Why Adyen is One of the Most Powerful Payments Platforms

February 7, 2019

MONTHLY ANALYSIS

A 2018 study designed to understand consumers’ shopping experiences, preferences, behaviors, and the impact of digital trends, found that the demand for immersive interactions is shifting competition in retail from price points to experiences. In an increasingly connected world of demanding consumers, the ability to offer seamless and relevant experiences across borders and channels can make or break a business. To compete effectively in today’s environment, retailers must go beyond selling a product or service to delivering experiences that cater to their customers’ own unique needs.

With about 86% of US consumers leaving a store due to long lines, resulting in purchases at a different retailer or no purchase at all, approximately $37.7 billion are lost in potential sales. In addition, the study suggests that $1.1 billion in potential sales have been lost when retailers don’t support their customers’ preferred payment methods. And this is where business models built on the premise of glocalization – with Adyen being one of the most vivid examples in payments – come in.

As consumers shift to mobile, online retailers must refine their checkout experience. On average, we see that during the checkout phase, the customer drop-off rate is 9% higher than on desktop. So there is a huge opportunity for retailers to optimize their checkouts by supporting one-click payments, stored cards, user profiles and much more. If they don’t act, they risk losing out to competitors. Ultimately, shopping is all about experiences. Retailers need to understand how their customers prefer to shop and provide an experience to match. Mobile is only going to become more important as consumers become increasingly comfortable using new mobile payment methods such as Facebook or WeChat messaging apps, Apple Pay or Pay with Google. Those who provide a seamless experience across mobile, web or in-app, are giving themselves the best chance for success. – Roelant Prins, Chief Commercial Officer at Adyen

Adyen is a payments platform that provides an end-to-end infrastructure connecting directly to Visa, Mastercard, and consumers’ globally preferred payment methods. It serves companies like Facebook, Uber, Spotify, Cathay Pacific, Grab, Gap, Freelancer.com, Lush, Dunkin Donuts, Groupon, GoFundMe, Mango, Booking.com, easyJet, Crocs, Spotify (Adyen partners with Spotify for payments processing across 60 countries), TransferWise, SurveyMonkey, BlaBlaCar, Casper, Etsy, Air Canada, Upwork, Quicksilver, Superdry, and eBay, which replaced PayPal with Adyen as its primary payments provider in 2018.

But the list of hotshot clients is not what makes Adyen the éminence grise, or gray cardinal, of payments. It’s Adyen’s all-in-one suite that empowers merchants to do business across channels and borders. Adyen offers a single platform for merchants to accept payments in-app, online, and in-store, empowering them to create unified, immersive experiences.

Unified commerce is a major growth driver for Adyen. In H1 2018, Adyen’s total processing volume reached €70 billion – up 43.1% YoY. POS processed volume was up 120% YoY with accelerated traction in the offline segment.

Through its single platform, Adyen provides a holistic view of payments, regardless of sales channel, delivering unique shopper insights in real time. The ability to view shoppers in real-time has enabled one of Adyen’s clients – Westwing – to fight fraud without blocking genuine customers. As a result, the company’s refusal rates went down from 12% to 0.2%. Adyen platform uses data and machine learning to optimize each transaction, blocking fraud and increasing authorization rates. This leads to an average uplift in revenue of 1.4%.

Global company. Local focus.

Unified commerce is the cornerstone of Adyen’s mission. With the aim of helping businesses grow, in 2006, Adyen’s co-founders set out to build an infrastructure directly connected to card networks and local payment methods around the world. The Adyen platform enables merchants to accept payments in a single system, enabling revenue growth online, on mobile devices, and at the POS.

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Source: Adyen, 2019

As a business built to empower unified commerce and immersive experiences, Adyen has hit some of the most important pain points in e-commerce:

  1. A patchwork of systems that the existing payments technologies market consisted of.

  2. Regional disparity in payments options preferences among consumers.

adyen-one-of-the-most-powerful-payments-platforms-2.jpg

Source: SaleCycle, 2019

The combination of preferred payments methods for online and offline shopping varies across regions and nations. By 2025, purchase volume for goods and services by Visa, Mastercard, UnionPay, American Express, JCB, Discover, and Diners Club is expected to reach $54.9 trillion. BlueSnap emphasizes that card usage varies significantly from one country to the next, with lower usage in Germany, Japan, and Mexico; and higher use in Australia, Korea, Saudi Arabia, and the UK. E-wallet payment acceptance varies as well.

