Fresh off $6.5B funding haul, devalued Stripe pursues AI payment products

The news: Stripe secured more than $6.5 billion at a $50 billion valuation, a sharp drop from the $63 billion it was valued at in June. It will use the money to cover a hefty tax bill tied to employees’ stock units and said it “does not need this capital to run its business.”

The digital payments juggernaut also partnered with ChatGPT creator OpenAI, per a separate announcement.

Funding haul could be double-edged sword:

  • Encouraging signs for fundraising fintechs. The haul is significantly more than the $2.5 billion Stripe was reportedly aiming for. It’s a tough climate for funding, and the beaucoup raise could be a sign of growing investor confidence that encourages other fintechs looking to bag fresh capital.
  • But its valuation cut will sting. Stripe was valued at $95 billion two years ago, almost double its value this week. The substantial drop from an industry leader may convince other financial startups to accept similar discounts if they want to raise capital. Some fintechs may delay fundraising to wait for investor sentiment to improve.

OpenAI turns to Stripe: OpenAI will use Stripe to monetize its hugely popular ChatGPT and DALL-E generative AI platforms, helping with billing, subscriptions, and checkout features.

  • The AI specialist is under pressure to improve its financials: Its $200 million in forecast revenues for this year are relatively small compared to the estimated 100 million monthly active users ChatGPT had in January.
  • And Stripe is no stranger to working with AI firms. It claims that three-quarters of “leading generative AI” companies have signed up with it, including Runway, Diagram, and Moonbeam.

What’s in it for Stripe? The payments firm will incorporate OpenAI’s tech into its products and stands to benefit from the space’s potential.

  1. Superior customer support. Generative AI can answer questions quicker and save money by relying less on human input. It can also help train human customer service staff.
  2. Improved process automation. The tech can help verify documents and identify efficient payment methods. This can save customers time and money when making payments.
  3. Stronger fraud defenses. Generative AI can help users manage fraud and better distinguish between suspicious and legitimate activity.

As generative AI use grows and the tech improves, more clients may be happy to sign up for paid services—giving Stripe a revenue opportunity as an early mover in the space.

Dig deeper: Check out our ChatGPT and Generative AI in Payments and Financial Services reports to learn about how AI can benefit companies in these sectors.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.