Stripe Launches Stripe Capital Merchant Cash Advance Service
On September 5, 2019, Stripe officially launched Stripe Capital, a merchant cash advance service for its U.S.-based merchants following a year of testing. The product offers instant funding typically ranging from $5,000 to $25,000, with repayment structured as a fixed percentage of future sales and a flat 10% fee. Stripe uses merchants' payment processing history for quick underwriting and approval, eliminating the need for traditional credit checks.
Funding is provided by an unnamed bank partner, while Stripe handles all servicing. The product is available to direct Stripe users as well as platform partners using Stripe Connect, such as Shopify. Next-day funding is available after merchants accept offers through their Stripe dashboard.
The launch positioned Stripe in direct competition with Square Capital, which had issued over $5 billion in merchant loans since 2014, and PayPal's Working Capital product. Stripe Capital represents a significant step in Stripe's broader strategy to embed financial services directly into its payments infrastructure.
- Stripe's entry into embedded lending intensifies competition with Square Capital and PayPal Working Capital, accelerating the shift of financial services into payment platforms.
- The use of an unnamed bank partner for funding highlights the growing BaaS model where fintechs originate and service loans while banks provide the balance sheet.
- Availability through Stripe Connect enables platforms like Shopify to offer white-label lending, expanding the B2B2C embedded finance distribution model.