Pivot: Cross Border Commerce Podcast Series

Home , Big Bank, Payment service provider

Adyen, from RBS Worldpay to today and beyond.

Hosts: Mike Robertson - Head of Transactional FX Trading, Global Banking and Markets, Bank of America Douglas Houser - Head of Transactional FX and Payments Strategy, Global Transaction Services, Bank of America

Guest Speaker: Roelant Prins - Chief Commercial Officer, Adyen

Mike Robertson (00:00):

Welcome to Pivot, the Bank of America Cross-border Commerce Podcast Series. Pivot refers to a moment where, due to an impactful event within the business environment, one is set on a new path and a new series of possibilities arise. In this series, you’ll hear competing discussions with industry leaders and key figures in the cross-border payments ecosystem and learn how they pivoted when the situation demanded it. I'm Mike Robertson, Head of Transactional FX Trading, Global Banking and Markets at Bank of America. And I'm joined by my colleague, Doug Houser, Head of Transactional FX at Bank of America. Hi, Doug!

Doug Houser (00:36):

Great to be here as always, Mike!

Mike Robertson (00:38):

Yeah, good to have you. For today's podcast, the topic is 'Adyen from RBS Worldpay to today and beyond.' And we're joined by our guests Roelant Prins, who’s the Chief Commercial Officer at Adyen. How are you doing Roelant?

Roelant Prins (00:51):

Hey, I'm great! Nice to be here. Mike Robertson (00:53):

Yeah, great to have you from, all the way from Amsterdam. So that's awesome! So the topic today Roelant is, as I said, Adyen from RBS Worldpay, where of course, I knew you back in the day, to today and beyond. And, you know, I learned just recently, with Peter on starting the business way back when, that Adyen means in Sewanee, 'start over again', which I find it fascinating understanding a little bit about the story from before. So perhaps that's a good place to start really, you know, what, what was the story of start again, and what was your personal journey within that?

Roelant Prins (01:24):

Yeah, that's correct. So briefly my story was, I started my professional life back in early two thousands. And at that point in time, there was only pretty limited Internet activity going on across Europe, but it had really fascinated me. So, after starting with a consultant, I ended up being quite disappointed with being in Excel sheets all the time. I ended up, you know, seeking more adventure and seeking the Internet space. And as there were so limited number of things going on, I ended up with this payments company through a guy I knew, which was called Bibit. I'd never heard of it, but I thought, hey, this is an Internet payments business. And let me check it out. There was a start of fantastic journey. I joined there fresh out of uni, started at customer support, you know, a whole new world, but fantastic adventure. And then I ended up working in the commercial side there. I worked closely with Peter, who was responsible for all the commercial activities at Bibit, which was really a first generation payment service provider, you know, enabling a credit card payments and other payment methods across Europe for the first generation Econ businesses out there. And that company was quite successful and then got acquired by Royal Bank of Scotland Group in 2004. And then there was a great acquisition for RBS because they really wanted to grow internationally in e-commerce. And I think for Bibit, as you know, early startup really new to this, it was a good moment to do this. There was a lot of uncertainty in the market around regulation. And for me personally, it meant I moved to London. I worked there, that's where we met. I worked in the city within RBS payments, wider payments team for quite some years. And I find that truly fascinating because I really learned a lot about the other side of payments being, how do acquirers work? What does risk mean? How does it fit into the wider banking space? And then, you know, what did happen is being part of a, at that time, 110,000 people, large bank, you know, this tiny 90 people payments operation. I got overwhelmed and not only by the size, but also by group, IT managing all the IT of the business, which had basically had a very limiting impact on the innovation. And as a result, quite a few people at some point left, you know, a lot of customers got a bit upset over time because a lot of the innovation came to a standstill, and they were used to getting a lot of new features being shipped to them all the time. So, then after a few years, about two and a half years, three years later, we, Arnot and Peter felt like, hey, that they'd left already a bit earlier. They felt like, hey, there's still so much demand and need for innovation in this payment space. It would be really fun to see whether we can deliver that because we felt like there was nobody really doing that. And that's how this company got started. So, you know, Adyen, at that time already, a lot of dot-com domains were gone, Adyen was available. We didn't want to go to a boring, global payments, blah, blah, blah type business name. So we felt short and sharp make sense and Adyen means indeed, in part of Sewanee language, to do something all over

again with a group of people. And we had worked before, and we felt, it would be fantastic to try and do this again in a different angle. And that's how it started.