Adyen enables acceptance of every popular payment method across regions and has demonstrated a solid growth of revenue based on billing location across (almost all) regions. In H1 2018, the total revenue grew by more than 57% YoY. Asia-Pacific has demonstrated the biggest leap – Adyen’s H1 2018 revenue in the region grew by more than 100% YoY.

Adyen’s impressive growth in Asia-Pacific is particularly interesting in a grand scheme of things where foreign companies with deep pockets seem to fail in Asia’s biggest economies. Many leading American digital firms, including Google, Amazon, eBay, and Uber, having successfully expanded internationally by introducing their products, services, and platforms in other countries, have all failed in China, the world’s largest digital market.

Home to over 4.5 billion people – 60% of the world’s population – Asia-Pacific is a diverse region with seven of the world’s ten most populous countries. It’s also one of the most fragmented regions when it comes to payments. Yet despite its outward complexity, Adyen emphasizes, the region offers a number of opportunities for businesses that want to tap its enormous market potential with relatively high speed and little investment. Adyen notes that markets such as China, Japan, Indonesia, and the Philippines don’t require businesses to set up a local entity to start connecting with local shoppers. From a payments perspective, this means that with the right payments partner, connecting with shoppers in these markets is pretty straightforward.

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Source: Adyen (all amounts in € thousands)

Here is a map demonstrating precisely why Adyen is so successful across regions. Not only does Adyen support the acceptance of the most popular payments functions across regions, but it also understands the intricacies of the e-commerce market in every country.

Source: Adyen

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North America

North America (the US, Canada, and Bermuda) is home to over 357 million people with a total GDP of $19.6 trillion. There are currently 223 million people shopping online, with 30 million more new users expected by 2021.

United States

  • Visa

  • Mastercard

  • American Express

  • Discover

Canada

  • Visa

  • Mastercard

  • Interac Online (eCom)

  • American Express

Europe

Online retail in Europe is growing exponentially, especially in Southern Europe, where growth is fueled by m-commerce thanks to its young population. When it comes to cross-border purchases, Luxembourg is in the lead, with 74% buying from overseas retailers. Russia is also emerging as a market open to buying from international sites. Swiss, Belgian, Irish, Dutch, and German shoppers are open to making orders across borders. Spanish shoppers still prefer to shop domestically.

Austria

  • EPS

  • SEPA direct debit

  • Visa

  • Mastercard

Belgium

  • Bancontact

  • Mastercard

  • Visa

  • Wallet

Czech Republic

  • Mastercard

  • Online banking

  • Visa

  • Wallet

Denmark

  • VISA Dankort

  • Mastercard

  • Wallet

France

  • Cartes Bancaires

  • Visa

  • Wallet

  • Mastercard

  • American Express

**Germany: **Germans are some of the most open cross-border shoppers in the world, with over 50% of online retail purchases taking place on an international website. Yet despite this willingness, Germany is one of the most fragmented markets when it comes to payment methods.

  • Sofort

  • SEPA direct debit

  • Wallet

  • Giropay

  • RatePay

  • Visa

  • Mastercard

Finland

  • Finnish e-banking

  • Visa

  • Wallet

  • Mastercard

**Italy: **Italy is the fourth biggest e-commerce market in Europe. More than 80% of Italians are now online. In 2016, Italy had 13 million frequent online shoppers spending about €1,400 each. Italian shoppers are increasingly mobile. Prepaid cards are also popular due to (perceived) better security and decreased costs.

  • Visa

  • Mastercard

  • Wallet

  • American Express

The Netherlands

  • iDEAL

  • SEPA Direct Debit

  • Mastercard

  • Visa

  • Wallet

Norway

  • Visa

  • Mastercard

  • Klarna

  • Wallet

Poland

  • Pay-by-links

  • Visa

  • Mastercard

  • Wallet

Portugal

  • Multibanco

  • Visa

  • Mastercard

Russia

  • Visa

  • Qiwi

  • Yandex Money

  • Wallet

Spain: In 2017, Spanish B2C e-commerce turnover grew by 8% to €28 billion.

  • Visa

  • Mastercard

  • Wallet

  • American Express

Sweden: While cards remain the most popular way to pay online, Sweden is at the forefront of open invoice payments (Klarna). This payment method is expanding internationally and is now the second most popular method after cards and the most popular in retail.

  • Mastercard

  • Klarna

  • Visa

  • Online banking

  • Wallet

Switzerland

  • RatePay

  • Mastercard

  • Sofort

  • Visa

  • Wallet

Turkey: Credit cards are popular accounting for 80% of e-commerce transactions. About 65% of these are paid in installments. Prepaid cards are currently enjoying the highest growth.

