💰 Batch #4: Stripe, Amazon, and The Compounding Nature of Digital Infrastructure
Stripe hasn’t won yet. It’s still day one at Amazon. What the Amazon-Stripe partnership tells us about how digital infrastructure providers grow.
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Earlier this week, Stripe announced an expanded partnership with Amazon.
Under the new agreement, Stripe will become a strategic payments partner for Amazon in the US, Europe, and Canada, processing a significant portion of Amazon’s total payments volume across its businesses, including Prime, Audible, Kindle, Amazon Pay, Buy With Prime, and more.
Stripe will expand its use of Amazon Web Services, Stripe’s long-standing cloud infrastructure provider, to run and grow its business while reliably serving millions of internet companies.
In this Batch, I’ll dive into what Stripe and Amazon announced, and what it tells us about the digital payments and cloud services markets.
The Amazon-Stripe Announcement(s)
Let’s start by all admitting that we really have no idea how much of Amazon’s total payments volume (TPV) Stripe will process. Obviously, things can change in the future, but what we can definitively say right now is that Stripe may process some payments for a few services in some regions in which Amazon operates. There are some important caveats to the announcement:
Amazon’s core retail business is not included in the list of services Stripe will be used for.
Stripe is eligible to process “a significant portion of” Amazon’s own subscription products (e.g., Prime, Audible, Kindle). “Subscription services, including Amazon Prime, generated almost $32 billion in revenue in 2021.” That’s impressive but it’s a far cry from the $746B in global retail sales Amazon is expected to do in 2023.
Under the new partnership, Stripe is also eligible to process payments for Amazon’s digital wallets (e.g., Amazon Pay, Buy with Prime) that can be used on non-Amazon websites. Amazon has been expanding Buy with Prime access recently, bringing it out of invite-only mode, and I expect to see both Buy with Prime and Amazon Pay as supported wallets on Stripe shortly (like Adyen does).
This is distinct from some of Amazon’s other retail-focused partnerships. Both Affirm and Venmo, for example, are offered at the point of sale on some of Amazon’s retail checkout pages.
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