In Plutarch’s life of Alexander the Great, the Greek biographer relates one of the best known stories about the Macedonian king. In Phrygia he was presented with the Gordian Knot, a horrendously complicated contrivance that acted as kind of a security lock on an ancient chariot.

Accounts of how Alexander solved the problem vary: some say he slashed it through with his sword, others say he uncoupled the chariot yoke from the chariot and slipped off the knot. Either way he solved the problem that everyone else shied away from.

The problem of fixing online payment problems was a 21st century Gordian Knot. According to Paul Graham, inter alia co-founder of Y Combinator, an incubation hub for tech start ups, the problems associated with paying online were just so complex a generation of hackers avoided them.

The Story We All Know

That was until it was tackled by Stripe, a company founded in the US and which was incubated in the Y Combinator. Its founders as we’re sure you all know by now were two brothers from Ireland, Patrick and John Collison (John is interviewed in the video below). In no time at all Stripe has rocketed into the tech firmament to rival PayPal in the online payments constellation. According to the Wall Street Journal its current valuation is $1.75 billion and just last week the company announced on its blog that its payment platform can process transactions in 135 new currencies. Up until the introduction of Stripe, getting setup for online payments was a tortuous process.



Just like Alexander’s solution to the Gordian Knot, Stripe’s solution is direct and powerful if not more eloquent. Stripe has completely simplified the online payments process for anyone who is looking to sell online.

In order to appreciate what this means you need to understand a little about what is involved in setting up an online payments business. This is not a simple task. It is quite complex, consists of lots of different elements, and is certainly not cheap. Plus it can be very time-consuming and very frustrating when trying to get a resolution to issues you may have.


How Online Payments Work by Larry Ullman


What has Stripe changed?

Stripe is a complete end-to-end solution.

  • Merchants Accounts → Gone!
  • Payment Gateways → Gone!
  • Speed to Setup → Hours instead of days or even weeks.
  • Ease of Setup → Stripe’s offering is a library of APIs built by developers for developers – and in the most common languages: Java – PHP – Python – Ruby – Scala





Stripe’s code is powerfully crafted and takes on much of the work that the user previously had to do.

This is a major driver in its lightening global success. Users don’t need to work with any other online payments add-ins like payment gateways, merchant accounts etc. It incorporates everything you’ll need to use for a web based or mobile payments system.

And that other source of pain and techy angst, website integration, is also largely resolved by the ease with which the Stripe API can be integrated into the merchant’s website or mobile app.

Crucially, the merchant remains in control of the customers transactions. The customer isn’t redirected away from the e-commerce site when completing the payment, instead they do it on the site itself. This means if there’s a glitch in the process then the merchant can track it and see where it went wrong. Although this does push back some tasks and responsibility onto the user. But Stripe’s Checkout technology routes all transactional data to the company’s servers.

Stripe’s simple robustness doesn’t mean it’s limited in its applicability. The technology is being used by every conceivable type of business from global media operations like The Guardian, to NGO websites and small start-ups and one man traders.

This versatility extends to how the user charges customers. They have a range of options from one off payments, to subscriptions and charging by metre.

Stripe’s lightening ascent in the online payments market is because they’re competing with legacy infrastructure that’s evolved from pre-internet procedures and technologies. They came to this complex of problems asking a different set of questions and just like the Macedonian after cutting the knot they can turn and look out onto a world to be conquered.


Note: The diagrams above are by Larry Ullman and we think he has simplified the process very aptly. Larry was writing about Stripe long before he was employed by them in August 2013 and if you want an in-depth analysis of how Stripe can work for you, we highly recommend you read his blog.