at a whopping 74% at the moment.

Lyft will remain a customer of Stripe, Stripe president Will Gaybrick confirmed to TechCrunch.

Financial terms of the deal are not being disclosed, but as with the rest of Stripe’s payments business, a large component will come from commissions that Stripe will make from each transaction that it operates on Uber’s platform.

The Uber partnership, which is expected to be formally announced later today at Stripe’s user conference, comes on the heels of recent corporate deals Stripe has signed with Amazon, Microsoft and BMW.

Stripe started as a simple API to integrate card payments into websites and apps (the “stripe” in the name, a reference to the magnetic stripe on the back of these cards), but over the years it has looked for bigger margins and more diversification, it has added to dozens of other products and features, including services to help calculate and account for sales tax, help detect fraud, incorporate businesses and more.

But this partnership — for now at least — isn’t a global adoption of everything Stripe has to offer. Uber will use Stripe to break into a specific, new payment threshold. Specifically, it will integrate Stripe Financial Connections and Link to allow users to import bank details to pay for services like Uber Rides and Eats directly from bank accounts, giving users a credit or debit card payment option.

“Creating payment experiences that combine payment innovation, reduced friction and cost savings is at the heart of what we do. Using Link to give customers the ability to easily pay with their bank accounts puts us in a position to tick all those boxes while providing access to an increasingly popular payment method,” says Karl Hébert, Vice President of Payments, Risk and identity at Uber, in a statement. “Stripe shares our commitment to reliability, customer centricity and continued innovation – which is why they are a key partner.”

Stripe’s flagship card payment product is currently only being rolled out in two of these markets: Australia (via eftpos) and Japan (via JCB).

In other words, while Stripe has built out some interesting products — including marketplace services like Instant Payout, it developed early with Lyft to pay drivers faster — those won’t be part of the mix for now.

Still, it’s a significant step for Stripe. The company had been working on an Uber deal for years, with attempts for the past three. This allows the two to work more together.

Gaybrick said that part of not collaborating more significantly in the past was a matter of a scaling problem: Stripe has several large customers now, but the start was really with other fast-growing (but smaller) startups. “Stripe didn’t exist when Uber was founded,” Gaybrick explained. “When we started talking several years ago, they were happy with the ease of use and reliability, but we had a way to go to convince them that we were powerful enough and performed in the market. Now that’s how they see us.”

For Uber, the deal is notable in that it underscores some changes at the company.

Earlier this year, Uber announced a seven-year cloud service agreement with Oracle and Google to host its IT infrastructure, and shortly after that launched one redesigned, simplified app which focuses on more personalized experiences for users.

Together, the two signal how Uber — under the same cost and financial constraints as the rest of the market — is looking for better ways to target engineering resources on the product and away from some of the functions that can be handed off to third parties. achieve.

Uber has been known to build and manage much of its payments infrastructure itself, and while it will continue to do so, it is also using a multi-vendor strategy to manage some of the work in the first and last miles of that process. That’s the opportunity for Stripe and others who like it.

It remains to be seen how far that possibility extends. In particular, Uber’s efforts in “super app” territory have recently been about expanding transportation options. Even Uber Eats is its own app. That’s unlike some of its regional counterparts like Grab and GoJek, which offer not just mobility, but deliveries, online shopping, entertainment, financial services and more.

Will Uber ever want to do more? Could it? If Uber’s hopeful answer to any of these is “yes,” then you can see why it might want to bring in more payment specialists as partners to build and scale it.