Here's the next key challenge for Stripe, the hot payment startup whose valuation keeps soaring

Payments company Stripe is Silicon Valley's latest startup success story: The company is in discussions to raise a new round of venture funding that would value it at $5 billion, according to a Re/code report.

While Stripe appears to be having no trouble attracting financing, a key effort for the company going forward is likely to focus on boosting the amount of transactions on its platform.

Stripe's technology serves as a "gateway," letting websites and online businesses accept payments from anybody, whether they're using a credit card, Bitcoin, or even Apple Pay. This is super critical as more and more consumers do their shopping online.

PayPal is still the biggest player in the room, with a whopping $61.4 billion in transaction volume in the first three months of the year, according to this chart.

Stripe was doing about $1.5 billion in annualized transaction volume about a year ago, according to a report in PandoDaily that cited anonymous sources.

A Stripe spokesperson declined to provide a current transaction volume figure, but said that Stripe processes "billions of dollars a year for thousands of businesses" that range from start-ups to Fortune 500 companies.

Stripe's partnership with Apple for its new mobile payment service is sure to help. And Stripe also counts Facebook and Twitter as partners.

Transaction volume is critical in this business. Being a payment processing "gateway" is a low-margin business (banks, credit processing services, and all the other middlemen have to get paid somewhere), meaning that you have to have a high transaction volume to make money.

While Stripe doesn't have the tremendous market share of PayPal, it has two things going for it, says Business Insider Research Analyst John Heggestuen:

First, it's really simple for a business to get started using Stripe, and second, it's easy for developers to customize Stripe's technology for their own needs - which is super important because not all online businesses have the same needs. And PayPal has long been notorious for not working well with outside developers, Heggestuen says.

PayPal has been using its BrainTree mobile payments service, obtained via acquisition, to compete more directly with Stripe.

But Heggestuen describes PayPal's pace of product improvements as "lackadaisical," betting on the fact that they're already so big. That gives Stripe a fighting chance.