Saturday , January 16, 2021

E-Commerce Specialist Stripe Snaps up Faster EMV Developer Index in Multichannel Play

The search by online-payments kingpins for avenues into physical-world stores reached a new milestone with the acquisition by Stripe Inc. of point-of-sale technologist Index Inc.

Terms of the deal were not disclosed, according to an Index spokesperson, who added the company has no immediate comment on the transaction. A Stripe spokesperson said the deal closed “late last week” but refused to comment beyond that.

San Francisco-based Index, which was founded in 2012 by a pair of executives who had helped develop and launch Google Wallet, posted at the top of its home page a terse announcement that reads, “Index has joined the Stripe team.”

With the acquisition, Stripe gains a company whose software won widespread notice in the wake of the introduction of EMV chip cards in the United States by improving on card-network protocols to speed EMV transactions. After steadily chipping away at transaction time, Index now promotes what it calls “1-Second EMV.” Especially in the months after the October 2015 EMV launch, merchants and customers alike grew increasingly exasperated with perceived transaction times for the new chip cards.

Index founders Jonathan Wall (left) and Marc Freed-Finnegan.

Index also develops point-of-sale software for loyalty, campaign analytics, point-to-point encryption, gateway management, and other functions.

Eight-year-old Stripe, also based in San Francisco, originally won recognition for its relatively simple code that allows e-commerce sellers to quickly set up for payment acceptance. Since then it has added considerable sophistication to its product suite but continued to concentrate on e-commerce.

Now, it can combine its e-commerce acumen with Index’s in-store capabilities to forge a strong multichannel offering for merchants with both online and physical stores, observers say. “There are few companies that are good at multichannel processing, and many larger merchants need that,” says Rick Oglesby, principal at AZ Payments Group, a Mesa, Ariz.-based consultancy, in an email message. “This deal not only opens up the point of sale, but it also does so with a modern technology stack and a differentiated product.”

Demand for such capability can’t be ignored at payments providers like Stripe that are looking for growth, experts say. Indeed, the Index deal “should strengthen Stripe’s proposition in a world where it’s becoming increasingly important to be able to seamlessly support merchants in the cloud and bricks and mortar,” notes Eric Grover, principal at Intrepid Ventures, Minden, Nev., in an email.

While the terms aren’t known, Grover argues the deal almost certainly yielded a result that would have been more costly for Stripe to develop in-house. “While Stripe could have developed the software themselves, there’d be an opportunity cost, and this gets them there fast,” he says.

Grover likens the acquisition to PayPal Holdings Inc.’s move in 2013 to buy Chicago-based e-commerce processor Braintree for $800 million. “PayPal had acquired an online-payment platform from Verisign in 2005,” he recalls. With that asset in hand, “it could have built a more flexible, feature-rich platform, but Braintree got PayPal a slicker platform in the market faster.”

PayPal and Inc. are among processors with deep roots in e-commerce that have, in different ways, moved recently to extend their payment capabilities to physical merchants.

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