Adyen: A Payment Processing Powerhouse

In today’s fast-paced, increasingly digital world, the ability to process payments quickly, securely, and efficiently is more critical than ever. One company at the forefront of this evolution is Adyen, a payment processor that has steadily grown to become a key player in the global financial technology landscape.

Section 1: Background and History

Adyen was founded in 2006 by a group of payment entrepreneurs in Amsterdam, Netherlands. The founders had already built and sold businesses in the payments industry and saw an opportunity to create a modern solution to replace the fragmented, legacy systems that merchants were using. The name "Adyen" means "start again" in Surinamese, reflecting the founders' desire to start fresh and rethink payment processing from the ground up.

Section 1.1: Founders

Pieter van der Does is the CEO and co-founder of Adyen. He previously worked at Bibit, a payments company acquired by the Royal Bank of Scotland, where he gained industry experience.

Arnout Schuijff is a co-founder and served as Adyen's CTO until 2020. He was the key architect behind Adyen's full-stack payment platform. Before Adyen, Arnout also worked at Bibit, focusing on technology development.

Section 2: Business Model

Adyen is a payment processor that offers a single, full-stack platform connecting directly to card networks (e.g., Visa, Mastercard) and providing merchants with high authorization rates, lower transaction costs, and faster settlements. It does not outsource any part of its operations, controlling the entire payment stack (gateway, risk management, processing & acquiring). This allows it to scale quickly across multiple markets and support nearly 300 local payment methods.

Adyen’s key customers include brands like Uber, eBay, Spotify, Microsoft, McDonald's, LinkedIn, Booking.com, Etsy, and Levi's. The top 10 of these customers contribute to 16% of Adyen's total revenue. Adyen has a volume churn rate of less than 1%, highlighting strong customer retention and satisfaction.

Adyen has over 4,500 employees worldwide.

Section 3: Market Size and Opportunity

Digital payments penetration is currently around 38% of a $40 trillion market, with potential growth to 70% over the next 8-10 years. Adyen processes approximately 2% of the market, with significant room for growth, especially in online and offline payment processing. The enterprise processing market remains fragmented, and Adyen is positioning itself to capture more market share.

Section 3.1: Competition

Adyen's main competitors include Stripe, PayPal, Square (Block Inc.), and Worldpay in payment processing services (PSP). Additionally, Fiserv and Global Payments are key competitors in the traditional payment processing market.

Section 4: Revenue

Adyen's revenue model includes both a settlement charge (~66%) and a processing fee (~34%). In the first half of 2024, Adyen processed €619.5 billion in total payment volume (TPV) with a net revenue of €913.4 million. For the entire year in 2023, Adyen’s processed volume reached €970.1 billion with a net revenue of €1.6 billion.

Adyen's EBITDA margin stays above 60% thanks to its cost-efficient model, where it handles the entire payment process in-house, avoiding third-party costs. About 80% of its new business comes from existing customers, which helps keep expenses low and supports its strong profitability

Adyen generates its revenue mainly from four regions: Europe, Middle East, and Africa (EMEA), which contributes 64% of total revenue, making it the largest segment. North America follows with 24%, reflecting strong growth. Asia-Pacific (APAC) adds around 7%, driven by expansion in countries like India and Australia. Latin America accounts for the remaining 5%, where Adyen continues to invest in local acquiring capabilities to boost growth

Section 5: Strategy

The company's growth strategy focuses on expanding its omnichannel solutions, increasing its market share in the US, and further developing its product offerings, such as issuing services and marketplace payment tools. This strategy aligns with Adyen’s emphasis on leveraging data-driven insights to optimize payments and customer experience across multiple channels.

Section 6: Fundraising

Adyen was bootstrapped initially with the founders' funds and did not raise external capital until 2011. The Series A round was led by Index Ventures, and Adyen remained profitable from that point on. The company is known for its conservative approach to fundraising, avoiding preferred stock and maintaining a high level of control.

Adyen (ticker: ADYEN) went public on June 13, 2018, with its initial public offering (IPO) on the Euronext Amsterdam stock exchange at an initial pricing range of €220 to €240 per share. The company did not issue new shares in the IPO; it was primarily an opportunity for early investors to gain liquidity.

Section 7: Ownership

Institutions own 46.7% of Adyen's shares, while the general public holds 48.6%. Co-founder Pieter van der Does owns nearly 3% of the company. Major shareholders Baillie Gifford & Co. and WCM Investment Management each have stakes of over 5%.

Section 8: Competitive Advantage

Adyen's competitive advantage lies in its single, full-stack platform, which directly connects to card networks, offers higher authorization rates, and enables global scalability with a single integration. Its nimble organizational structure, known as the "Adyen Formula," fosters a unique culture that encourages innovation and rapid decision-making. The company’s end-to-end control of its platform allows it to offer better service, lower costs, and faster integration than its competitors, and it does not depend on external partners.

(Sources: Adyen 2023 Financials, Adyen Financials, Acquiring Bank vs. Issuing Bank, Tweet by Alexxubyte, Adyen Press Release - Globe and Mail, Adyen H2 2023 Financial Results, Adyen Prospectus, Adyen Payment Processing Disruption)