Good morning, and welcome to Protocol Fintech. This Thursday: how Adyen’s caution paid off, the CFTC makes a bold move, and Russia gets its crypto act together.
Off the chain
Things are starting to open back up, which means I’m experiencing the relative novelty of meeting people over coffee. I sat down with Brian Dammeir, Adyen’s president of North America, in January to learn more about the business. One thing we bantered about: Was PayPal’s key innovation, the blended rate, holding it back? Dammeir argued that Adyen’s simpler model might be an advantage as online and offline commerce crash together. Sure enough, as the company reported stellar results for the second half of 2021, that seems to be playing out. Now PayPal’s introducing “interchange plus” pricing. Old dog, new tricks? Tomio talked to Adyen CEO Pieter van der Does to find out more about its strategic edge in payments.
— Owen Thomas (email | twitter)
When caution pays
Payments company Adyen is avoiding some of the pandemic-related problems that have hit its competitors. PayPal revealed it had missed earnings expectations this month and said it was pulling back its plan for growth in users and instead focusing on more active, higher-spending users. It blamed inflation, supply chain issues and the pandemic for curbing shopping.
Adyen, meanwhile, has continued to grow, posting $342.7 billion in payment volume and $646 million in net revenue in the second half of 2021, which was up 72% and 47% year-over-year. Its customers include eBay, Uber and Spotify. Shares jumped around 10% Wednesday on the news.
The company, which went public in 2018, has seen its shares fall this year in the tech downdraft, and is still smaller than PayPal, which has a market cap of nearly $143 billion. But Adyen’s market cap hit $69 billion yesterday (before falling back today).
The strategy: Cover all commerce channels. Many companies say they can handle any form of payment, but Adyen’s middleman model fits better for offering multiple options.
- Where others charge a flat rate across transactions, Adyen offers what it calls “Interchange++” — a straightforward markup on the rates card networks charge. That’s easier to apply to a variety of payment scenarios.
- Because it handles in-store, self-serve checkout, curbside and online payments, Adyen could better weather the pandemic and changes coming out of the pandemic, said CEO Pieter van der Does.
- “The strength that [merchants] know us for is that we are helping them to sell in all channels. Often they take us for point-of-sale and think it’s only in years that they’re going to do online — and now, with COVID, that’s quicker,” he said. “But the ultimate promise is that we will help them, whatever comes their way.”
Adyen thrived going into and coming out of the pandemic. During the pandemic, clients quickly moved to online or contactless curbside options — even luxury merchants that would have previously turned up their noses at such sales methods.
- As a result, Adyen sold new services to existing customers while adding new accounts. “We just get more share of the wallet,” he said. “If a merchant starts with us for one brand, and they like it, they roll it out over multiple brands or regions.”
- It’s also helping customers in more parts of the world. McDonald’s, for example, started in 2019 with Adyen for mobile payments in the U.K. and later expanded elsewhere.
- The U.S. market is contributing to growth. Adyen, founded in Amsterdam, has expanded outside of its European base, with 40% of net revenue outside of EMEA for the first time. North American net revenue grew 74% in 2021, faster than the company overall.
Careful expansion could be an advantage. Adyen’s homegrown philosophy might 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. It believes building its own technology to meet the needs of clients provides the best products, while avoiding costly and distracting integration issues, van der Does said.
— Tomio Geron (email | twitter)
A version of this story first appeared on Protocol.com. Read it here.
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On the money
It seems like Russia is heading toward crypto regulation instead of a ban. The Russian government published a document outlining what future legislation could look like, noting that the Bank of Russia, which proposed a complete ban last month, had taken part in the discussions.
BlackRock is planning to offer a crypto trading service to its investor clients. The investment management company currently manages over $10 trillion worth of assets, and is preparing 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 planning to provide revenue-based financing for small businesses “with a proven track record on DoorDash.” Parafin, which already works with similar companies, is providing the financing.
Tennessee state Rep. Jason Powell introduced a bill to allow 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 study committee for blockchain and crypto issues.
The CFTC makes its move
CFTC Chairman Rostin Behnam asked Congress Wednesday for an increase of at least $100 million to the agency’s annual budget of $300 million to take on additional responsibilities in regulating the volatile crypto market, angling to boost his regulators’ role and possibly edge out bureaucratic rivals.
Behnam’s pitch at a Senate Agriculture Committee hearing: The CFTC has been “a forceful and disciplined cop on the beat” and has the “expertise and experience” to tackle crypto’s “risks and opportunities.”
His stance in 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 gets to regulate crypto, which hinges on 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 a brand-new regulator specific to digital assets.
Last month, Agriculture Committee Chairwoman 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.
Moves
Ebanx hired Paula Bellizia as its president of global payments. Bellizia, formerly Google’s vice president of Marketing for Latin America, will focus on expanding the payment company’s global customer portfolio.
Disney is hiring a business development manager with NFT expertise. The job posting says that the new manager will help lead the entertainment giant’s efforts in the space.
BlueVine appointed Yael Malek as its new chief people officer. This move comes as the financial services company expands its global footprint. It nabbed Steve Allocca, former PayPal and LendingClub leader, as its COO last year.
Financial Venture Studio hired Cameron Peake as a partner. The former startup founder and adviser will fund and work with early-stage fintech companies.
Katie Haun hired Sam Rosenblum as a partner and deal-team lead for KRH Partners. The VC star recruited the former Coinbase exec and successfully persuaded him to join her firm instead of fundraising and recruiting on his own.
The Boston Fed has a new leader. Susan Collins will take over as 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, having released a joint study with MIT on technology for a potential U.S. CBDC.
A MESSAGE FROM PLAID
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Thanks for reading — see you tomorrow!
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