Mike Robertson (04:58):

That's super fascinating, frankly, because, you know, back in the day when I was at RBS when they acquired Bibit and I can't recall exactly whether Bibit came first or Worldpay came first in terms of acquisitions. But it ended up being, of course, this combination. And I do recall at the time being very excited because Bibit for me was a company which was very agile and was able to, as you said, innovate quickly and deliver quickly. It felt almost like you would do a sales call, head back to the office, and then, you know, many weeks later, the actual production of that sales call would arrive with a customer, which I thought was astonishing. Is that really then what you saw as the key differentiator, did quote unquote, Big Bank effectively kill that agility? Is that what you think happened?

Roelant Prins (05:45):

Yeah, that's what happened. And, you know, it's all to do with the fact like Big Bank is not used to run technology the way smaller tech company does it. So, in our way of working, which we still run today, you are able to try, test, push something through life quickly, see whether it works, and then you optimize. And we call that within Adyen, we launched fast and iterate. That's of course completely opposite on how they think about development of functionality within a bank. It's, you know, risk management first, you figure out like, hey, what's the potential impact here. We gotta make sure we understand all different angles, and then typically projects take six months, you know, through business cases and all sorts of studies. And by doing it that way, you basically limit all the different functionalities for which you are not hundred percent sure what the impact is. And for us, a lot of things we build, we don't know exactly on day one, how big it will be. You know, you have to try a lot of things and solve them, become really impactful, and then you improve them. Some of them you launch and you feel like, hey, in the end, doesn't really do what we were expecting it to do, and then let's pause. And that ability to constantly try things and see what works and sticks and improve it that just doesn't fit with a risk management approach the Big Bank has. And that's the limiting factor.

Mike Robertson (07:12):

I get that. I get that.

Doug Houser (07:14):

Before we bad-mouth the Big Banks, totally, I will say one thing about Adyen and the banking expertise that Adyen has, which is, what we see, really it's a, you know, in the last 15, 20 years in the Fintech space is lots of tech, not as much Fin sometimes. And by that, I mean, the frontend piece is very, very sharp, but the backend piece is where innovation is a little bit less likely to happen, but also more impactful. Adyen is actually different in that way, right? Adyen has always focused on being able to innovate on the backend, the actual process. So, talk a little bit about, was it helped by the fact that, sort of had people who had grown up in banks a little bit

that had exposure to the banks, while agility is important, was some of that DNA for the risk and backend piece helpful as Adyen grow?

Roelant Prins (08:14):

Yeah, absolutely, it was very helpful. And, you know, I think everybody has their role to play, and a tech company is good at tech and a bank is good at managing risk. And if you try to do and be something else, then that's where it fails a bit. Then that's where the issues arise. But in general, I think we learned massively from being within the bank, we learned massively about, you know, what does this industry, how does it operate? What is this underlying value chain and what can we do to improve that? And absolutely, it's one of the key learnings we had, but also the insights that gave us, you know, the ideas and dreams about what we wanted to build. And a lot of what we've been doing over the years is really the backend. It's like changing the way the entire value chain of processing card payments, and really rebuilding it from scratch. I mean, it's not really sexy. People don't see it. People don't really understand it from the outs of people like, what does it; does it really make a difference? In the end, in our opinion, it makes a huge difference, but a lot of it is under the hood, so to say.

Doug Houser (09:20):

So following on to that and talking a little bit about disruption in the space, and there is of course, a lot of disruption in the space as far as how payments are made, but let's talk with the nearest one probably, which is, what do you think about the models that are largely aggregator based in functions, right? We all know them, right? So is it Stripe and other competitors in the Adyen space. How do you see those types of models versus Adyen, and where they play in the market and how both of you co-exist?

