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Adyen: A Fintech Diamond In The Rough

Seeking Alpha

Launched in 2016, Adyen for Platforms allows merchants to embed financial products into their platforms or marketplaces.

Adyen primarily focuses on large enterprises as their merchants and some of them operate as a platform/marketplace, which subsequently has a large network of smaller merchants under their platforms. Fundamentally, Platforms serves as a gateway to distribute enterprise-quality financial products to small and medium businesses (SMBs).

In essence, Adyen for Platforms is a banking-as-a-service offering for platforms and marketplaces, which includes the following features:

Payments: Allows SMBs to make payments a part of their product offering.
Accounts: Enables SMBs and users to open a business account and digital wallet, respectively, which enables them to manage their finances in the same platform where they do business.
Issuing: Enables platforms to issue virtual or physical cards to their users. This creates an additional revenue stream for platforms as they receive a revenue share of the interchange fee whenever a platform user transacts using the cards issued.
Capital: Enables platforms to provide users quick access to business financing to grow their businesses.
Payouts: Enables platforms to send payouts to their sellers, creators, suppliers, vendors, and staff in real-time, 24/7.
Adyen Platforms
Adyen FY2022 Capital Markets Day Presentation

In short, these three commercial pillars combined make Adyen the one-stop shop for modern-day payment processing. The company offers other value-added services such as risk management, fraud prevention, and marketing tools, but these three pillars form Adyen’s core value proposition.

Put simply, Adyen’s end-to-end payment capabilities within the payment ecosystem make it the financial technology platform of choice for leading businesses all over the world.

Based on my research and analysis, I identified four competitive moats for Adyen: technology, network effects, switching cost, and cost advantages.

Adyen’s platform is built in-house and is one of the most vertically integrated payment platforms out there. Its simple, all-in-one technology stack is a major reason why leading global brands choose Adyen to be their sole payment processor. Just look at some of their customers:

Adyen Customers
Adyen Website

Adyen is also recognized as the undisputed leader in the 2022 Forrester Wave: Merchant Payment Provider report, ahead of competitors such as Stripe, Worldpay, and Fiserv.

The Forrester Wave™: Merchant Payment Providers, Q2 2022

In addition, The Strawhecker Group recognizes Adyen as the Leading Payment Gateway with API.

TSG Recognizes Top Payment Gateways with 2023 API Awards

In short, Adyen’s high-quality clientele base as well as recognition from industry analysts, are testaments to the company’s best-in-class technology platform.

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