Frankfurt The Dutch payment service provider Adyen, so far mainly active in Europe, is aiming for global business. Company boss Pieter van der Does told the Handelsblatt: “We are in the process of building a global company – without taking over other companies.”
With this project, Adyen could outperform many other payment companies. Most competitors are concentrated in one region or are mainly active in the USA and Europe. There are also many mergers in the industry.
The basis for the expansion plans is the recent rapid growth. In 2021, the transaction volume shot up by 70 percent to 516 billion euros. In the second half of the year alone, it was 300 million euros, as Adyen announced on Wednesday. According to data service provider Bloomberg, the company clearly exceeded analysts’ expectations.
Adyen receives a small portion of transaction volume from merchants as a payment processing fee. This net turnover increased by 47 percent to almost 560 million euros. The profit (Ebitda) climbed to almost 360 million euros, an increase of a good 50 percent.
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Currently, almost 60 percent of sales still come from Europe. Adyen also grew significantly in the USA last year, and the company is also increasingly focusing on Asia. “While the US market is fairly unified, the Asian markets are more fragmented. It takes time to get into individual markets there,” said van der Does, who co-founded Adyen in 2006. He doesn’t think it makes sense to enter China. “But we support Chinese dealers who are active in other countries.”
Spotify, Booking.com and Zalando are among the customers
Adyen processes payments at the point of sale and, above all, in e-commerce on behalf of retailers. The company wants to offer as many payment methods as possible for online trading, such as credit cards, Paypal or purchase on account, from a single source. In this way, payment transactions should be as simple as possible for customers. Adyen also offers additional services such as fraud protection.
The company also wants to increase payment processing at the checkout, especially since more and more retailers are linking payment for online shopping and in-store. Transactions at the checkout accounted for 14 percent of the total transaction volume at Adyen.
The Adyen boss wants to take customers away from established payment companies.
(Photo: Bloomberg)
The environment is favorable for payment service providers: people around the world are increasingly paying by card or smartphone at the checkout or shopping online. The corona crisis has accelerated this change.
“The total accessible market is enormous,” said van der Does. According to van der Does, Adyen is primarily competing against the established payment companies whose customers they want to win. 80 percent of the growth comes from existing customers.
Adyen serves several big tech companies like Microsoft, Spotify and Booking.com. In Germany, customers include Zalando, Delivery Hero, Flixbus, Hugo Boss, Robert Bosch, Gorillas and Trade Republic.
Competitors include the traditional payment service providers such as FIS from the USA and Worldline in Europe as well as young payment companies such as Stripe from the USA and Checkout.com from Great Britain. Stripe and Checkout.com, both of which are not yet publicly traded, are not releasing business figures. When asked, Checkout said the company remains profitable and has tripled transaction volume again in 2021.
Share price jumps 12 percent
Stripe is valued at $95 billion (€83 billion) and is one of the most expensive startups in the western world. Checkout is valued at $40 billion. The young payment service providers attack the established competitors, among which there have been a number of mergers, with the help of new, sophisticated systems.
Adyen’s stock market value jumped up on Wednesday, most recently the market capitalization was 58 billion euros. Investors rewarded the good business figures. The share shot up by 12.4 percent to 1890.20 euros by the afternoon. It was the biggest one-day gain since the IPO, according to Bloomberg.
After the IPO in the summer of 2018, the Adyen share had risen steadily and strongly for three years, but the price fell from autumn 2021.
Investors are likely to have looked at Adyen with excitement given the poor PayPal numbers. The US online payment service reported a fourth-quarter profit decline in early February, disappointing investors. The share price then collapsed by more than 20 percent at times.
According to Adyen van der Does, he does not want to enter the booming market for purchase on account and purchase on installments. The payment methods with which consumers only pay after a delay are called “buy now, pay later” (BNPL) in specialist jargon. While purchase on account has long dominated in Germany, BNPL is gaining popularity in other countries. “We support merchants using BNPL offers. But we don’t want to build relationships with consumers ourselves,” explained van der Does.
More: Two heavyweights join forces: payment service providers Stripe and Klarna become partners.