Adyen, Davi Strazza (President North America) — Growing a Global Payments Powerhouse | by Kailee Costello | Wharton FinTech | May, 2024

Overview of Adyen

Davi: Adyen is a global financial technology platform for enterprise businesses. The world of commerce moves incredibly fast. And all it takes to realize that is just to think about what shopping was like, say, 10, 20 years ago versus what it is like today. And just take Uber as an example. I think the fact that we go from point A to point B. We don’t even touch our wallets. We don’t even think about paying for that service. It’s quite incredible.

I think today we kind of take that for granted, but there’s just a lot of technology behind the scenes to make that payment experience invisible. We’re very fortunate to work with Uber, but also like so many other companies in the digital space, in the unified commerce space, as well as in the platform space that are shaping what commerce looks like. They’re transformative businesses, not only here in the US, but also globally. Our role in that evolution is really to kind of power those businesses, to take payments, power those businesses to prevent fraud, enable them to expand internationally, enable them to gather data from consumers and understand their consumers in a much better way, an effective way. But also if you look at the platform side, we help the largest platforms in the world to embed payments, create new revenue streams, embed finance, offer things such as accounts, a card, or even capital to small and medium-sized businesses, which is incredibly exciting.

Adyen’s single platform approach and value proposition

Davi: Going back to the very beginning, I think the hypothesis behind Adyen and how we started Adyen touches on that very point. If you look at all of the challenges that businesses had before and until this date, when it comes to expanding their business, like I said, taking payments, gathering data, ultimately, those challenges they have.

They derive from the fact that there’s a lot of fragmentation in the ecosystem. There are many different parties that influence the success of a transaction. At the time we looked at all of that, we saw incredible opportunity. Businesses were growing, e-commerce was exploding. And we said, look, if challenges are often directly, sometimes indirectly related to fragmentation, what if we built this single global platform? And so we happened. We started from the ground up. We built our entire tech stack internally. We haven’t outsourced anything in that process, and we haven’t engaged in any M&A activity since the very foundation. I think what that does is it gives us the ability to control what happens in that value chain. We go directly to Visa and Mastercard. We have our own licenses, between acquiring licenses and banking licenses. It helps us access much more quality data. It helps us translate that data into insights for our customer base. And it helps us innovate much faster as well.

If you look at the ecosystem broadly, it’s fair to say that Adyen is the only company with that unique profile, that runs the platform worldwide, across any channel, across any key payment method, under a single tech stack. And that is really what makes us unique.

Adyen’s rationale for obtaining a banking license in 2021

Davi: The first banking license we obtained was actually a few years earlier in Europe. At the time, we were already quite successful in helping enterprise businesses take payments. Those relationships are typically one-to-one when you think about the money out. We work with a big company, they’re taking payments, and all of those funds are landing on one bank account.That’s been how we built the system.

As things evolve, the number of payouts that our system was generating increased. Not only that, but we also started to work with more and more marketplaces where there’s one entity that we serve, which is that marketplace, that platform, but then there are hundreds, thousands, tens of thousands, sometimes millions of sub-sellers, sub-merchants. Think of eBay, think of an Etsy, right? And so the number of payouts that originated from our platform multiplied tremendously. On that side of things, there was a dependency on third parties to complete those payouts.

We saw an opportunity to do on that end the same as we did in the pay-in. That was the idea at the time. It was essentially to find another way to streamline operations to make it more efficient for our customers to receive and move their funds. We got a banking license in Europe, European Central Bank back in 2017.

In 2021, we got a branch license here in the US. It’s a Federal branch license. It gives us the ability to offer enterprise bank accounts to our customers. It gives us the ability to offer short-term loans or capital products. It helps us with issuing, but specifically it also helps us to connect to different parts of the ecosystem directly. Shortly after we got the banking license, we got access to a master Fed Account. We’re connected to FedNow. We also worked on connecting to the clearance house for real time payments.

It really expanded the reach that we could have in the ecosystem. Therefore, it expanded also what we could do for our customers. All within again, a single tech stack, which is, which is really, what makes us unique.

Regarding FedNow, Adyen was one of the first fintech platforms certified by the Federal Reserve to utilize its instant payment infrastructure. What is Adyen doing to enable FedNow?

Davi: If you look at real-time payments in the US, most of the activity is happening on the pay-out side or the account-to-account side of things. It hasn’t really gone from that particular use case to the pay-in use case, at least not at scale. For the time being, I think that’s where we’re focusing on.

