Adyen’s Quiet Payment Processing

by Raymond Pucci 0

Pull back the payments processing curtain. Many consumers would be surprised to find Adyen busily handling both online and POS payments, and there’s a good reason for this as the following article describes.

On a digital world map in the lobby of an Amsterdam office building, you can watch the synapses of capitalism’s hive mind fire in real time. Pop: A small bubble containing Airbnb’s logo flashes over Rio de Janeiro, signaling a payment processed on behalf of the hotel marketplace. Pop: There’s a monthly bill paid to Vodafone in London. During a busy second, 100 transactions can flash across the map. The daily average is 7 million. This is the headquarters of Adyen, a payment processor whose 4,500 customers include many of the world’s best-known tech companies and largest retailers. Though virtually unknown to consumers, the 10-year-old company has quietly grown to handle $50 billion in transactions a year, twice the volume of rival Stripe and 40 percent more than Square . And unlike those companies, Adyen turned a profit last year (€40 million, or $45 million).

The company works with 150 currencies and 250 forms of payment, more than larger processors, including Worldpay and Chase Paymentech. Businesses like those and First Data dominate the global market, each handling billions of transactions a year. Adyen is tiny by comparison but has a big advantage: It handles every step of a credit card payment, from the checkout counter or website taking your order to the bank authorizing the payment. Most processors have to use one or more intermediaries to handle fraud detection, request approval for payments from card issuers, or transfer funds to merchants. Adyen’s greater control has helped reduce failed payments to its clients, says co-founder and Chief Executive Officer Pieter van der Does.

Think of Adyen as a deft utility player in the game of payments processing. They do many things and they do them right. While not having the star recognition and cache the likes of First Data, Chase Paymentech, Vantiv, and Worldpay, they achieve impressive results for merchants by boosting transaction conversion rates and reducing chargebacks. Adyen is highly vertically integrated, and gained much credibility and growth by handling leaders of the sharing economy, Uber and Airbnb. Don’t expect them to be a secret outside the payments world much longer.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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