Zendesk enters new markets and reduces costs by $1.5M annually with Stripe

Founded in Denmark in 2007 and now headquartered in California, Zendesk provides a customer relationship management solution to businesses worldwide, including Slack, GitHub, Box, Groupon, Instacart, and Shopify. The business powers billions of conversations and connects more than 100,000 brands with hundreds of millions of customers via telephone, chat, email, messaging, social channels, communities, review sites, and help centres. Zendesk employs about 4,000 people worldwide.

Products used

Global
Growth

Challenge

To control costs, Zendesk’s expansion strategy incorporates local acquiring – establishing local entities in markets the business is processing cardholders’ cards in to avoid additional costs incurred through cross-border transactions. In particular, the business is targeting expansion into lucrative markets such as Brazil and India. Zendesk also wanted to access expert advice and technical capabilities to minimise regulatory risk in new markets. “We needed a provider we could trust to be a strategic expert in regulatory changes for payments across the world, so we did not learn about them after the event or have to spend months doing our own troubleshooting in this area,” says Bryant Przybilla, director of revenue and business operations at Zendesk.

Furthermore, the business wanted to reduce card processing costs in its core markets: the United States, United Kingdom, and Europe.

Solution

When reviewing its roadmap, Zendesk realised it needed to engage a global payment provider with a solution capable of supporting its expansion strategy. The business evaluated Stripe, whose account team worked closely with Zendesk to educate key personnel and forge relationships. This close engagement prompted the Zendesk team to advocate for Stripe to its leadership team.

“We could see Stripe had the expertise to support our growth into new markets, including countries with complex regulatory regimes,” says Przybilla. “Furthermore, Stripe’s pricing structure was more compelling than that of other vendors.”

The business also welcomed the ease and intuitive nature of Stripe’s user interface and migrated to Stripe card processing in January 2022. “The implementation was so straightforward that we decided to use internal engineering resources to complete the project,” says Przybilla. “We also had access to technical experts at Stripe to answer any questions we had.” The business has migrated all card processing volumes in the US, the UK, and Europe to Stripe.

Results

Deep expertise in new markets complements technical capabilities

With expert assistance from Stripe, Zendesk has expanded its presence in the Brazilian market. “Stripe provided access to deep expertise in complex Brazil tax structures and obligations that we needed to navigate to build our volumes, particularly in the small-to-medium business segment,” says Przybilla.

The business plans to use Stripe to work with country-specific payment processing methods to complement the widely used Mastercard, Visa, and American Express systems. “We use Stripe as the information source to determine the best way to transact in different countries, and that helps us build the stories for our leadership to obtain buy-in to proceed,” says Przybilla. “We’re no longer scared to go into a new market or region because of payment processing solution limitations.”

Positioned to increase authorisation rates

Zendesk’s authorisation rates with Stripe are around 97% – a 1–2 percentage point improvement on what it saw with its previous payment processing provider. “That means we have fewer declined transactions and consequently lower churn rates resulting from our payment processor,” says Przybilla. He expects the authorisation rates with Stripe to improve further as the business ramps up local settlement and expands its presence in new markets.

Seamless login and easy administration

Stripe has also delivered benefits not anticipated in Zendesk’s original planning. For example, an intuitive interface and simplicity of use reduce log-on and administration task completion times, and enable Zendesk’s accounting teams to complete a business-critical deposit-in-transit process 30 minutes faster. “The user interface, the reporting, the ease of going in and administering is so much easier,” says Przybilla. “From an administrative standpoint, I personally would save four to five hours a quarter with Stripe, which helps considerably with work-life balance.”

Developing direct debit

Zendesk is now working to deploy Stripe direct debit functionality and anticipates saving hundreds of thousands, if not millions, per year, depending on the adoption rate. “Direct debit charges are about 700 percent lower than the charges we incur from card providers for the average credit card transaction involving our business,” says Przybilla. “So the potential savings are considerable, whatever adoption level we achieve.”

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