Have you heard of Adyen?
The company's CEO, Pieter van der Does, was recently featured in a Wired article as one of the most influential people in European tech. Speaking to the publication, van der Does said, “Someone forwarded me a tweet from a big guy in Silicon Valley saying: ‘Today I spoke to four companies who claim to be Adyen’s largest customer--wow, those guys are nailing it.'” Adyen is a global payments technology provider that handles payments for companies such as Facebook, Spotify, and others. From 2013 to 2014, Adyen's revenue nearly doubled, from $95 million to $185 million, and in 2014, the company secured $250 million from investors, valuing Adyen at $1.5 billion.
As the founder and CEO of Applico, I often speak to platform operators. This week, I spoke to Pieter about how his company provides a new type of payment infrastructure for the world's largest and fastest growing tech companies, including Facebook and Uber. We discussed those clients' special needs and the complexities involved in being a partner that helps them scale globally. Adyen is on a mission to become the invisible engine of global commerce, seamlessly connecting businesses to their customers across all sales channels and geographies, wherever people pay.
1. Make your product better than the competition.
Pieter described how the proliferation of commerce channels, particularly Web and mobile, created a maze of complexity for merchants. "The existing infrastructure that businesses worldwide rely on for accepting payments is old. As commerce has evolved, many new layers have been built on top of this older infrastructure. This means that retailers now work with a variety of different payment platforms and solutions in different countries. This patchwork causes a lot of complexity."
Pieter saw an opportunity to create an entirely new and better solution: "We built a completely new infrastructure that combines all the pieces of the payments puzzle into one single new platform." The results are dramatically simplified operations, greater access to data, and transparent, competitive pricing, which improves the experience for shoppers and increases revenue for merchants.
2. Deliver simplicity.
Adyen is the only unified e-commerce and in-store payment solution in the market. Take, for example, an international retailer with stores in 20 countries and e-commerce operations in a further 80 countries. In-store payment terminals would be provided by the in-country bank, thereby forcing retailers to work with 20 different providers to enable card payments. Twenty different contracts, 20 different methods of financial settlement and reporting, and so on.
For its e-commerce, the retailer would typically need three solutions--one to accept payments online, one for risk, and one to connect to credit card schemes. Three different contracts and relationships to manage. Furthermore, the data live in a completely different environment from the retailer's offline activities. In total, such retailers may have close to 25 different solutions in order to do business internationally.
"Enter Adyen," Pieter says. "We have completely unshackled businesses from those dependencies. With Adyen, that global brand can consolidate those 25 contracts and countless systems down to one single solution. This provides merchants with endless possibilities in terms of streamlining logistics, accessing data on customer behavior for marketing, and improving the customer experience across sales channels."
3. Enable the innovators to scale.
At Applico, we believe the platform is the business model of the future. The unicorn club is filled with them.
Adyen has plenty of platform clients, including Uber, Facebook, Spotify, and Netflix. There is no arguing that these are some of the more exciting companies in the business and technology community. However, Adyen faces two challenges in being their partner. The first is the ferocity and pace of growth these companies pursue. Secondly, their business models are very unique and require solutions specific to their platforms.
When asked what it's like leading a company providing services to the world's fastest growing startups, Pieter said, "In the fast moving, high growth curve that unicorns go through, speed to market and removing complexity are paramount. The big advantage we can offer these businesses is time to market and ability to scale quickly. So when a Spotify or an Uber rolls out in countries such as Morocco or Poland, we can be powering local payments for them from day one."
Companies like Uber can afford to pursue this type of exponential growth because of the value they provide. Uber is a pioneer in the zero-click payment experience. In describing the future of mobile payments, Pieter shared some insight about the type of payment innovation that Adyen must enable: "For example, with Uber, customers have a zero-click payment experience, meaning that once the card details have been entered, subsequent payments happen seamlessly, silently, and securely in the background."
Platforms are often referred to as two-sided marketplaces. You have the consumer paying for a producer's services. You then have the platform in the middle, facilitating the exchange of value. The money flow is very particular and distinct to each platform, so Adyen must provide a unique solution.
"Our marketplace solution is the best example of how we work with platforms," Pieter said. "Adyen MarketPay enables marketplaces to automatically split payments between buyers, sellers, and their own accounts. This is a very powerful proposition, since splitting payments normally requires a great deal of internal resources, particularly when it comes to cross-border e-commerce. Example: With a single transaction, a customer may purchase three items supplied by three sellers. These transactions then need to be split twice, between payouts for each seller and the marketplace's own commission. This means that this single transaction is split a total of six times, between four different parties--creating enormous complexity in the process. We unshackle marketplaces from this complexity, enabling them to automate the payments process and focus on the hard work of international expansion."
International expansion is no easy feat for a global platform from a payment perspective. Payment patterns vary greatly, from region to region. For instance, in the U.S. and U.K., credit cards account for the lion's share of online transactions. But in fact, for most of the world, credit cards aren't always that popular when it comes to making online purchases.
"Instead, consumers in different countries use an astonishing variety of payment methods to buy online," Pieter said. "What we have done is revolutionized global e-commerce by enabling global companies to support all key payment methods in all markets around the world--Alipay, Tenpay, and UnionPay in China, SOFORT in Germany, QIWI in Russia, and Boletos in Brazil, to name but a few. This approach has been so successful that a number of our customers are taking a 'payments first' approach to global expansion--where they offer international shipping and key local payment methods before they actually set up local operations in the market."