STRIPE, one of the world’s most valuable startups, said growth in payments volume slowed last year after a pandemic surge, even as it helped more large business clients handle payments over the Internet.

The payments company, which was valued at US$50 billion in a fundraising round just last month, said volume climbed 26 per cent to US$817 billion in 2022, according to the firm’s annual user letter published on Wednesday (Apr 5). That compares with 60 per cent in 2021 when Stripe and many of its rivals saw rapid growth as consumers did more shopping online during the pandemic.

“We feel like, given the climate that it was, we’re very happy,” John Collison, who along with his brother Patrick founded the company, said in an interview. “2020 and 2021 were such fun years with e-commerce in particular. You had such a maelstrom of activity and there was no way that would continue.”

The letter confirms parts of earlier reporting in the run-up to Stripe’s moves last month to raise US$6.5 billion to cover a looming tax bill for veteran employees with expiring stock options.

The US$50 billion valuation it received was well below the US$95 billion it was last valued at when it raised US$600 million from investors in 2021. The company’s results — and its accompanying drop in valuation — mirror many of its peers in online payments, including PayPal Holdings and Adyen.

Enterprise focus

While Stripe helped startups take payments over the Internet during its earliest days, it’s been targeting larger firms in recent years and now counts Amazon.com and Zoom Video Communications as customers.

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More than 100 companies now handle more than US$1 billion in payments with Stripe every year and that set of customers has grown by 50 per cent annually since 2018, Stripe said in the letter.

For years, large retailers have viewed the technology they need to take payments as a cost. Now, Collison said, they are considering how that technology can boost revenue.

That’s because e-commerce players increasingly struggle with so-called conversion rates, which measure the percentage of visitors to a website that actually make a purchase. On average, that rate hovers around 3 per cent for most e-commerce sites, according to McKinsey.

“Checkout pages across the Internet are riddled with needless friction. Ten per cent of payments still fail for no good reason when transacting online,” the brothers said in their letter. “At Stripe, we obsess over fixing this.”

In its letter, Stripe analysed what it called “breakout startups” or new companies with unusually high revenue growth.

The company’s data show Silicon Valley may be losing its allure for startups: In the three years leading up to the pandemic, more than 60 per cent of these so-called new breakout startups were based in San Francisco. Since 2020, just 46 per cent were.

“San Francisco remains the clear leader,” John Collison said in the interview. “But what we’re seeing is that there is a less San Francisco or Bay Area centrality in tech.” BLOOMBERG