Thank you for the opportunity to speak to the committee today.

Stripe is a technology company that builds economic infrastructure for the Internet. Businesses of every size, from small start-ups to public companies, use our technology to accept payments, fight fraud and manage their businesses online.

Stripe began operations in Canada just over a decade ago. At the time, one of the biggest challenges for online businesses was accepting payments, which we simplified with just seven lines of code. Since then, our platform has grown to provide a range of services, including fraud detection, in-person payments, subscriptions, calculation of tax and more.

We are proud of our ability to support Canadian companies, who have grown their payment volume on Stripe more than 50% in the last two years. Last month we announced a new Toronto office. We are also hiring to support thousands of Canadian businesses.

Canada is an increasingly competitive payments market. At last count, there were over 50 companies offering payments processing, from major banks to well-known technology companies and specialized players. Of the fees that companies like Stripe charge for card payment processing, the vast majority, 80% to 90%, goes to the bank that issued the card. The remainder is used to cover the processor's costs, including liabilities for fraud or other losses that we bear.

In December 2023, Visa and Mastercard announced that they would lower certain credit card interchange fees for a subset of small businesses in Canada. Card network scheme fees and interchange fees vary based on more that 50 factors, including type of card, transaction type and industry category. They often decrease and increase multiple times a year.

Stripe offers two pricing models. The first is interchange-plus pricing, where network fees and other costs are passed through to the businesses. Stripe is passing the recent interchange reduction to businesses on this pricing model. The interchange-plus pricing model also exposes businesses to price increases, some of which have been material recently.

The second is standard pricing. This is our flat rate model that does not change with the transaction-level network cost fluctuations. Our goal with standard pricing is to make it seamless for small businesses to get started and accept payments. This pricing model is simple and predictable. It allows small business owners to focus on running their business.

Stripe's standard pricing also helps small businesses grow, because it includes value-added services that combat fraud and improve credit card acceptance rates, and updates card details to reduce churn. Businesses using Stripe's latest checkout suite saw 11.9% more revenue on average.

Over recent years, Stripe's flat rate standard pricing has shielded businesses from processing costs that have increased overall. In the last year alone, Stripe's costs for credit card processing in Canada for businesses on standard pricing increased by 0.036% , primarily due to recent tax-related changes. By comparison, the small business interchange reduction is about 0.02% when averaged across Canadian businesses on Stripe's flat rate standard pricing. This means costs have increased in aggregate. However, businesses on our standard flat rate pricing will see no changes to their costs. Stripe's standard pricing for domestic card payments hasn't changed in over eight years.

Across Canadian businesses on Stripe's flat rate standard pricing, the annual interchange reduction collectively makes up less than one-tenth of one per cent of the total $1-billion reduction promised by the government.

When we saw the news of the interchange fee reduction for a subset of small businesses, we thought long and hard about the best approach. For our interchange-plus pricing, it was a straightforward decision to pass on the reduction to users. That's how that pricing model works. For flat rate pricing, we concluded that the predictability and simplicity of a single price is more important than a small reduction. If we were to start passing through cost changes to all users, it would effectively be the end of flat rate pricing. We believe this would be to the detriment of businesses who have chosen Stripe for predictable prices as well as the many other services we provide.

We're deeply committed to Canada. We continue to compete energetically in the market and invest in technology to help Canadian businesses grow, export and manage their revenue.

Thank you, and I do look forward to your questions.