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

And selling means selling for example tickets for airlines – that’s not big now but it will be bigger in the next couple of years; tickets for movie theatres on the other hand are already big now: there’s already real volume going over for those types of merchants. The same is true for a deal-of-the-day kind of customers: we can imagine that when you walk in the street and there is a deal coming in from an auction site or a deal-of-the-day type of site, you want to act immediately, you want to pay and you want to have that deal, that’s also a real application.

A third example to mention would be sending postcards – you take a picture, select an address form your address book and then you send your postcard and you pay EUR 2 for it over your mobile. Because of PCI compliance, it’s not very easy for merchants to write their own payment pages for the mobile. Besides, you’ve got a lot of different models and the payment page has to be optimized for every model.

The Adyen mobile offering
What Adyen has done has been to use its’ existing skin technology to optimise payment pages for different mobile phones – the iPhone, the BlackBerry, the Android-powered devices, basically for all the important smartphones models. Of course, you can also downgrade for example to the five year-old models from Nokia where you have very simple screens – but the real smartphone payment screens are the ones that really look well and therefore drive conversion and ensure the best experience possible for the buyer.

With respect to payment methods support, an increasing number of payment methods will be made available for the mobile – which of course means they will be optimized for a small screen. Obviously, it’s always possible to use credit cards, it’s possible to use direct debits in many countries; in the Netherlands we have iDeal, which is an important payment method and which we are planning to make available for the mobile as well. This is very good news for our merchants, which can accept payments as easily via the mobile as via the web.

Successful mobile implementations by Adyen
One of the merchants that I can mention is Pathé, a large Dutch – French conglomerate of movie theatres. They are already selling tickets over the iPhone now and expect smartphone-based ticket sales to boost this year already. Another customers which will go live with our services really soon is Greetz, the leading Dutch online postcards company. Adyen handles all the online payments traffic for them and will soon go live with a mobile channel, which they expect will further drive their sales volume.

How are merchants’ pages optimized for mobile use?
In addition to using advanced skin technology and making the mobile payment page look like a native app which “moves” smoothly on the iPhone, another important feature is the possibility to support one-click payments. This means that once a customer has registered previously either via his mobile phone or online, he can log into the app, which automatically knows who he is and allows him to pay with his CVC code or password, without having to enter all the credit card details on the mobile. This is also a very important driver for conversion.

What we see is a lot of demand from our merchants that use a combination of different channels, for example the web and mobile. Let’s take for example the Groupon-type business model; with it, customers carry out their first registration via the web – they register their payment details and then start receiving offers by email – emails which of course can also be accessed via a mobile device.

A great thing – and also one of the aspects on which we’re focusing with regard to the mobile channel – is that if you receive a great special offer on your mobile while you’re travelling, the Adyen platform allows you to use the payment details stored on your mobile (which you’ve already registered on the web) via the single-click methodology to make the purchase. The barrier for making a payment within such a scenario is very low and convenience is very high. We feel that convenience is a critical success factor for the mobile channel.

Within this scenario – would the single-click internet-based payment made via the customer’s mobile phone qualify as an online payment or as a mobile payment?
That’s a very good question. I think it would be a mobile payment, because the payment of course initiates on the mobile – using the web as the major infrastructure. It’s really difficult to answer – and we’ve had this discussion before. For instance, on the iPhone if you do a payment via the Adyen platform, obviously that’s a mobile payment, and if you do it via the web, then it’s an online payment.

But what about a payment initiated via an iPad or another tablet that you carry around with you and that might have a 3G card? What we see happening is – to use an older term - a process of convergence. We see convergence now happening with our merchants – and perhaps a nice development to mention at this point is Connected TV. We work with merchants for instance in the travel and traffic business that want to offer their customers for instance traffic information on the Connected TV in the morning for EUR 1 per day and allow customers to then take that information with them on their navigation devices during the day; then maybe for an additional EUR 1 consumers can opt to receive additional traffic information which they can also access via their mobiles and online.

So, as a consumer, you develop a relationship with a content provider, and the paid contents – paid via the Adyen platform, that is – can be used on different devices; also, you can actually pay for that content using different devices via the one-click payment option: you can pay on the web, which is the easiest (mostly because you can use a full keyboard and a big screen) but you can also pay via your iPhone or even via your navigation device and certainly you can pay via the Connected TV. This is a very good example of converging channels for our merchants – which are all internet connected and which can benefit from our payment pages, all of which work on all the different platforms.

Fraud prevention – how does Adyen ensure it?
Given that all our payment pages are hosted, security is ensured the same way as on the web. The credit card details are always entered on our servers and we are PCI-compliant, so that makes it a closed loop. For the mobile and Connected TV we have some additional security measures in place – namely, we have a unique identifier per device; this means that on the internet, we can look at the type of browser used and the operating system and say whether it’s the same person we had yesterday or the same person who has been trying in vain to make a purchase for the past three days; for mobiles, this is even easier, as there are a number of additional IDs specific to each individual device. We therefore expect to have tighter fraud control on the mobile platform.

Where is Adyen now in terms of market coverage?
I think it’s always interesting to look at market coverage and how exactly we can define a market. When we look at a market, we at Adyen especially focus on the truly international e-commerce merchants, companies that are trading all over Europe and beyond and that have true global focus.

Looking at Adyen’s background, we started the company in 2007 so we have been around for 4 years now and 2010 has been a major breakthrough year for us. Before 2010, many people had heard about us, they liked the general idea of what we were doing – but in 2010, Adyen experienced a major breakthrough and we are now working with many of the large, leading international e-commerce companies.

In 2010 we therefore became equal to the large players in the market in terms of being known and being regarded in turn as a major player.2011 is about moving on and taking the next step.

The unique thing about our company is that we are essentially a technology company, we master the technology in the payments processing field, which makes us very flexible and fast when it comes to adding new functionalities and implementing innovation into our platform.

For all of us at Adyen, this is a very good place to be in and we are all extremely excited about this opportunity. It’s therefore difficult to talk about our market share in definitive terms – but we are really a top of the list payment processing provider at the moment.

Some top directions of development for Adyen
One would be true global reach – that’s a key thing. The second direction is mobile, which is a very important channel for us.

What will happen in the European mobile payments space within a year, let’s say?
First of all, an increase in the uptake of web-like transactions of the type we previously discussed. If we look at near-field communications, NFC, I think that this is much further away – just look at the fact that Apple has announced that it will not include NFC into its next version of the iPhone due to lack of standardization.

As for Square-like solutions, since in Europe we don’t rely on swipe anymore, so it’s difficult to see that happening in Europe.