California headquartered payments giant Stripe is aiming at a big bang entry into India’s payments ecosystem and that too through State Bank of India’s payments arm – SBI Payments Limited. According to sources, Stripe is looking at entering a joint venture with State Bank of India for a sizeable stake in SBI Payments Ltd. “While the quantum of stake is still under negotiations, Stripe wants to be a large shareholder in the payments joint venture of SBI,” said a person familiar with discussions between Stripe and SBI.

Presently, SBI Payments is a joint venture between SBI and Hitachi Payments Services Private Limited, with SBI holding 74 per cent stake and the rest held by Hitachi.

Deal details

Highly placed sources aware of the matter say Stripe is keen on picking up 30 – 40 per cent stake held by SBI in the payments business. “Discussions are on with Reserve Bank of India regarding the same,” said another person aware of the development. It is gathered that the regulator may have provided feedback to the global payments major on certain matters pertaining to risk management and data protection. “Stripe is working on these aspects and will approach the regulator soon to get a buy in for the investment in SBI Payments,” said the source quoted above.

The deal is expected to happen through Stripe’s Indian subsidiary namely Stripe India Private Limited which received RBI license to operate as online payment aggregator in January 2024. While the timelines for the transaction seem fluid, sources say the deal will hinge on regulator’s comfort with Stripe considering that it would be a massive collaboration.

Emails sent to SBI and Stripe remained unanswered till press time.

Advantage Stripe

Valued at about $50 billion, Stripe is globally among the largest entities in the payments infrastructure space with a strong foot hold on merchant acquisitions. “An association with SBI would give Stripe the scale to operate in India and a huge access into the B2B and B2C payments landscape,” said a source.

In 2010, Stripe received its seed capital from Y Combinator and marque investors such as Elon Musk, Peter Thiel, Sequoia Capital, Tiger Global and General Partners being part of the cap table.

About SBI Payments

Incorporated as JV between SBI and Hitachi, SBI Payments is among India’s top players in the payments space with 2.93 million merchant payment acceptance touch points and over 1.14 million POS or point of sales machines in FY23. It is among the most profitable payments companies in India.  Incorporated in 2019, the JV has a life of five years life which is said to be ending 2024. Hitachi provides technology, infrastructure and backend payments support.

Sources say that Hitachi may remain invested in the JV, though it may partly monetise some stake if approached by Stripe. “Hitachi may continue to provide technology and backend support for SBI Payments irrespective of the amount of stake the company decides to hold,” said a person aware of the matter.

Denial from SBI

businessline had made multiple attempts to get a response from State Bank of India while working on the story but the bank did not respond. The following clarification was sent by them on May 23:

“The State Bank of India categorically denies any engagement with Stripe India Pvt. Ltd., a subsidiary of Stripe, USA, concerning collaboration with SBI Payment Services Pvt. Ltd.”