Stripe hints at growth strategy with identity verification rollout

The payments titan launched Stripe Identity, a self-service solution that authenticates user identity, in 30 countries after a successful pilot, per TechCrunch. Stripe Identity asks users to upload a photograph of their government ID and a selfie, which are then matched using machine learning. The technology—which is not payments-specific and will be available to businesses that are not existing Stripe clients—can be either integrated into a company’s existing workflow with code or distributed as a link to verify select interactions.

Identity fraud risk is growing. Identity fraud losses hit $56 billion in 2020—far more than previous years, according to Javelin. This uptick was largely the result of scams, though new types of identity fraud, including synthetic identity fraud and account takeover fraud, have been growing for years as well. Fraud growth has become a particular concern to merchants and businesses not only because it’s costly and time-consuming but also because it can erode their reputations, making tools like identity verification increasingly popular, per LexisNexis.

Dipping a toe into identity verification dovetails with Stripe’s payments ambitions.

• Building an in-house fraud prevention solution gives existing clients a tool they need from a provider they trust. Stripe has long offered a fraud prevention service called Radar, which it recently strengthened by acquiring Bouncer. Building in-house identity verification redoubles its fraud prevention efforts—and could push companies to use Stripe for these services instead of giants like Visa and PayPal, which have recently bolstered their fraud prevention technology, or third-party services that have raked in funding.
• It could also bring new customers into the fold. As a standalone product, Stripe Identity can help Stripe expand its addressable base beyond providers seeking a payments-related solution, widen the brand’s ambitions beyond payments, and diversify its business model—leading to meaningful growth in the future. And as payments digitization accelerates, the move could expose companies to Stripe that might want to add payments solutions down the line—perhaps with the same partner.

And it can bolster Stripe’s value proposition ahead of a potential initial public offering (IPO). Stripe was most recently valued at $95 billion, and investor interest has mounted as the company explores going public later this year or in 2022, per The Wall Street Journal. So far, Stripe has focused on achieving its ambitions by developing APIs that can be easily deployed and scaled to clients looking for value-added tools like financial solutions and tax capabilities. Extending that strategy beyond financial services offers insight into the brand’s broader growth strategy—and could be a winning ticket to cement its stature long-term.