Roelant Prins (09:56):

Yeah, and I think on the aggregator space, there's, you know, there's lots of benefits in terms of that frontend you alluded to earlier. Like if you go back a few years ago, and especially if you go back 10 years ago, you know, for any small business or even startups to try and get payments going, or in general to try and open bank accounts, get something going, it was incredibly painful. And that was just the way it was. And I think in this aggregator space, there's been, so much improvements to try and make that so much simpler, faster and easier, which so many companies benefit from. And it's absolutely a space where a lot of innovation has happened and will happen on an ongoing basis. I think our approach has always been like, we have more experience and by background, more knowledge and network within the bigger merchant space, where it's much more about, you know, global reach all sorts of different payment methods, and how do you make that all work, but also very much about the optimization at the backend, what can you really do to fix our problems in the operation? How do you make financial reconciliation more stable, faster is a big problem. How can you improve, you know, authorization rates on card processing with 1% for a small merchant that doesn't really matter, but for big merchants, it has massive impact. And that's where you really, really find a bit this value chain and our angles always been to approach it from that side, because that's where our passion lies and that's what's been driving us.

Mike Robertson (11:37):

That's really, really interesting, Roelant, because you've said something there, which is interesting. The rise of others and yourself in the market has created, I suspect, more I'm using the wrong word here, but more relevance in the sense of the traditional providers to you, which of course helps. And I think I last read that Adyen is now over 1700 people, perhaps that number is even old, so you're approaching a big company. And yet as you say, within your DNA, there's this need, passion to fix the problems, which very implies agility. How do you balance that? How do you balance this kind of, the culture of agility and innovation in a large company as you grow?

Roelant Prins (12:11):

Yeah. That's of course, an ongoing topic. That's one of the biggest topics that you have at the moment, right? How do you do that? You know there's one thing that’s always been very important to us where we say, we create our own path, and we won't be slowed down by stewards, it's the saying we have, we have this Adyen form path, some of these core driving principles. And this specifically stands out in this regard because, you know, there's a lot of things and we've gone through quite some phases as a company, and there's been some big moves we made within, you know, how our role within the industry. So at some points, we became our own acquirer. We got our own licenses. We billed directly into the Visa, MasterCard networks, no one had ever done that from a tech company point of view. And lots of people were saying like, you know, that's not possible, or it's a massive amount of work. Why don't you just outsource that? It's not going to make a big difference. You know, the big players are not going to allow for it, a lot of this sort of stuff. And we felt like, well, let see about it. We think it makes a difference. We really wanted to try this; we think we can do it. And in the end we did it and the impact was massive. And we still benefit from it hugely in the service we provide to our customers. Another thing was, we got our banking license because from a regulatory point of view, it was a much more clear predictable bar for us to have a banking license in terms of the regulatory framework to adhere too. And we thought that made sense. And also the functionality we could start building for our customers over the long- term made sense. So again, that's the path we took. Then a lot of people are like, oh, now you're going to become a bank. You're gonna have to comply to everything. You’re going to be wearing suits, all that sort of stuff, you know, people start to talk about it. And we felt like, well, let's see about it. We're a technology company with a banking license. Is that how we position it? We have some extremely smart people running the reporting side of the bank, etc., but we continue to operate the way we do. And it's been fairly successful. Same thing, we went public, oh, you're a public company now you're so big. It's all going to change, you know, everybody's going to be dealing with the stock price. And we're like, well, we'll see about that. And again, we go our own way. We create our own path. And this thing about these stewards that we say in this thing, like, we won't be slow now with stewards. There is this story, like in the eighties, when it was massive problems with hooligans in football stadiums in UK, and they did this scientific experiment when they had, you know, a couple of stewards dress up like hooligans. And they were there one night in the stadium, and they're like talking all the aggressiveness out, like talking to all the other hooligans, like, think I'm going to go home tonight, you know. Don't think it's going to happen tonight, probably going to rain, that sort of talk. And what happened is that it instantly took away a lot of the aggression. So the violence and the problems instantly became much smaller,

which showed that you only need a few people that start to talk the energy out of a group, and you can really impact the group behavior. And that's something that always stuck in our minds that, you know, make sure we decide how we go forward. We decide how we approach this industry. And let's not be influenced by people that are going to say what it's supposed to be like, or, and that's, it's a strong conviction. And it's the same thing for how we look at; we’re growing, because of course, a lot of things change. We never think like, oh, we got, currently, of course, in COVID working from home has a big impact on how you work, how you interact. We're a very informal company you suffer of course from that. And one thing is that at some point you could say, like, we really got to do everything to maintain our culture, but it's ultimately not about maintaining our culture. It's about what are your core values? What do you think is really important and how do we keep building on those? And of course the culture and how you work, it constantly changes because you are so many more people, but the core principles they have to keep standing.

