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They say that in every crisis there’s an opportunity. E-commerce merchant processor Stripe Inc. and several providers of prepaid accounts think they’ve found some in the Covid-19 pandemic sweeping the globe.
San Francisco-based Stripe announced Thursday it had raised another $600 million in an extension of its Series G funding round. The company said it will use the funding for “product development, global expansion, and strategic initiatives.” Some of those initiatives are tied to the growing competitiveness of e-commerce while many brick-and-mortar merchants are shut down as a result of governmental stay-at-home orders to control the pandemic.
“Covid-19 is pushing the economy online, underscoring the importance of Stripe’s mission to increase the GDP of the Internet,” Stripe’s news release announcing the funding says. It later adds that “while the full economic impact of Covid-19 remains uncertain, several years of offline-to-online migration are being compressed into several weeks.”
Stripe also said “the rate of new businesses going live on Stripe has accelerated since the start of the year,” but did not give details. A Stripe spokesperson did not respond to a Digital Transactions News request for comment. The company did say, however, that one of its newest clients is Zoom, developer of a conferencing app whose usage has boomed in recent weeks as businesses and families try to congregate online.
Privately held Stripe’s valuation is now about $36 billion, according to news reports, up from $35 billion last September.
Meanwhile, with payments to individuals now going out as part of Congress’s CARES Act to stimulate the tanking economy, prepaid card providers are trying to persuade consumers to direct those funds into their accounts. In a tweet Wednesday, Square Inc. chief executive Jack Dorsey said, “hook up your cash app now to get your $1,200 fast.”
Cash App is Square’s popular person-to-person payments service that also provides a Visa prepaid card. The tweet from Dorsey, who also is the CEO of Twitter Inc., links to a Cash App tweet telling customers how they can find their routing and account numbers and provide them to the Internal Revenue Service to receive funds quickly instead of waiting for a check in the mail.
Similarly, Walmart Inc. said Wednesday it is waiving monthly maintenance fees on its Walmart MoneyCard, which is issued by Green Dot Corp.’s banking subsidiary, through June 30 for new MoneyCard customers who deposit at least $500 as part of its effort to encourage them to set up direct-deposit accounts and receive stimulus funds electronically. Walmart also increased its maximum check-cashing amount to $7,500 from the previous $5,000 limit.
And convenience-store giant 7-Eleven Inc. issued a news release Thursday touting its Transact@7-Eleven prepaid Mastercard as a vehicle for unbanked or underbanked consumers to receive stimulus payments quickly. The card is issued by MetaBank and managed by Global Payments Inc.’s Netspend subsidiary.
Prepaid cards can benefit from business opportunities created by major disruptions to routine life, according to researcher C. Sue Brown, director of the Prepaid Advisory Group at Marlborough, Mass.-based Mercator Advisory Group Inc. Like fires, hurricanes, and other natural disasters, “unfortunately yes, the Covid-19 virus will increase prepaid debit card loads on general-purpose prepaid reloadable cards,” Brown says by email. “The prepaid card is one of the easiest ways for the government to provide emergency money as a prepaid card can be ordered online or purchased in a retail store.”
Also working in prepaid cards’ favor for the estimated 7 million under- and unbanked Americans are less-stringent account-opening policies than those of banks, she adds.
