Stripe Announced a New Service to Pay People Immediately
Stripe is a six-year-old tech company on a mission to make digital payments as simple as possible for all businesses.
And yesterday, they made some serious headway with the launch of Instant Payouts — a service that allows marketplaces currently using Stripe’s payments API to pay contract workers “within minutes.”
This isn’t new, it’s just being unleashed
A few customers have been using a beta version of Instant Payouts for months now, including Lyft, Instacart, and Postmates.
In Lyft’s case, this technology enables its drivers to deposit earnings in the bank (and start making it rain) the second they finish a shift, as opposed to waiting the 2-3 business days payouts usually take.
Since integrating the service last November, the pink moustache has sent over $500m to drivers this way.
What makes this faster?
Almost all of today’s payment services use the automated clearing house network (ACH) to transfer money, a fairly outdated system where money is transferred from Bank #1, electronically sorted by the clearing house (the middle man), and then sent to Bank #2 (its intended destination).
In hopes of keeping up with the times, the ACH network is switching from one daily submission deadline to 2 (morning and afternoon) later this week… meaning payments sent in the morning can be settled by the evening, as opposed to the following business day.
Still, legacy payment systems and banks better be on notice because companies like Stripe, Square, and Venmo/Paypal are coming in hot and adding an extra shift isn’t good enough.
Fun facts: Stripe was founded by a couple of brothers brothers, Patrick and John Collison, born in 1988 and 1990, respectively. The company’s 6 years old with a $5B valuation.