Mike Robertson (16:10):

So what I'm hearing is it's really your culture, I guess, any sense for culture is this, it's a living organism and you're giving a space to develop, and in the analogy of a plant, you've sort of giving it the light in the, you know, the water and the food it needs and moving it around when you need to. That kind of takes me though to a thought, and you used the word steward, some would say through some lenses, the regulator could be seen as a steward in this space. And you mentioned having got a banking license, and, you know, the changes that obviously implies, I mean, in your view, and if you had a blank sheet of paper and you would like the regulators to do three things differently in your space, or even choose one, if you wish, what would that be?

Roelant Prins (16:47):

You know, I think what's been very helpful for us in dealing with a regulator is, you know, we initiated at an earlier stage, the fact that, hey, we are interested and we'd like to discuss getting a banking license and moving away from the license we had before that, because we thought like, hey, we see how this company is evolving. We have very long-term ambitions. So we initiated that. So in that regard, you know, I think we have always been proactive, keeping the regulator in mind and thinking along the way. And that's been helpful in the sense that you have a long standing relationship, and you have a lot of openness. So that's been one thing that's been very helpful, I think from our point of view, at the same time, you know, I think what you'll find is, you know, regulators have such a long background. They look at the industry through the lens of, hey; this is what this is how banks typically operate. These are the main areas of concern. And because there are so many of those, then you know, you look at a company like ours through the same lens, or you look at the same criteria you have for the others, which of course from a consistency point of view, you have to do. But ultimately we we're quite a different company. There's nothing like us. And that's a challenge because it's new. And of course that's makes it hard. I think what we very much like to offer to regulators is, come spend time with us. You know, we're more than happy to not only talk about ourselves as a company, and how we look at things, but also, you know, provide a, almost like educational guiding program to explain much more about our role in the bigger ecosystem. What are some of the things that we as tech companies, do, how we work. And we feel that the openness to share that, beyond, you know, looking at specific numbers, ratios, etc., and measures is important

to create more of that context and to work together, to create a bigger context on what's happening in the wider industry. I think it's very relevant, if you look at what's going on.

Doug Houser (18:51):

And after that comment about the wider industry, I do want to pivot the conversation a bit to the market journey for Adyen. And by that, I mean, from when you started to now, where did you start thinking that your target market would be from geography, from a segment, from a size of company standpoint, and where have you ended up at this point in time? And how has that evolved over time?

Roelant Prins (19:17):

