Stripe launches Billing ahead of seismic European SCA e-commerce change

25 Apr 2019

Image: © tanaonte/

Subscription e-commerce market is booming and onset of SCA rules in Europe will reinforce this.

Stripe has unveiled its new Billing platform for Europe just ahead of a seismic change in how online payments will occur in the EU.

The onset of Strong Customer Authentication (SCA) in September as part of the new Payment Services Directive (PSD2) will change payment flows for more than 300m Europeans.

‘Tools like Stripe Billing represent an important element of the economic infrastructure that will facilitate the creation of a Digital Single Market across Europe’

Stripe Billing solves a part of the problem by enabling an easier path to full SCA compliance for online subscriptions.

Subscription e-commerce boom

The online subscriptions e-commerce market has grown more than 100pc a year for the past five years, according to McKinsey & Company.

“Subscription and SaaS companies have been some of the internet’s greatest success stories up to now, but we’ve barely scratched the surface of what’s possible, especially here in Europe,” said Tara Seshan, product manager for Stripe Billing. “With Stripe Billing, companies of all sizes now have access to advanced invoicing tools that will also help them comply with SCA and VAT requirements. We’re excited to power the next generation of European subscription companies as we continue building the economic infrastructure that will grow the GDP of the internet.”

Billing uses Stripe’s advanced machine-learning infrastructure to help businesses increase revenue, move more quickly and significantly reduce engineering effort. Instead of manually retrying cards, Stripe Billing’s Smart Retries tool uses machine learning to figure out the best time to retry failed cards.

In addition, Stripe Billing automatically generates invoices on behalf of businesses. Instead of being static bills, Stripe’s hosted invoices are interactive payment pages, making it easy for customers to submit a payment instantly.

Stripe launched Billing in the US last year and claims it led to an average 7pc lift in recovered revenue for businesses and hosted invoices getting paid three times faster than typical invoices.

Customers in the US include Slack and Meetup while Irish beta users include Huggity, Fitness Bootcamp and the Jack and Jill Children’s Foundation.

“By significantly reducing the manual hours involved in recurring billing for us, Stripe has saved us a lot of time and effort and makes it easier for people to donate to our charity,” explained Carmel Doyle, CEO of the Jack and Jill Children’s Foundation.

“It has also allowed us as a small team to focus on the core service of home nursing care for sick children, and raising awareness and funds for that service.”

Do you listen to SCA?

While pundits and opportunists wax lyrical about the importance of fintech, few of them are aware of what SCA is.

The looming SCA rules in September represent a radical change that will require more than 300m European consumers to confirm their identity using a second factor – such as a password, phone or fingerprint – in order to complete a purchase.

For businesses accepting recurring payments, this is a particular challenge, as their customers are accustomed to being charged automatically.

Stripe last week confirmed the acquisition of Touchtech Payments, a Dublin-based payments start-up, for an undisclosed sum. The Dublin company provides SCA technology that is used on a daily basis by companies such as N26 and TransferWise to enable frictionless authentication on mobile and desktop.

The acquisition of Touchtech follows Stripe raising $100m in a funding round earlier this year that values it at more than $22bn. The recent investment came from Tiger Global, which previously led a $245m funding round in September 2018. As well as Tiger Global, investors in Stripe include big names such as Peter Thiel, Elon Musk, Sequoia Capital and Andreessen Horowitz.

In recent weeks also reported that Stripe plans to grow its engineering team in Dublin tenfold after it secured a crucial e-banking licence from Ireland’s Central Bank that will enable it to process pan-European payments following a hard or soft Brexit.

Its new Stripe Billing platform will help companies automatically identify precisely which charges require SCA and send customisable emails to subscribers when additional authentication is needed, reducing customer attrition and revenue loss.

“SaaS, subscription and recurring revenue business models have become a major force for economic growth on the internet across Europe,” said Jordan McKee, research director at 451 Research.

“However, for the vast majority of companies, running a billing and subscription system at any scale is both laborious and costly. This function will become even more complex once the SCA regulations take effect on 14 September 2019 in Europe.

“Stripe Billing aims to mitigate this complexity and expense for European companies of all sizes by smoothing the path to SCA compliance and democratising access to enterprise-grade billing tools. Ultimately, tools like Stripe Billing represent an important element of the economic infrastructure that will facilitate the creation of a Digital Single Market across Europe.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years