Silicon Valley firm eager to earn its stripes in South-east Asia

Singapore

SOUTH-EAST Asia is experiencing a boom in its Internet economy, and here to tap that opportunity is Silicon Valley darling Stripe, which builds payments infrastructure for online businesses.

Stripe's chief business officer Billy Alvarado told The Business Times that the firm is "super excited to be in the region" and it plans to be here "for the long term". The startup, valued at US$22.5 billion after its last fundraise, has been making headway in the region since it launched in Singapore in 2016 - its first foray into Asia. The company continued its expansion with launches in Japan and Hong Kong, and beta programmes in India and Malaysia.

Stripe this month hired a Paypal veteran, Rahul Shinghal, to head its business in the Asia-Pacific. Mr Shinghal, who is based in Singapore, was last PayPal's head of small and medium-sized businesses across several international markets.

"The axis of the Internet economy is shifting east. And really central to that is how in South-east Asia, companies are born global," said Mr Alvarado, who was in town in March for Money 20/20 Asia, a conference held in Singapore to discuss payments, financial services and fintech.

By "born global", Mr Alvarado meant that these Internet businesses have ambitions of expanding beyond their home country right from the get-go. These companies are crucial to Stripe, whose main offering is the ease of settling payments and carrying out related processes regardless of which country the business is operating in. It takes into account different factors such as localised payment methods, compliance and data analytics, and allows merchants to accept various forms of e-payments.

Mr Alvarado said the growth of the Internet economy in South-east Asia is due to several factors, such as Internet and mobile phone penetration. "It's an area that has a lot of the ingredients - the underlying infrastructure, the consumer demand, and the talent to build new and different ways for people to sell online. And consumers have a preference for this, right? They want to buy on marketplaces, they want to use ride-sharing apps, and they want to use booking platforms."

He added: "There's been a set of things that have happened and now there's this opportunity. I think that we're off to the races."

Without getting into any "roadmap specifics", Mr Alvarado said Stripe will invest in expanding its team in South-east Asia and in localising its offerings, which include payment acceptance, money movement and point-of-sale terminals.

Stripe chose Singapore as the location for its first Asia-Pacific engineering hub, launched in October last year. In the Republic, it works with fast-growing companies such as Grab, Carousell, honestbee and Chope.

In the past year, 70 per cent of Singaporean adults bought something from a business powered by Stripe, said the firm.

Although the number of Internet businesses is climbing steadily, rising anti-globalisation and protectionist sentiment, as well as regulatory barriers, might throw a wrench in these companies' expansion, noted Mr Alvarado.

About 40 per cent of respondents across 15 markets polled by Stripe said it is harder to do business globally today compared to five years ago; in Singapore, the figure stood at 61 per cent.

One way that companies can address this challenge is through partnerships, said Mr Alvarado.

For instance, Stripe announced global partnerships with Alipay and WeChat Pay in 2017. It enables Stripe-powered businesses to accept both payment methods on their websites and apps, opening up opportunities in China.

With the changing global environment, Stripe has its work cut out for it. But Mr Alvarado said the firm will stick to its principle - to help businesses easily navigate complex processes.

"What may be happening is that... for some of the infrastructure that we have to build, the mix of the portfolio starts changing a little bit. Take for example, in Europe, where strong customer authentication is being rolled out as part of PSD2 (revised Payment Services Directive) regulation. What that means is that Stripe is rolling out this year a whole set of software capabilities (for that)," he explained. "So that new regulation, that compliance, that checkout flow - you can rely on Stripe to be able to do right."

Additional reporting by Jamie Lee