Yeah, that's a great question because, who would have known, you know, when we started like 30, 40 years ago, it's, I think the only thing we knew for sure was that we take a long-term approach on this. We want to go for the long run. We think that's where the real fun is. That's where the real impact is and where that'll take us time will tell. And I think, you know when we started, I looked at that very recently for a talk I was doing around a bit of the origins of the company. And when we started, we were just trying anything. We actually built a mock-up of a buy now/pay later product back in 2007. And we were pitching that; nobody wanted to buy it, so in the end, nothing happened. We built a marketplace product and we were pitching that with split settlement, etc., for some resellers. Again, you know, we were a young company, nobody wanted to buy it, but we had all these ideas. And in the end, we started in the gaming space because in the gaming space, there were lots of startups. They didn't care about us being very, very new as a company. And they loved the technology and that's how we got into the market. And then together, we could build some really cool, ways to, you know, improve conversion on the payment pages at that time. And that got us going. And I think, you know, we didn't have a plan originally to say, hey, we're going to go for these gaming companies. It was all about trying, pitching and see what sticks, and that's how we got into it. And I think, you know, what's always been driving us like is, we talk a lot to merchants. We listen to what are their challenges. And then we think about how can we help them fix those problems? And that's always been a bit, the give and take approach that leading us to where we end up, and that's been going like that for a long time. I mean, throughout time, at some point we, a pivot moment for the company was, at some point, we signed Groupon at that time, as a merchant, and they were growing incredible pace and going into market after market, they have a huge reputation at the time. So it helped us a lot, together with them, to go into new markets, and we could very quickly implement new payment methods and get them to market with them. And then suddenly, you know, we built out in a year, so many different payment methods and then suddenly you have this global solution. So not all of this, you can plan, especially in those earlier days. I think the things that we always dreamt about, not only doing online payments, but also in store, and we always thought about retail, but the fact that we're now also doing the likes of Subway, McDonald's, hotels and it's going beyond that, that's something we'd never thought about years ago. The fact that we are, you know, we're growing really rapidly, relatively in the US and that's for a long time in the beginning, I had the feeling like, hey, the US, our play there, so to say, is helping US companies globally, you know, and for quite some time that was the approach, because US it's all cards, it's all commodity, you know, what do you have to offer? Then over time, it turned out like, hey, with a very modern acquiring processing infrastructure, you can suddenly automate much

more for these larger companies. And also you can give access through the local debit routing networks. Oh, and if you do online and in store and combine it all, that's fairly new. So suddenly we had quite a few things we could offer that weren't there and that's driving a lot of growth on the US market and the fact that, that's happening, wow, I'd never anticipated it.

Doug Houser (22:56):

And that was something I want to build on, which is, Adyen's been around long enough, and I've seen this journey where everything was going to be e-commerce. Remember that, we were all going to be e-commerce, even when we're all at home, we still don't want it all to be e-commerce oddly enough. So, talk a little bit about how that's happened in the market, where it's seemingly, like everyone was looking off in the future, and it was one direction all the way to e-commerce, but it's kind of switched back to being omni-channel, right? And have, and being able to solve across physical payments as well in point of sale as it is online.

Roelant Prins (23:32):

Yeah. Yeah. You know, the way I look at it, what we see happening is that people are now used to having multiple ways that they pay. They have things like Apple Pay or Google Pay for their favorite food order apps that they go to every Friday. And then, ooh, if I buy some luxury products, I use my Visa card, but if I go for my day-to-day online groceries, that's where I use my Internet banking, because that's what they like from a cost perspective. And because of technology, making it so easy now to have these multiple payment methods, it's all stored for you. It's all there. It's tokenized. So it's not difficult to run a few of these different payment methods side by side. And it's almost like a contextual way of payment method preference, which ties into what you're saying. There's so many different situations where people want to buy and interact with brands. We see a craving for people to go out and go to stores and buy things and experience the shopping. Whereas at the same time, there's lots of things that people just want to get shipped off to their house once a week. It's, you know, and it's all possible. So, to figure out as a brand, like, how do I cater for these different segments of customers that I have, is the key? And they all have different needs. It's not like everybody's the same. And it's easier to address them if you invest in the technology.

Mike Robertson (25:01):

Well, speaking of the same, I mean, that's critical, isn't it, it's a segmentation and knowing what job you solve for whom. Speaking about that, then in terms, the actual payment methods, let's just move a little bit towards an area, which is for some quite controversial, sort of digital, you know, asset tokens, cryptocurrencies, call them what you wish. Where do you, and I'm not suggesting that Adyen tells us anything that's not public, but where does Adyen see the link between that asset, so to speak, and the payment channels? How do they come together, do you feel? Do they come together?

