Challenge

Turo was a trailblazer in the sharing economy when it launched its peer-to-peer car-sharing platform in 2009. Back then, delivering on its innovative concept required the company to assemble the technology behind its platform piece by piece, engaging several vendors to help manage the flow of money between multiple parties in each transaction.

By 2021, Turo had already expanded beyond the US into Canada and the UK. A confluence of market trends prompted the company to focus on enhancing the core areas of the business, including its payments stack, in preparation for greater geographical expansion.

“After the pandemic, you had a lot of pent-up travel demand, a shift toward more leisure travel, and a rental car shortage,” said Shaa Alagumuthu, Director of Engineering at Turo. “So the opportunity was there. But to make the most of it, we had to revamp our payments ecosystem.”

Turo had been using three separate providers to process payments from renters (called guests), provide payouts to car owners (called hosts), and pay out insurance claims. To eliminate unnecessary complexity and optimize its entire payments funnel, the company wanted to consolidate those functions—beginning with a single provider for guest payments and host payouts.

Any new platform would have to easily scale with Turo’s expansion plans by providing built-in international coverage, rather than the separate per-country/market integration model used by the company’s previous provider. That provider also didn’t offer a system to verify account holders’ identities for Know Your Customer (KYC) requirements, so Turo sought a solution that made it easier to manage compliance obligations. And to improve the payout process, Turo wanted to move away from its practice of converting local currencies to US dollars.

On the payments side, Turo needed a solution that supported multiple payment methods due to its global footprint. It also wanted to offer alternative payment methods—such as buy now, pay later options—that would give guests more flexibility in how they paid for their bookings. This was especially important given that the average order value for a trip is more than $300.

Finally, four separate teams within Turo rely on payments data to inform decision-making on risk, fraud prevention, trust and safety, and chargeback handling. So any payment solution would also need strong data analytics capabilities.

Solution

Turo had already been using Stripe Payments to process guest payments and chose to add Stripe Connect to create a unified platform for processing guest payments, collecting the company’s own fees, and distributing payouts to hosts. “Stripe had the products and features that could handle the complexity that comes with growing our platform’s global footprint, and offer a simplified experience—for guests and hosts and for us on the backend,” said Steven Hurd, Principal Software Engineer at Turo.

Connect provided a single, global platform that supports payouts in more than 118 countries. Turo could easily create a connected account for each of its approximately 170,000 active hosts (as of March 31, 2024) using self-serve onboarding. Connect onboarding flows are designed to accommodate customers with an international footprint like Turo, by automatically appearing in the appropriate local language and collecting the right information for local regulatory and compliance requirements—which Stripe automatically verifies. Connect’s cross-border payouts feature further supported Turo’s international operations by paying hosts in their local currencies.

Aside from improving the payout process with Connect, Turo enhanced its frontend payment processing by using Stripe’s Optimized Checkout Suite, which includes Stripe Elements—a set of embeddable UI components that improve the checkout flow and drive conversion. Because Turo can easily turn on additional payment options without any coding or development time using the Payment Element, the company plans to add buy now, pay later methods such as Klarna, Affirm, and Afterpay/Clearpay to help guests manage the relatively large average order value for a car rental. Turo is also testing Link, a Stripe accelerated checkout solution that securely saves and autofills the buyer’s address and payment details for a simpler, quicker transaction.

Turo’s integration with Payments provided additional frontend optimization through built-in features that improve authorization rates. For example, Adaptive Acceptance retries network declines in real time using optimized routing and ISO messaging, while Stripe’s card account updater automatically accesses updated card information from major card issuers such as Visa, Mastercard, American Express, and Discover. Turo also used network tokens, which create unique credentials as a substitute for a card’s primary account number (PAN), and that remain current even if the PAN associated with the network token changes.

Turo also uses Stripe Radar for Fraud Teams to detect and prevent fraud on its platform. As Turo looked to consolidate its various payment needs under one provider, the fact that Radar was natively integrated with Stripe and could be enabled without any additional code appealed to the company. Additionally, Radar’s global coverage ensured that Turo’s business would be protected as it scaled globally. ““We’ve been able to keep our fraud rate below our target thanks to Stripe. Radar for Fraud Teams also comes with built-in analytics and insights that help us understand our fraud performance and the causes of fraud trends without needing to do time-consuming manual analysis. That’s been a game-changer, as we rely on payments and fraud data to inform our company’s decision-making,” said Alagumuthu.

Finally, Turo added Stripe Data Pipeline and Stripe Sigma to support the company’s data analysis needs.

Results

Streamlined pay-ins and payouts accelerate international expansion

By consolidating pay-ins and payouts on Stripe, Turo simplified its revenue accounting process; achieved a unified and compliant payments platform for multiple markets (requiring no development work from Turo’s team to manage KYC verification); and standardized the process for enabling new payment methods for customers.

Since implementing Stripe, Turo has expanded into France through its acquisition of OuiCar and began operations in Australia. Thanks to the efficiencies created by Stripe, Turo has been able to launch its payments platform in new markets within two to three weeks, compared to the three to four months it took with its previous provider.

Now, Turo is planning to migrate the third piece of its payment system—claims payouts—to Stripe.

Improved currency management reduces cross-border processing costs 50 bps–70 bps

Consolidating its payment system with Stripe allowed Turo to use local acquiring through merchant banks based in the same country as its customers, simplifying the process for handling multiple currencies. Turo also now pays out the acquired funds into locally domiciled bank accounts to further reduce currency expenses.

4.71% uplift in revenue through Stripe authorization optimizations

Using Payment Element, Turo achieved a 4.71% total uplift in revenue during 2023 through Stripe authorization optimizations such as Adaptive Acceptance, card account updater, and network tokens. This uplift represented $114 million in recaptured revenue.

To further enhance its payment offerings for guests, Turo is now in the process of enabling Link and several buy now, pay later options.

Unified data integration through Stripe Data Pipeline

Stripe Data Pipeline’s standardized schemes and integration processes helped improve the efficiency and quality of Turo’s data reporting procedures.

Stripe creates a path for future optimization

After seeing the benefits of consolidating its payments infrastructure on Stripe, Turo is already considering ways to partner with Stripe for additional financial tasks. For example, Turo is planning to use Connect to issue 1099s to its US-based hosts for tax reporting. The company is also planning to leverage a Stripe solution to manage its global tax reporting, amid evolving requirements in Europe and Australia.