Data Dive: The Things Edition – Stripe, Starbucks And The Comptroller’s Concerns

Innovation never sleeps and, from the current shape of things, it is also safe to assume that it isn’t much for taking a summer vacation, either. The big news of the week was Prime Day, which reports indicate marked another record break for Amazon, particularly in regards to sales of the various Alexa-powered AI devices.

But, as millions of Americans are watching the Amazon boxes rolls in — and finding themselves wondering why, exactly, they felt such a burning desire to purchase a pressure cooker on a Wednesday — the time has come to review the other news that crept into the market last week.

Trying new things was the name of the game. Sometimes change looks good, like Stripe; sometimes it looks a bit hiccupy, like Starbucks. And sometimes it looks a bit worrisome — particularly if one happens to be the Comptroller of Currency.

Stripes Raises Its Global Game

U.S.-based payments firm Stripe made a big jump on Chinese eCommerce this week with an announced partnership with Alipay and WeChat Pay. Merchants worldwide on the Stripe platform are now open for business through both, and the dual launches were timed to coincide with Stripe’s Hong Kong launch.

Credit cards — which are limited in China to state-backed Union Pay cards — are only used by a fraction of Chinese consumers. Alipay and WeChat pay, on the other hand, claim 520 million and 600 million users respectively.

“If you are an internet business, this unlocks a new, vast customer base,” said John Collison, president and co-founder of Stripe, in an interview.

Stripe is currently valued north of $9 billion and is active in 25 nations. The firm has been in business since 2010 and makes its money charging a small fee on every card transaction it processes.

“If we can help a business double [its] sales, then it doubles our revenue from that business,” Collison noted.

Alipay and Stripe previously paired to enable U.S.-based merchants to accept Alipay payments on the Stripe platform. The latest partnership will open the Alipay experience up globally, and add WeChat’s robust and growing customer base into the mix.

“Demand for services from Chinese consumers is at [an] all-time high,” said Souheil Badran, president of Alipay for North America. Badran also noted the new partnership between the firms will allow Chinese consumers first-time access to hundreds of thousands of Stripe-powered merchants around the world.

Starbucks Mobile Order-A-Headache

Trying new things may be good for the soul, but if you are Starbucks, that doesn’t mean growth. In fact, the coffee chain has seen its fair share of operational headaches as of late.

In this case, the headache comes from the order-ahead technology that has made Starbucks a consumer favorite — and left its staff feeling a bit tapped out. Understaffing — according to a new survey commissioned by entering CEO Kevin Johnson — has become an endemic problem at Starbucks. The chain finds itself critically short on baristas and struggling to keep up with pick-up stations during peak hours.

Executives are saying this is likely a direct result of the mobile order-ahead service that cuts into already busy morning commuter hours.

U.S. traffic declines have plagued Starbucks for the last two quarters, and the survey comes as part of an effort to bolster greater efficiency. It has also generated a few internal surprises.

“All of our metrics show we are moving in the opposite direction of what the survey claims,” said Reggie Borges, spokesman and manager of global corporate communications for Starbucks.

Starbucks has pledged to up its staff by 15 percent immediately with more staffing increases promised down the road. That, however, has done little to allay employee concerns about staffing levels — 75 percent of polled workers said locations were not staffed adequately. Within the last three months, 62 percent of employees shared that the understaffing issue is impacting quality customer service.

The Comptroller Urges Caution Around FinTech 

The Office of the Comptroller of the Currency (OCC) — the banking industry’s leading governmental regulator — has some concerns about banks, FinTechs and the increasing connection between the two.

According to the OCC’s latest semi-annual report, the regulator is concerned that FinTechs — and the orientation toward speed and easy access to service — could be driving banks from cooperation and competition toward taking on more strategic risk.

“Strategic risk is elevated, as banks make decisions to expand into new products or services, consider new delivery channels or otherwise search for sustainable ways to generate returns,” said Keith Noreika, acting comptroller at the OCC. In addition, he noted his agency “will pay close attention to these key risk areas over the next six months.”

FinTech firms and their products are still new and require greater care by banks, according to the OCC’s warning, particularly when it comes to underwriting loans for consumers and small businesses.

“Credit risk is relatively stable overall,” said Noreika. “Nonetheless, we must remain vigilant.”

Vigilant, and focused on increased new ground where the lines between FinTech startups and traditional banks are starting to run thin, that is. How the OCC will address those issues — and whether it will create the first national bank charter for financial technology firms — remains to be seen.

The creation of such a charter has been notably controversial and already touched off lawsuits from state banking regulators. As of yet, Noreika and the OCC have made no official comment on those charters, though the acting comptroller is expected to provide further explanation in a July 19 speech.

Noreika will serve as acting head of the OCC until the U.S. Senate confirms President Donald Trump’s nominee for comptroller, Joseph Otting.

So, what did we learn this week?  New things can be great — Stripe, for example, if one has adequately planned for changes. If preparations are lacking, people can get mad quickly (or employees, in Starbucks’ case). And, of course, planning can only take one so far. Just ask the team at the OCC, because it is hard to plan for a new thing that no one even saw coming ten years ago.

Now, off to figure out those pressure cookers.