Stripe, the $9 billion payments-processing startup, has purchased Index, an in-store-payments startup backed by the former Google CEO Eric Schmidt’s venture-capital firm, Innovation Endeavors.
Index provides software for in-store payments systems, like the PIN pads you use to pay with a debit or credit card at your local Target or pharmacy. Its biggest claim to fame is that its software for these pads can read a chip card in under a second, making for faster checkouts.
Index and its software offerings will be integrated with Stripe so that customers can manage and secure both physical and digital credit-card payments in one place — and centralize all that data too. Now, Stripe can tell its new breed of large customers that it can handle all kinds of payments.
“We really believe so much in the value of integrated technology,” Stripe CFO Will Gaybrick told Business Insider.
Terms of the deal were not disclosed, though Stripe confirmed that most Index employees were offered new roles after it closed.
Over its six-year life, Index raised $26 million from investors including Innovation Endeavors, Khosla Ventures, and General Catalyst. It was founded by Jonathan Wall and Marc Freed-Finnegan, former key executives for the Google Wallet payments-processing product now known as Google Pay.
It might be tempting to think of Index as a competitor to Jack Dorsey’s $19.8 billion Square, which also provides point-of-sale products and services. But while Square builds card readers, cash registers, and other hardware, Index is all software, helping stores manage and get more out of the sales systems they already own.
Stripe says the purchase of Index isn’t so much about physical retail but is instead a reflection of the company’s growth. Early on, Stripe was best known as the payments processor of choice for small-but-growing startups. Now, it’s moving toward deep-pocketed enterprise customers.
“This is really about us working with larger and larger users,” Gaybrick said.
To that end, Stripe also announced on Thursday a trio of new, large customers: Allianz, the German insurance titan valued at about $103 billion; Booking.com, the flagship subsidiary of the $103 billion Booking Holdings (formerly Priceline); and Zillow, the $6.8 billion real-estate search engine.
Those new accounts join Stripe’s flagship customers, including Amazon, Facebook, SAP, and the NFL, all of whom use Stripe for at least some of their payments processing. Tech startups like Lyft, Slack, and Kickstarter have also been longtime Stripe customers.
“Traditionally, [Stripe has] been associated with these high-growth startups,” said Jordan McKee, a principal analyst with 451 Research. Now, though, “you see Stripe getting pulled upmarket.”
The big idea behind the Index buy is that larger customers already have a physical presence or want the option of having one someday. Consider how the prescription-eyewear company (and Stripe customer) Warby Parker started as an online-only business and eventually opened boutiques across the US.
Meanwhile, Stripe has so far specialized in online commerce, making it easy for an app or website to accept payments via a credit card or a digital wallet like Apple Pay or Google Pay. More recently, Stripe has invested in new technologies to then analyze all those payments for possible fraud, or otherwise sift the data for useful insights.
Index’s integration with Stripe means customers can have their physical and digital payments data all in one place. Index even offers tools for IT departments to manage and maintain the PIN pads and other sales hardware. Stripe had built similar systems before, but only as one-off non-scalable projects for specific large customers.