The payments processing giant Stripe is the latest company to apply for a special purpose banking charter in Georgia.
Stripe’s application was accepted on March 31, Georgia Department of Banking and Finance spokesperson Bo Fears said in an email Monday.
San Francisco-based Stripe is likely to learn by July whether the state grants its charter request. “Pursuant to our rules, the timeframe to act on an accepted application is 90 days,” Fears said.
The charter, which is known as a merchant acquirer limited purpose banks charter, would give Stripe direct access to card networks, which means the payments processing company would no longer need to partner with banks to process credit card transactions.
Stripe’s application for the charter is an extension of its work to expand the number of banking and other partners it works with, a spokesperson said in an emailed statement.
“This application helps us ensure we have an even broader range of options to support our users—and complements the work we do directly with banking partners across the US,” the statement said.
The acceptance of Stripe’s application was earlier reported by the news site PYMNTS.
Stripe’s move follows earlier attention for Georgia’s special charter option. Milwaukee-based payments processing company Fiserv had its application for a merchant acquirer limited purpose banks charter approved in October and a Georgia official confirmed in February that the charter had attracted another applicant but could not reveal the name of the company.
At least one company has applied for the charter outside of Fiserv and Stripe, James Stevens, a partner at the law firm Troutman Pepper Locke who follows the payments industry, said in an interview Monday. Stevens declined to identify the company.
“And there are multiple other companies that are looking at this charter,” he said. “There will be several more of these that will be filed.”
The charter gives the applicant the power to undercut competitors on price because they will no longer need to partner or share revenue with banks, according to consultants who follow the payments industry.
Stripe’s application will almost certainly encourage other companies to apply, but bigger payments players like Fiserv and Stripe currently have an advantage, Stevens said.
“There is a risk for the card networks if the banks that they grant membership to are not able to stand behind their obligations,” he said. “It's going to be much easier for larger, more established players to get these charters, at least initially.”
“I think that as more of these bigger players get operational, my expectation is this will open the doors for others to follow their lead,” Stevens said.
