Hello and welcome to Protocol Fintech. This Thursday: How Adyen’s caution paid off, the CFTC makes a bold move, and Russia rallies for crypto.
out of the chain
Things are starting to reopen, which means I’m experiencing the relative newness of meeting people over coffee. I caught up with Brian Dammeir, president of Adyen for North America, in January to learn more about the company. One thing we joked about: Did PayPal’s key innovation, the blended rate, hold it back? Dammeir argued that Adyen’s simpler model could be an advantage as online and offline commerce collapse together. Sure enough, while the company announced exceptional results for the second half of 2021, it seems to be happening. Now PayPal is introducing “interchange plus” pricing. Old dog, new tricks? Tomio spoke with Adyen CEO Pieter van der Does to learn more about its strategic advantage in payments.
—Owen Thomas (E-mail | Twitter)
When caution pays
Payments company Adyen is avoiding some of the pandemic-related issues that have plagued its competitors. PayPal revealed that it fell short of its revenue expectations this month and said it was withdrawing its user growth plan and instead focusing on more active and spending users. He blamed inflation, supply chain issues and the pandemic for holding back purchases.
Adyen, meanwhile, has grown steadily, assignment $342.7 billion in payments volume and $646 million in net revenue in the second half of 2021, up 72% and 47% year-over-year. Its customers include eBay, Uber and Spotify. Shares jumped about 10% on the news on Wednesday.
The company, which went public in 2018, has seen its shares plummet this year in the tech downdraft, and is still smaller than PayPal, which has a market capitalization of nearly $143 billion. But Adyen’s market capitalization hit $69 billion yesterday (before falling back today).
The strategy: Cover all trade channels. Many companies claim they can handle any form of payment, but Adyen’s intermediary model is better suited for offering multiple options.
- Where others charge a flat rate for all transactions, Adyen offers what it calls “Interchange++” – a simple markup on the rates charged by card networks. It’s easier to apply to a variety of payment scenarios.
- Because it handles in-store, self-service, curbside and online payments, Adyen could better weather the pandemic and the resulting changes, CEO Pieter van der Does said.
- “The force that [merchants] know us is that we help them sell on all channels. Often they take us for an outlet and think it’s years from now that they’re going to be online – and now with COVID it’s faster,” he said. “But the ultimate promise is that we will help them no matter what.”
Adyen has thrived in and out of the pandemic. During the pandemic, customers have quickly turned to online or contactless curbside options — even luxury merchants who would previously have turned their backs on such methods of selling.
- As a result, Adyen sold new services to existing customers while adding new accounts. “We just get a bigger share of the wallet,” he said. “If a merchant starts with us for one brand and they like it, they roll it out across multiple brands or regions.”
- It also helps customers in more parts of the world. McDonald’s, for example, started in 2019 with Adyen for mobile payments in the UK and then expanded elsewhere.
- The US market contributes to growth. Adyen, founded in Amsterdam, has expanded outside of its European base, with 40% of its net sales outside EMEA for the first time. North American net sales grew 74% in 2021, faster than the company as a whole.
Careful expansion could be an advantage. Adyen’s local ethos could be a strength. While some of its rivals have grown through acquisitions – look at PayPal’s acquisitions of Braintree, iZettle and Paidy, or Block’s recent Afterpay deal – Adyen prefers not to acquire companies. He believes that building his own technology to meet customer needs provides the best products, while avoiding costly and awkward integration issues, van der Does said.
— Tomio Geron (E-mail | Twitter)
A version of this story first appeared on Protocol.com. Read it here.
A PLAID MESSAGE
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on the money
It looks like Russia is heading towards crypto regulation instead of a ban. The Russian government published a document outlining what future legislation might look like, noting that the Bank of Russia, which proposed a full ban last month, had taken part in the discussions.
BlackRock plans to offer a crypto trading service to its investor clients. The investment management firm currently manages over $10 trillion in assets and is prepare to support client trading and using crypto assets as collateral in loans.
DoorDash launched DoorDash Capital, a financing service. The online food ordering company is plans to provide revenue-based financing for small businesses “with a proven track record on DoorDash.” Paraffinwho already works with similar companies, provides the financing.
Tennessee State Representative Jason Powell introduced a bill allowing the state and its municipalities to invest in bitcoin. the bill would allow Tennessee and its municipalities to invest in other cryptocurrencies and even NFTs. Powell also introduced a bill that would establish a committee to study blockchain and cryptography issues.
The CFTC takes action
CFTC Chairman Rostin Behnam on Wednesday asked Congress for an increase of at least $100 million in the agency’s $300 million annual budget to take on additional responsibilities in regulating the volatile crypto market, aimed at bolstering the role of its regulators and possibly outpacing bureaucratic rivals.
Behnam’s presentation at Senate Agriculture Committee hearing: CFTC has been ‘an energetic, disciplined cop on the beat’ and has the ‘expertise and experience’ to tackle ‘risks and opportunities of cryptography.
His stance during the hearing that digital assets are commodities was a nod to an ongoing power struggle between the CFTC and the Securities and Exchange Commission over who can regulate crypto, which hinges on whether whether digital assets are commodities or securities.
Some crypto companies have pushed for the CFTC to play a bigger role, while Coinbase has called for an all-new regulator specific to digital assets.
Last month, agriculture committee chair Debbie Stabenow and other committee members sent a letter to Behnam in which they wrote that “the two largest digital assets by market capitalization, bitcoin and ether, are commodities,” suggesting that the committee is inclined to give the CFTC more regulatory power.
—Lindsey Choo (E-mail | Twitter)
Ebanx has hired Paula Bellizia as President of Global Payments. Bellizia, formerly Google’s vice president of marketing for Latin America, will to focus on expanding the payments company’s global customer portfolio.
Disney is hiring a Business Development Manager with NFT expertise. the job offer says the new director will help lead the entertainment giant’s efforts in space.
BlueVine has appointed Yael Malek as its new Human Resources Director. This move comes as financial services company expands its global footprint. He appointed former PayPal and LendingClub executive Steve Allocca as chief operating officer last year.
Financial Venture Studio has hired Cameron Peake as a partner. The former founder and advisor of the startup finance and work with start-up fintech companies.
Katie Haun has hired Sam Rosenblum as partner and team leader for KRH Partners. the The VC star recruited the former Coinbase executive and successfully persuaded him to join his company instead of fundraising and recruiting on his own.
The Boston Fed has a new leader. Susan Collins will take over at the head of the central bank branch, replacing Eric Rosengren, who retired last year. The Boston Fed is positioning itself as an innovator on digital assets, after releasing a joint study with MIT on the technology for a possible US CBDC.
A PLAID MESSAGE
Like any other payment rail, ACH is not perfect and comes with some risk. In this guide, you will learn how to implement ACH to minimize risk and liability while creating new financial opportunities for your business.
Thanks for reading – see you tomorrow!