Exclusive Interview with Roelant Prins, Adyens Chief Commercial Officer (Part I)

The vision behind Adyen’s internet payment platform
Adyen was founded by a team with a significant background in internet payments. Our founders previously founded Bibit, one of the first outsourced payments providers in Europe. That was what we could call the first generation of internet payment services, helping larger merchants accept online payments. It was a very successful company developed at a time when there was a growing need to have a secure payment system for merchants, a payment system that addressed the right payment methods internationally and a system that was always stable and viable – at the time, those were the core requirements.

This system was especially created to serve the needs that existed in the market at the time, this was the beginning of 2000. That company was sold to RBS in 2004 and integrated into RBS and that fitted very well. A few years later, end of 2006, beginning of 2007 we had founded Adyen. This was founded with people that have been working in the industry by now for well over 10 years. We founded the company as a next-generation internet payments system. The reason why we look at it as a next-generation initiative is that the needs of e-commerce merchants have in turn shifted and developed.

The truth is that many of the existing payment systems are based on being first-generation systems addressing the needs that I’ve just talked about. However, at the moment it is still equally important for e-commerce merchants to have a secure and stable system, but this is no longer the sole requirement. E-commerce merchants today all have a lot of experience and are continually looking to optimise their processes and the way they do business—consequently, there are a number of significant developments that have emerged.

On the one hand there is of course PCI compliance, which has come around the corner a few years ago, and which now has major impacts on businesses handling their sensitive card data. So this is one thing that has changed and really drives merchants towards fully outsourcing payments acceptance—since that way they can really get rid of PCI compliance. So that is one big change. But, at the same time, people are all looking at optimizing conversion and optimizing their processes. There is however a conflict here, due to the fact that traditionally, outsourcing the payment acceptance and also PCI compliance through our hosted payment page environment typically had a lot of disadvantages for merchants, as it implies having less control over the payment page, little to no insight into what’s happening on the payment page. That conflicts with trying to improve your conversion, as conversion optimization involves having a higher degree of control.

Our view involves using the most modern technology to bring those two together into a payment system that on the one hand allows merchants to fully outsource PCI compliance, and at the same time provides them with the tools that enable them to really maximize conversion and address those needs. And that’s really what our vision is, what we focus on and we’re actually being quite successful. And the third element we can add is that the channels are shifting as well; the focus so far has been on e-commerce, internet, and we now believe that the mobile channel and also internet TV are channels that will become very important over the next few years.

Adyen’s payment platform at a glance
Adyen has a fully PCI compliant solution. A redirect solution like that has been on the market for the past ten years. We had the same type of solution with Bibit and traditionally, those redirect page solutions have the great benefit of not having to deal with PCI compliance – but for many bigger merchants that we have typically worked for, it also had a lot of disadvantages. First of all, it was a black box: you send a customer to an external webpage and have no idea on what happens on that site. Secondly, another disadvantage was that typically the customer / shopper had to work through three or four screens. Another disadvantage was that it was very difficult to control the look and feel of those payment pages and, finally, and there was the limitation of things like walk-in payments which are now very important and which the platform didn’t support.

What’s quite unique about our system is that our redirect-based solution covers all those requirements: we use very innovative skin technology, which allows merchants to adjust everything related to the look and feel of the payment page – logos, colours, but also the fields into which customer data is inputted, everything can be adjusted so that the payment screen can be completely fitted into the customer experience as the merchant wants to do it. That’s very powerful, at the same time we use Ajax technology to have the payment processed on a single screen, instead of loading the traditional three or four pages to run through the payment acceptance. For bigger merchants we can also even adjust the URL of the payment page, so that it’s not immediately obvious that see that it’s coming from our system.

We also support single-click payments on our hosted payment page, again a feature this is very much in-demand at the moment – for example, companies like Groupon (that we work for) bill their process around it and Adyen fully supports it on its hosted payment pages. Finally, what’s very interesting is that where traditionally the hosted payment page was a black box, Adyen has developed in partnership with the Technical University of Delft a payment analytics tool, which means that we provide full insights into the conversion statistics of the payment page. This means that our customers that use the payment page can see per country or per payment page or per product exactly how many people abandoned the payment page and at what stage. So this gives the real insight you need, which then helps you to improve the payment process - that way you can start experimenting say with either a green payment button or an orange payment button and then see which one has higher results.

Maximizing conversion strategies for merchants
There are a few things we continue to do. On the one hand, we have a conversion analytics tool, which gives our merchants very valuable insight into their actual conversion rates. So, we start with giving the insight: on the basis on having that insight, we provide merchants with the tools to carry out A/B-type testing of different payment pages. That means that every merchant can experiment with having two different payment pages at the same time where they can, for example, change the order of appearance of payment methods or else they can add a surcharge to certain payment methods. Subsequently, they can measure what the conversion rate is for each individual payment page, thus being able to measure exactly which payment page performs better and, of course, that’s the ideal way to maximize conversion and work towards having the most effective payment page.

We also do other things to maximize conversion, which include working with a very international platform, via which we process payment for our customers in the US, but also in Latin America, in Europe, in Asia. Also, a big element in maximizing conversion is supporting the right payment methods, so that every customer is enabled to make a payment; secondly, specifically in what concerns credit card payments, at the European level there’s a wide range of acquiring banks.

For example, in the US and Latin America we connect directly to American acquirers and Brazilian acquiring banks; what you see is that if you process cards with local banks compared to processing with European banks, so if you go local you’ll have much higher success rates and therefor higher conversion. So, that’s the other thing that we do at the back-end our system/platform: we structure the most effective acquiring network at the back-end, which in the end provides the highest success rates. These are the various approaches that we have to really optimise conversion rates for our customers.

Top 3 arguments to bring customers on board for Adyen
Full international coverage, the best technology that provides the highest conversion rates and everything provided at a very cost-competitive price

Payment methods supported?
Our philosophy is NOT to have the highest number of payment methods – typically, you see a lot of e-commerce payment companies that all claim “we have the highest number of payment methods”. For Adyen, it’s very important to only support those methods that actually matter. So we very critically look at every payment method to see whether it actually adds value and has substantial market share.

Typically, we know that if you, for example, offer ten payment methods to customers, they get distracted and select the wrong payment method, which in turn leads to lower conversion. There has to be a balance between having the right number of payment methods and maximizing conversion.

Adyen thus looks at which are the most relevant payment methods – we currently support around 75 internationally; these include local payment methods all over Europe, in Finland, in the Netherlands, Belgium, France, Spain - we support all the relevant payment methods across Europe; also in Asia, we have just gone live with Tenpay and Alipay in China. We support local payment methods in Russia as well as local payment methods in the US where there is the added factor of ACH, and we are Interac-compliant in Canada. Finally, we support a wide range of local payment methods in Latin America.