[abiekatz]

The textbook method to disrupt a market is through disruptive innovation. This is serving the very low end of a market with a solution that is just good enough and then moving up market.

Sustaining innovation is when a company keeps improving a product and raising the prices. Stripe is more of a sustaining innovation than a disruptive one. Typically incumbents are the ones to improve their products while raising the price, but it is also possible for a new entrant to do the same. Providing a much better user experience could potentially lead to Stripe dominating the payments market but it is really just a less hassle version of what is in place today. Payments are a huge hassle to deal with as a merchant/developer so this is still an innovation but just not a disruptive one.

Dwolla is a better example of disruptive innovation in that they are circumventing the whole credit card system which could potentially save merchants and indirectly, consumers, large amounts of money.

http://en.wikipedia.org/wiki/Disruptive_innovation

[malay]

Changing the basis of competition in the marketplace from price to convenience (i.e., ease of use) is exactly what disruptive innovation is. Not all disruptive innovations are low end.

Stripe is actually more like a new market disruption because it is bringing in non-consumers who might not have even been able to setup payment processing without their solution. The same is true of Gumroad, or Shopify.