  • Visa

  • Mastercard

  • Troy

The United Kingdom: UK’s shoppers are world leaders in terms of mobile shopping and debit cards are popular, with the average shopper holding between two to three cards per person. Cards account for approximately 90% of all online payments, e-wallets are another popular option, and online banking is virtually non-existent.

  • Visa

  • Mastercard

  • BACS Direct Debit

  • Wallet

  • American Express

Latin America

LATAM is one of the top regions in the world for growth. LATAM is economically dominated by Brazil and Mexico. What’s critical to success across LATAM is the localization of both marketing and payment methods in some key markets in order to improve authorization rates and customer experience.

**Brazil: **Brazil is the largest online market in Latin America, representing over 40% of the region’s e-commerce sales. There are more than 200 million active cards issued in Brazil, with credit cards representing around 45% of the total. Up to 80% of all e-commerce payments in Brazil are made in installments.

  • Visa

  • Mastercard

  • Boleto

  • Elo

**Mexico: **The country’s online retail revenues are forecasted to grow to $6.7 billion in 2019, with online buyers increasing from 10.1 million to 21.1 million. Mexico is one of 22 countries leading the trend toward m-commerce. And young adults made 88% of smartphone purchases. The country has one of the largest mobile markets in LATAM, with one-third of all residents using smartphones.

  • Oxxo

  • Visa

  • Mastercard

  • American Express

Asia-Pacific

Asia-Pacific is one of the most fragmented regions when it comes to payments. Regardless, the region offers a number of opportunities for businesses that want to tap its enormous market potential. With the right payments partner, connecting with shoppers in China, Japan, Indonesia, and the Philippines is pretty straightforward.

Australia: Australian shoppers are the second-most likely in the world to buy online from overseas businesses and cross-border e-commerce is expected to grow at an average of 29% per year until 2020.

  • Visa

  • Mastercard

  • American Express

  • POLi

China: China is the biggest retail e-commerce market in the world and is expected to reach $1.7 trillion by 2020. The country is a driving force behind m-commerce.

  • Alipay

  • UnionPay

  • WeChat Pay

  • Visa

  • Mastercard

Hong Kong

  • Visa

  • Mastercard

  • UnionPay

  • American Express

India

  • Visa

  • Mastercard

  • Online Banking India

  • American Express

Indonesia: With a population of 200 million, Indonesia offers one of the largest market opportunities in Asia. It’s poised for enormous growth, with the market size expected to rise to $11 billion in 2019.

  • ATM payments in Indonesia

  • Visa

  • Alfamart convenience store

  • Mastercard

  • Doku wallet

Japan

  • Visa

  • Mastercard

  • Konbini

  • JCB

  • American Express

**Malaysia: **Malaysia is enjoying rapid e-commerce growth driven largely by mobile. Malaysian shoppers are comparatively open to cross-border shopping, with 40% of online transactions being cross-border. And among Southeast Asian markets, Malaysia is second only to Singapore in terms of credit card penetration and usage.

  • Online banking

  • Visa

  • Mastercard

New Zealand

  • Visa

  • POLi

  • Mastercard

The Philippines: As the second most populous country after Indonesia, its e-commerce market has had an annual growth rate of 101.4% until 2018. This is driven mainly by high mobile penetration. Filipinos are among the most prolific mobile users in the world, and smartphone penetration is currently at 30%.

  • Mastercard

  • Visa

  • Bank Transfer

  • GCash

Singapore

  • Visa

  • Mastercard

South Korea: South Korea is the third-largest retail e-commerce market in Asia-Pacific (after China and Japan). The average South Korean shopper holds an average of four credit cards and around 80% of online transactions are card-based.

  • Korean Cards

  • Visa

  • Bank transfer

  • Mastercard

Thailand: Thailand has a huge potential for growth in e-commerce. Online retail transactions currently account for as little as 0.5% of the industry, but it’s growing by an estimated 30-35% annually. With internet penetration estimated at 60% and mobile being the primary access device for most new shoppers, m-commerce is key.

  • Visa

  • Online Banking Thailand

  • Convenience stores in Thailand

  • Mastercard

Adyen found that by implementing local payment methods, many companies saw a revenue uplift of about 7%. Cambridge Satchel Company saw checkout conversions grow by 5% after implementing Alipay for Chinese shoppers.

