The new charge card program makes it easy for fintech startups and platforms to offer expense cards with flexible credit options. The charge card program is available in beta in the US, and will later expand to the EU and the UK.
Stripe, a financial infrastructure platform for businesses, announced a new charge card program for Stripe Issuing, Stripe’s commercial card issuing product. „With the addition of charge cards, fintechs and platforms can create and distribute virtual or physical charge cards that allow their customers to spend on credit rather than the funds in their accounts—providing new revenue streams for platforms and allowing them to offer new financing capabilities to their customers.” – according to the press release.
“Whether a small business is just starting out or looking to expand, access to capital can make all the difference. Our new charge card allows fintechs and SaaS platforms to provide access to a reliable source of credit for the many small businesses they work with,” said Denise Ho – head of product for BaaS at Stripe.
Since Issuing launched in 2018, platforms and fintechs have used it to create more than 100 million cards in the US, the UK, and the EU. Until now, Stripe-issued cards could only be used to spend money from a prefunded account. The expansion into charge cards allows platforms to offer these same users access to credit. Cardholders can spend up to their credit limit and pay back the outstanding balance at the end of each month.
Building a charge card program with Stripe Issuing
In a recent survey, 77% of SMBs said they were concerned about access to financing. Software platforms can help by providing access to capital that their customers use to boost growth. The addition of a charge card program also allows platforms to create deeper and more profitable ties with their customers. But building a credit offering from the ground up is hard. Platforms would need to collect repayment, handle lending compliance, navigate licensing requirements, and much more.
Issuing’s charge card program handles these issues out of the box, allowing platforms to quickly offer access to credit with little additional operational cost. Issuing provides the core components of a charge card program—such as funds flows, network connections, printing, and integration APIs—and streamlines all the necessary compliance, bank partnerships, and ledgering.
„Building a charge card program is a daunting task. Stripe provided immense value in planning and launching our program quickly, with a compliance-first design that we’re confident can scale to meet Ramp’s needs,” said Michael Cohen – vice president of partnerships at Ramp.
Businesses can set individual credit limits and repayment schedules, including flexible weekly, monthly, or set-day repayment options. When businesses need to collect repayments from customers, they can use Stripe’s suite of products, including no-code and embeddable options like Invoicing and Checkout.
The charge card program also provides flexible funding options for platforms. Once a card is used to make a purchase, the transaction needs to be funded. Most charge card programs require the platform offering the card to cover the transaction immediately, which forces platforms to maintain large cash balances. But with Issuing, platforms can send funds to Stripe after the transaction settlement date. This helps platforms reduce the funds they need to keep in reserve, freeing that cash for other purposes.
Banking 4.0 – „how was the experience for you”
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