Postmates added $70 million in revenue and saved $3 million in network fees with Stripe

After running an A/B test on auth rates, Postmates selected Stripe for its payments platform

postmates and stripe logos
  • Postmates added $70+ million in revenue with Stripe Adaptive Acceptance, Card Account Updater, and Smart Retries in the last 12 months
  • Postmates saves $3.3 million annually in card network fees with Stripe’s payment consultation services

Postmates offers a leading on-demand delivery marketplace for customers to find and purchase from local restaurants and stores across 4,200 US cities. Postmates needed a payments platform that was robust enough to handle multiple payment methods, recurring payments, instant courier payments, and that also offered a whitelabeled KYC merchant onboarding experience.

“To provide the best customer experience possible, our product teams are dedicated to optimizing each step of the journey for our customers. At checkout, that means selecting a payment processor with the highest success rates to ensure the best customer experience,” said Samantha Phillips, Payments Product Lead at Postmates.

In a competitive industry with high customer-acquisition costs, even a small percentage increase in authorization rates would increase revenue while maintaining high customer satisfaction.

Results

Postmates ran an A/B test involving Stripe and a leading payments processor. The focus was on authorization rates across credit card networks like Visa, Mastercard, and American Express. During the testing period, Postmates examined the success across both platforms.

Phillips said, “If one customer was processed on Stripe and later processed on ‘processor B’, Postmates could compare the authorization rates for the same card fingerprint head-to-head to clearly see the payments platform with better rates. Stripe’s authorization success rate was 1 full percentage point higher than the competition.”

12 months after selecting Stripe in the A/B test, Postmates has seen an additional 2.16% uplift in authorization rates with Stripe, generating $70+ million in revenue and saved $3.3 million in card network fees. Here is a breakdown of the new revenue and savings:

+0.33% uplift from Adaptive Acceptance, leading to $11 million in revenue

“The Adaptive Acceptance innovation uses amazing multivariate machine learning techniques to optimize auth rates for Postmates by intelligently deciding when to retry transactions. That extra uplift is additional revenue for our business,” said Phillips.

+1.72% uplift from Card Account Updater (CAU), leading to $60 million in revenue

By intelligently updating the credentials on saved cards that have expired or been replaced, CAU optimizes authorization rates to keep subscription payments recurring seamlessly. In the last year, over 2 million cards were automatically updated on Postmates leading to an additional $60 million in revenue.

+0.11% Billing Smart Retries leading to $3+ million in revenue

Smart Retries is a feature of Stripe Billing that helps users retry failed subscription charges at the optimal time to increase the chances of successful payments. Smart Retries recovered more than 200,000 payments last year, leading to over $3M in additional revenue for Postmates.

$3 million in card network fees savings

“Stripe provided an impact summary including the breakdown of interchange, scheme, and Stripe fees that was specific to our pricing structure. Stripe also analyzed our transaction data, providing custom recommendations for cost savings that immediately worked,” said Phillips.

By evaluating card types, international setup, refunds & returns, penalties, and AOV, Stripe’s payments consultations services identified $3.3 million in savings for Postmates.