As BlaBlaCar, for example, expanded across Europe, the company entered markets where local payment methods dominate over international credit cards. In the Netherlands, for example, iDEAL accounts for over 60% of online transactions, and in Poland, online banking methods such as Dotpay account for 45%. Adyen enabled BlaBlaCar to move into new markets – it was as easy as flipping a switch and adding a new payment method. With Adyen, BlaBlaCar expanded into six countries in a single year.

Empowering merchants to delight customers. In every way.

The power of Adyen is not just in a unique position to be a global company that enables merchants to do business successfully across borders on a local level. \ \ Adyen has a set of powerful technology partners that address a variety of other needs. Adyen allows merchants to integrate with other service providers – from CRM to stock management. Merchants can accept payments through any platform, sales channel, and in any country.

Adyen’s platform partners include Centra, IBM WebSphere Commerce, Salesforce Commerce Cloud, Magento, Oracle Retail, Zuora, Tulip, and more. Service partners include Javelin Group, K3 Group, Astound Commerce, eNext, Itelios, and others.

Adyen, powering unified commerce, built a single platform for merchants to manage all customer communications, allowing them to create one consistent experience across channels and devices – from customer interface, right through to backend technology. Which means, instead of having multiple interfaces, merchants need to manage only one platform – simplifying and unifying the shopping and buying experience.

In H1 2018, Adyen grew the mid-market portfolio while also making product improvements tailored to this segment. One of these product improvements was in the form of Adyen Checkout, a software development kit (SDK) that allows merchants to quickly board onto its platform, even when lacking significant development resources.

The company also increased its focus on partnerships – with e-commerce platforms that have significant customer bases such as Magento, NetSuite, and Salesforce – by building committed development groups.

In H1 2018, Adyen also launched the Terminal API, which is integrated with cloud-based POS systems that retailers use in-store. With Terminal API, payment transactions are run entirely over the internet. This makes it much easier for retailers to create new and more personal shopper journeys in their stores – examples include ‘endless aisle’ concepts (experience where retailers can ship from the supplier to the shopper without expanding their inventory or losing valuable floor space to storage), or self-checkout using smartphones. Companies have found endless aisles to increase sales by up to 14% thereby giving retailers more benefits if their payments partner can connect their online and offline sales channels in a single system.

With every solution and feature, Adyen takes another step towards locking in its customers and their customers – in different ways – but always locking in. Out of everything that makes Adyen a gold standard of how cross-border commerce can and should be run, let’s look at just a couple interesting and important business-driving solutions:

Adyen MarketPay

With Adyen MarketPay, Adyen emphasizes the dominating role of online marketplaces in the e-commerce landscape. Adyen MarketPay is a flexible end-to-end payments solution allowing online marketplaces to control the full payment stack, own the customer experience, easily sign up & pay sellers, and expand into new markets. The company states that nearly 40% of shoppers start on marketplaces and 97% of US shoppers consistently use marketplaces for online shopping.

A successful marketplace has to operate across borders, which, with complexity and disparity of requirements for the marketplace model, requires the ability to quickly sign up and settle funds to sellers. MarketPay brings simplicity to marketplaces. It reduces the friction around signing up a seller while handling the complexities around payments so marketplaces can focus on what matters: growing their business.

Adyen MarketPay is helping leading marketplaces improve global payments in the following ways:

  • Automated sign-up in seconds

  • Easily split funds

  • Flexible payouts

  • Fully compliant solution

Adyen RevenueAccelerate

In 2016, Adyen launched RevenueAccelerate, a suite of automated tools designed to significantly increase credit card approval rates globally.

Adyen shares that globally, ~5% of online credit card transactions fail due to flaws in the legacy payments system. RevenueAccelerate is designed to turn this 5% into revenue, with no input required from the merchant.

RevenueAccelerate sits at the core of the Adyen payments platform, which gives Adyen maximum control over the full payment flow. It can collect a much broader range of transaction data than other systems, which fail due to a lack of information. RevenueAccelerate even uses Adyen’s data to selectively retry the declined transactions that are likely to be successful with a follow-up attempt.

RevenueAccelerate uses this data to build intelligent rules to adapt the format and the route of each payment request in real-time, ensuring the highest chance of an authorization.

Adyen claims that revenue gained on Adyen transactions by global e-commerce organizations is 1.43%.

The RevenueAccelerate suite includes:

  • Smart logic issuer

  • Intelligent payment routing

  • Dynamic card validation

  • Account updater

  • Auto retries

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Source: Adyen

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