Roelant Prins (25:32):

Yeah, not really at the moment, from our perspective, you know, I think we are very pragmatic in how we work, I mean, if you hear me talk that comes across, maybe already here and there, but we've always very much looked at how, what issues do merchants have right now? And a lot of those are either; we want to go into more and more markets. We want to be able to, you know, support the Japanese customer, whose paying with a different payment method, then the customer in Brazil, or in, we want to drive costs down in the US, how can you help us do that? And from that perspective, that's always been driving us, that's driving our development roadmap. And from that perspective, we have always been looking at, like, what can we do for customers along those lines? And it's not like we're only fixing the problem they have today, but our windows there for few years down the road and see, how can we really best help them? What's their problem in growing today? And what can we do about that now? How does it then work when we're thinking about new ways of payment, what new payment methods to add to our platform? Yeah, the past few years it's been a lot about buy now/pay later, and there's the large ones that we work with, like Klarna, Affirm, Afterpay. But there's also lots of local initiatives in countries like Spain, France, across APAC, and those are actual current needs that merchants have. Whereas on the crypto side, you know, we've always been looking at customers and asking them what payment methods would you like to see? And this doesn't come up. It's not like all of our customers are keen to have crypto as a payment method for enabling their customers to make payments. And therefore it's currently not high on our to-do list because you have the merchant, the demand isn't really there.

Mike Robertson (27:15):

I get that. So, I can sort of see your point. It feels like you're agile enough to react when you see the demand. I get the pragmatic aspect there. I saw online recently, quite a cute headline about going Dutch, which of course referred to Adyen. And it made me chuckled because, you know, obviously the double play on things, but what is it that you think that really means in the, in terms of the future of you offering in the payments market? What does going Dutch mean to you?

Roelant Prins (27:43):

Yeah, well, it's funny because in our country it doesn't have a very specific meaning, so just to make sure how would you explain that expression?

Mike Robertson (27:53):

Well, going Dutch was, especially for me, which I don't do any more now that I'm married, but when I was dating, it was me splitting the bill with the young lady, hopefully.

Roelant Prins (28:03):

Yeah. What does it mean to us? I think, you know, it's about flexibility. It's about enabling different journeys. And I think the first thing I think about is, you know, QR codes. What's the role of QR codes and what are they

doing outside of China and APAC? Because of course, in China and, you know, they've been around for a long time and very effective. We've seen a huge amount of growth in using QR codes in enabling payments and more across Europe, more recently. And that includes, in these lockdown areas, the ability for people at restaurants to order and pay without having to touch anything or to interact. And these QR codes then drive the ability to split, for example, I mean, it's very easy to integrate order and pay in one go. It's easy to include loyalty, but it's also, enabling these split transactions. So I think technology enables that and makes going Dutch much more simple. That's how I look at it.

Mike Robertson (29:11):

Well, you could also say, going Dutch implies taking the Dutch or Adyen-ing approach to addressing the market, which I suspect is the double play there, wasn't it?

Roelant Prins (29:21):

Yeah, no, of course. I mean, that's the other part that I like about it, but I, that's the bragging answer, which is not in our DNA.

Mike Robertson (29:29):

I understand.

Doug Houser (29:31):

So one question I do have about it, when you're talking about cryptos, you're saying that your clients haven't been begging for it right, or even their end users? And kind of want to ask the question again, over time, what's been the biggest surprises in the market as far as something that you didn't realize was going to catch on, as far as from an experiential standpoint in payments? And also something that maybe either hasn't changed, that you thought would by now?

Roelant Prins (29:58):

Yep. I think the success of buy now/pay later in the US is something that's, an even the pickup in the UK, is something that I did not see coming. You know, because I think the way we looked at it, like credit cards in those markets are real credit cards. A credit card in the Netherlands, for example, means it's just a postponed debit because the moment I pay with my credit card today, then ultimately by the end of the month, automatically, the money's taken off my account. But of course in the US, UK credit card means real credit, so why then a need for buy now/pay later? Isn't that the same thing? Yeah, of course that is happening and it's growing and that's something that I wouldn't have expected. I think the, you know, the thing that hasn't happened is, I'll put it differently in the sense that, looking into payments and the importance and the often underestimated role of culture and habits, in how people look at payments, how you look at adoption of payment methods and the change in behavior. I think that's often, you know, not taken at the right levels because in countries like Germany, Netherlands and others here in Europe, there is a massive feeling of, you know, not wanting credit at

