Little-known global payments provider Adyen processed $10 billion worth of transactions in 2012, a new record the company points out is on par with the volume of mobile payments processor Square.
So does this mean that Adyen is becoming a threat to Jack Dorsey’s brainchild and other processors?
“In five years we’ve grown tremendously…which really speaks to what we’re bringing to the marketplace,” says Peter Caparso, president of Adyen North America.
Adyen provides its merchant clients with more than 200 payment methods, 187 transaction currencies and 14 settlement currencies across every inhabited continent. The company travels to countries its clients want to expand into, conducts market research while speaking with the big payments players about spending patterns and then partners with those players to allow payments on merchant’s e-commerce sites with localized methods.
Not only has the Amsterdam-based company grown quickly in a short period of time, but it’s done so without the venture capital funding that mainstream payment companies have received.
But Square processed $10 billion in payments with only its mobile card reader, says Gil Luria, an analyst at Wedbush Securities. Although Adyen did launch a portable card reader called Shuttle last year, the company processed its $10 billion in total, Luria says.
“It’s an impressive number, but [Adyen] isn’t a threat to anyone, not yet,” Luria says.
To put Adyen’s $10 billion annual processing volume in perspective, fellow multicurrency processor Planet Payment posted $2.3 billion in settled dollar volume processed in 2011 and $1.9 billion through the first three quarters of 2012. While both companies aim to capitalize on the multicurrency processing niche, their volumes are dwarfed by Global Payments’ $180.7 billion processed during its fiscal year 2012 that ended in May.
But Adyen’s early acceptance of EMV and its focus on mobile could push it to the forefront in the future, Luria says.
Caparso seconds Luria, saying “portability and globalization” are at the heart of Adyen’s success. As the world becomes more globalized and people are connecting across physical borders, e-commerce merchants need help handling payments in their customers’ local currencies using local payment mechanisms.
Adyen’s annual processing volume was a 35% increase from its 2011 volume. The company said it experienced a 300% increase in mobile payments on its platform in 2012, making up 10.5% of total transactions. It also claims a 58% increase in revenue year-over-year, but the privately-held company declined to provide the dollar amount of its revenue. Worldwide customers grew 55% and in North America, its fastest growing region, Adyen saw a 70% increase in new customers, including JustFab, Kachingle, Entrust and Elance last year.
In the upcoming months, Adyen plans to announce other large retail partners, says Caparso.
Many companies are taking advantage of this “flatter” world. Payelp Global partnered with SafetyPay in December 2012. SafetyPay allows consumers to use their online bank account to make purchases in their local currency on Payelp’s ecommerce platform.
And BlueSnap, formerly Plimus Inc., makes it easy for merchants of digital goods to accept payment in a variety of ways, including credit and debit, PayPal and mobile wallets.
The core team at Adyen spent 15 years working in the payments industry with Bibit before forming Adyen. Bibit, founded in 1997, provided electronic payment services to multichannel retailers. It was during this time that the team learned what merchants wanted from their payments providers, particularly during the transition period when Bibit was acquired by RBS, when it learned its most important lesson.
“When we started to adopt the RBS practices, we found we were reverting to the one size fits all model,” says Caparso. “When we got back together for Adyen, we felt with the complexity of the various new payment methods, coupled with the complexity and fast growing global marketplace, we needed to have a state of the art, real-time merchant-friendly system.”
The company became profitable 36 months after launch of Adyen, which Caparso believes validates the benefit of Ayden’s model.
“The bottom line is that we learned in order for businesses to be successful, we needed to be listening—and providing solutions—to our customers with complete commercial and platform flexibility,” he says.
Last year, Adyen quietly became a principal for Visa and MasterCard, working as an online acquirer. Adyen Payment Acquiring allows its merchants direct connectivity to the payment schemes and better reporting on payments, such as why transactions were denied. Plus this process is often cheaper since merchants are not paying an extra fee to connect with a big bank, says Caparso.
“It’s so powerful for merchants,” Caparso adds. We’re “removing an extra link in the chain.”
Adyen won’t be an acquirer for all its merchant clients; the company still works with a lot of banks around the world.