Adyen has certainly seen a lot of growth, and although the global payments platform is based in Amsterdam, North America is actually its fastest growing region with 70% year-over-year net revenue growth, Brian Dammeir, Adyen’s president of North America, told FinLedger in an interview.
Adyen provides end-to-end infrastructure connecting directly to Visa, Mastercard and other preferred payment methods. The company serves customers such as Facebook, Uber, Spotify and Casper.
“I often like to say that we’re a technology company doing bank things in an industry of banks trying to do technology things,” Dammeir said.
In December, FinLedger wrote about how Adyen announced the launch of its new Network Token Optimization offering and an expansion of its collaboration with Microsoft.
Dammeir spoke with FinLedger about how the giant payments company adjusted amid the COVID-19 pandemic, the buy now, pay later space and what opportunities for growth he sees ahead.
FL: Let’s take a look back at 2020: How did the COVID-19 pandemic affect Adyen and its U.S. operations?
Dammeir: We work with a good number of airlines and online travel agencies and of course, the data shows that they continue to see depressed volume on the platform. At the same time, this is likely one of the reasons why we saw such strong growth even during COVID. COVID has been a driver of digital transformation.
When you look across demographics of who has become a first time online user for a particular brand it’s across the board. Whereas previously it was millennials and younger generations engaging on these digital channels, now all demographics are doing that. For example my mom uses Instacart, she’s been going to the grocery store twice a week for as long as I can remember. But just over the last year she started using something like [Instacart]. Because of that there’s substantial tailwinds in terms of digital overall and merchants tend to work with Adyen as part of an overall digital transformation. They’re generally replatforming their approach to embrace what we would call ‘unified commerce’ which is to eliminate any difference between channels and the experience the customer receives. That’s our specialty.
FL: What opportunities do you see for growth?
Dammeir: The first would be unified commerce. More industries and verticals have a need for this. Previously, we saw it in high-end retail. A high-end retailer wants to make sure that the experience across channels is absolutely consistent, it’s about white-glove service. High-end retail was amongst the first set of merchants in which we saw a need for this channel-agnostic unified commerce journey where you could seamlessly move between those channels.
But what we’re finding is that different verticals and industries are going through this transformative moment. That’s happening in larger format retail. I would point to our partnership with Dick’s Sporting Goods is a good example. That same expectation of being able to seamlessly do things like buy online, pick-up in store, even have my loyalty recognized seamlessly between channels. Customers at a company like Dick’s Sporting Goods, for example, are seeing that. I would also point to the same trend in the food and beverage industry. We work with merchants like McDonald’s and Subway. I would point to the overall quick service restaurant experience. If you think back five years ago, you could go to the counter, and you could go to the drive thru. But just in the last few years, there’s come the kiosk, in-app order ahead, in-app curbside pickup, in-app first party delivery and in-app third-party delivery…
We see a ton happening in unified commerce. This is global, but in particular, we see that it’s driving a lot of our discussions as a domestic player here in the North America market.
FL: Are there any other opportunities you see for growth?
Dammeir: The other area would be issuing. Over the last [few] years we’ve developed from scratch our own issuing platform. The same as our acquiring and processing business from when you send us the API call to when it goes to the network, it’s completely our technology. We’ve done the same with issuing. We’re able to issue debit cards systematically via API, both virtual cards as well as physical. We see really cool opportunities with our platform merchants, as well as other use cases, where with one relationship, with one contract, with one set of API’s, not only can you acquire funds coming in, you can hold them in our ledger system and add different platforms. You can also issue a card to do things like payouts, for example.
FL: What are your thoughts on the buy now, pay later space?
Dammeir: These buy now, pay later payment methods take a savvy and smart approach to co-marketing and present themselves as understanding their customers and the sorts of things that they would want to buy. There’s a lot of players in that space. Now, how Adyen sees it is that we’re always driven by consumer demand. Consumers demand certain payment methods, they express that to the merchants [and] we then aggregate that feedback across our merchant base. Then, we offer them on our platform. We offer 250 plus payment methods at Adyen, a good number of which are by now pay later. We have payment methods like Afterpay, Klarna Affirm, Zip, etc.
I do think that there will continue to be a trend of more propagation of these buy now pay later payment methods. Then what happens over time, whether that’s consolidation or what have you, I think only time will tell.
FL: What are some of the biggest challenges you anticipate going forward?
Dammeir: Because there are these new merchants who are seeing through digital transformation [that] COVID was a wake-up call — payments is not the only piece of that. If you’re going to try and merge all of your channels together and see through digital transformation that involves your CRM, your ERP, your inventory management system, the actual e-common point of sale platforms you’re using to just drive the overall commerce experience. The biggest challenge going forward is assisting those merchants with that digital transformation. Our goal is always for payments to be the easy part. But there’s an ever-growing complexity in terms of the number of platforms that are involved in those transformations. The only thing that slows down embracing that transformation is that complexity.
This Q&A has been edited to read clearly and concisely.