all in your life. That's how we grow up. You are taught here, credit is a bad thing, you stay away from, that's only going to cause problems. So you don't want to do that. And that's something that's important here, but in Germany, very relevant. And that has a lot of impact in how people think about payments and what payment methods, and how they will be successful. In line with that, there's an example of, you know; the most important payment method here in the Netherlands is called iDeal. It's based on the Internet banking infrastructure, it's been massively successful, and everybody uses this for their online payments. The funny thing about it is that people really look at it like this is the payment method. This is the best thing out there. If you can pay with this, you should always go for it. This is the most trustworthy way to pay. However, it almost acts like a cash payment in the sense that the moment I make the payment, I transfer the money in real-time to the merchant, and it's gone and they then have to ship me the product. The moment the product doesn't arrive. There’s no way for me to reclaim the money. I mean, there's no chargeback rights, there's nothing like that, the money is gone, and if the merchant’s off, then yep, sorry. Whereas a credit card, of course, you have all these protection mechanisms that give you much more, as a consumer, rights to get your money back. But still with that in mind, people still look at JEJA, iDeal, that's the most secure payment methods.

Mike Robertson (32:44):

So, do you think then, perhaps that's, if you like, what you've just described, there is one of the critical elements that support the future of card usage, this underlying relationship, credit aspect that gives them protection. Is that one of the protections for the card industry, do you feel? Or do you feel that's, you know, not even really fully understood?

Roelant Prins (33:03):

No, it's not everywhere, fully understood. I think there's also the conception of it's costly. I'm going to pay for something that, you know the whole idea that you have to pay for a payment method in the eyes of the consumer, here in Germany and the Netherlands, those markets. I'll never pay for something like that, you know, so it's a different mindset.

Mike Robertson (33:26):

Yeah, I get that. So given the different mindsets and the fact that obviously, you know, you're in a global business and you're operating a global offering, let's move a little bit across to cross-border payments because clearly that the friction in the cross-border payment is the two currencies and, you know, and there's often, you know, certainly there's lots of startups out there that seek to sort of address that from a cost perspective or from a friction perspective. I want to just sort of combine a question here with the future of embedded payments, this sort of, this payment that's embedded in the underlying transaction, but it's almost seamless, as you don't even know it's there, and the cross-border element. Your thoughts on this how do those two things sort of become more frictionless, more mainstream in the future from your perspective?

Roelant Prins (34:08):

Yeah, I mean, this is of course where there's so much optimization still to be done. And it's only just started, I think now, if I look at the likes of TransferWise and what they're solving is so impactful for people that are traveling or that they're spending some time in a certain country. I mean, I moved to the US for about a year, as part of this Adyen journey. And you don't want to set up everything locally, then, you know, it's incredibly costly to use your non US bank accounts or cards, etc., to spend in the US. I mean, it's almost irresponsible to do that in terms of the Forex markups and everything. It's incredible. So there's a huge path of optimization there. You know, I think it's only just about, started from a merchant perspective, you know, that there is a company we work with, which gave me the insight. So there's this company called Joe & The Juice. They're one of these super fun, coffee and juice chain there, and they're really global, they're in APAC, in Australia, US, all over Europe. And they really decided we want to run a consistent experience in every country. So we work with them, hence I know a bit about what they're doing. And one of the things they were very focused around is loyalty and making loyalty as seamless as possible. So embedding payments in an app where you can pre-order and then pick up in the actual Joe & The Juice location. The payment is done automatically, loyalty is awarded and minimizing all the efforts, right? It's just; order once everything happens, and what they're aiming to do, because they have a lot of these international travelers and as customers, they've really been building this as a uniform infrastructure in every country that they're operating. So you can really actually go in Sydney, order something, go to New York, order something, it works the same way, it ends up at the same loyalty program. And that's something, if you think about it, which retailer, which brand runs a consistent uniform infrastructure like that, hardly anyone, because payments are so fragmented. These currencies are driving a lot of the fragmentation, but also, you know, by nature, by tradition, you have to set up locally, you need local contracts with local payment companies, local bank accounts. There's no way to combine all that. And, you know, with this company, Joe & The Juice, we figured out that, hey, wow, they're one of the first that are actually now doing this where you think like, that's quite unique. I mean, for e-commerce businesses, that's much more common, right? But for the likes of anyone that's to do with retail that doesn't exist.

Mike Robertson (36:45):

Absolutely, that really innovative!

Roelant Prins (36:47):

Think about hotels, it all has to start. Nothing out there yet.

Mike Robertson (36:54):

No, no absolutely. I get where that's going.

Doug Houser (36:57):

So I think from an experience standpoint, what are all the layers that, kind of, go into that, right? And so we often talk about here is the bank is the, end users and wants someone to be the network for them. They say, okay, just go ahead and connect everything, please because their business, a hotel chains business is to make sure everyone's comfortable. It's not to actually create a global payments experience, and what, from the standpoint of innovations, will kind of help that journey? And also, basically, what part of this is really kind of just brute force, like basically saying, hey, we're going to create a global infrastructure and it's difficult, but someone has to do it essentially.

Roelant Prins (37:37):

Yeah, no, I think that second part is really important because you can't do everything, have the low risk cost, and at the same time have all the other things, those are hard decisions these companies need to make. But, what I would say is to add an element of humbleness, because we as payment companies tend to look at things, you tend to look at the world a bit through the lens of payments and it feels like, hey, payments plays a really instrumental role in creating these fantastic uniform customer experiences all over the world. And we can do it. But if you look at the bigger landscape in terms of systems, that these companies have to deal with, I mean, then payments is maybe like 5% of the overall. They've got all these point of sale systems; they've got the local networks to deal with in their stores. They have customer management, there is older accounting systems. They have to comply with local tax. And if you paint a bigger picture that they need to deal with yet, that all plays together. Of course it's easier if you start from scratch, then having to try and re-engineer all that existing stuff that you already have running, but I think it can be done, but you have to make certain hard decisions like, if we think this is important, then we got to move to one central system around our point of sale infrastructure, because that's the way we can be ready for the future. And anything we build and innovate here instantly becomes available everywhere. That's where you want to get to.

Mike Robertson (39:05):

You're effectively describing an efficiency of scale, which by definition implies, I guess, more collaboration and more collaborative partnerships, so to speak, to make that work. Because of course, as you say, payments are fragmented, especially cross-border. And, you know, kind of goes to a topical area, which under certainly topical in the bank at the moment, and I'm sure it's topical in most places. And that's the use of technologies and specifically the use of distributed ledger type technologies, or indeed, underlying Blockchains, no matter what type of technology you look at there. Is that a topical thing within Adyen in terms of, well, how does one create this sort of distributed or decentralized network that embodies transparency and trust and immutability, but still works in the sense that the underlying data that should be protected is protected and it's private, etc., etc.? Is that a general conversation in your firm at the moment?

Roelant Prins (39:52):

It's a discussion out of interest for a lot of people because of the space we're in. But it's not big topic we're actively working on to try and create in a sense that, we have to deal with a lot of reality that these merchants are facing today, and we weave that in at some point in time for them. And so that's a bit how that fits in.

Mike Robertson (40:13):

And I guess as you say, you have to be pragmatic and I guess you solve today’s problems today. But I can't help wonder how successful companies are going to adopt these sorts of ideas. Because the more I read about it, the more I can see the potential there, just like I could see, as I'm sure you could, going back 15 years ago, the potential of the Internet and what that was going to do for us, despite the fact that we saw lots of disasters along the way, one can't argue that it's fulfilled a lot of the promise.

Roelant Prins (40:37):

Yeah, yeah, I agree. I agree.

Mike Robertson (40:39):

Yeah. It's going to be very interesting. Roelant, I'm afraid we've come to the end of this, which is disappointing because I'm really, really fascinated in this area. It's such a broad topic. And it will continue to be that I feel, as world trade continues to expand. So I just want to thank you very much for being with Doug and I today. It's really been interesting. Thanks so much.

Roelant Prins (41:00):

No, my pleasure. It's been fun. Thanks for inviting me.

Mike Robertson (41:03):

Yeah, sure. Maybe we'll do this again, and Doug, thanks very much for being here too.

Doug Houser (41:07):

Thanks so much, Mike.

Mike Robertson (41:08):

Right, so as always, you’ve been listening to Pivot, the Bank of America Cross-border Commerce Podcast Series, our compelling discussions with industry leaders and key figures in the cross-border payments ecosystem. Join us again next time for more of the same.

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