What that means in practice for our customers is we’re going to give them the ability to receive their funds faster, but also if they are a marketplace or a platform business, that has underlying sub-merchants, sub-sellers, it gives them the ability to move funds 24/7. This is beneficial for them and their customers. So that’s the use case that we are focusing on.

It can very well expand from that use case to other use cases. Brazil and India show that there is a lot of opportunity for real-time payments to go incredibly big on the pay-in side. Pay-by-bank is evolving incredibly rapidly in those geographies, but also in Europe. We see a future where if you look at the pay-in landscape, things will diversify even further. That type of technology, FedNow, RTP, they have the potential to expand to those use cases. When that happens, we want to be ready to offer that service to our customers and allow them to take full advantage of those technologies.

How Adyen’s offering and focus areas have evolved over the past few years

Davi: When we started, our business was very much focused on e-commerce, on online businesses. Think of Uber, like I said, think of Microsoft, think of Spotify. We spent a lot of time there. I mean, e-commerce was growing incredibly fast, as I said, and there was a lot of opportunity there. Now, over the years, omnichannel has become a buzzword. For many businesses that were operating in store, it became vital for them to expand to e-commerce. As they did, shopper expectations changed. And it became, over the years, also critical that they could connect e-commerce transactions to the transactions that were happening in the store environment.

That is not trivial. Technically, that is quite challenging for many reasons, but I’m just going to give you an example. Every time you go shopping online, you leave something behind. You leave an email, you leave a phone number, you leave something that helps that merchant understand who you are — an attribute or identifier to your customer profile. But when you go to a store, that doesn’t happen, right? You want to buy whatever you’re buying and you want to leave. You don’t want to have to answer questions or fill out forms.

The vast majority of the transactions that take place in the in-store environment are not identifiable. That’s really the opportunity that we saw. Over the years, we had a lot of tech built for e-commerce and we used that same technology to help retailers connect the two worlds, and helped in the digital transformation journey.

We also saw marketplaces and platforms growing very fast all over the world. I talked about eBay and Etsy, but there’s also SaaS businesses for which embedded payments became incredibly important as a revenue source. Today, there’s research showing that just about a third of small business owners will rely on a platform for services, banking services, but that will grow to three quarters over the next five to ten years. It’s essentially because for small business owners, it’s much simpler to work with a platform that is already helping them on the storefront and get access to financial services via that platform, as opposed to going to a traditional bank and going through a very tedious process to access capital. We also saw a great opportunity to offer those services to platforms, to enable them to extend those services to their customers. Our area of focus expanded again from online to unified commerce, but more recently also to embedded payments and finance. And it’s been quite a journey. It’s been really fun to watch and be part of.

Davi’s career path and motivation for joining Adyen

I got into fintech just out of college, and that was at a competitor of Adyen. I thought there was a great technology business. But I learned over the years that from the outside, it looked like a lot of technology, but then the company itself was controlled by two banks. I was frustrated at one point. But my path crossed with Adyen as I was selling the services of my former employer to a big digital merchant in Brazil at the time. Adyen was also competing for that deal, but in a different capacity. And there was a potential partnership.

Things moved really fast and the head of sales at Adyen in Latin America at the time pinged me on LinkedIn and said, “hey, we’re looking to grow the team here in the region. Would you like to talk?” I said, “well, why not?” I was impressed by what I was seeing at the time coming from Adyen from the competitor’s point of view. I decided to take that talk. We were 200 people globally at Adyen at the time, and 15 in Latin America. What surprised me about Adyen was not only the tech I saw, such as the product and solution, but also the ambition, customer focus, drive and energy.

That was very energizing. And that’s how I started my career. I joined the team in Latin America as an Account Executive for the sales team.

You were the President of Adyen in Latin America. What are some of the key differences that you noted between that geography and your current role in the US?

Davi: There are many things that are similar and some that are dramatically different. I think culturally, there are great differences, naturally, between Latin America and North America. I think one of the mistakes that many businesses that are based here in the US make when expanding to Latin America is that they think that a one size fits all approach will work.

Latin America is composed of several different markets. Each and every one of them is very nuanced, not only from a technology perspective, but also in terms of shopping behavior and how people do business. The culture is very different. How people pay, but how you make business. Adyen sells to large enterprises and going from a first conversation to a contract signed to a project that is running at scale is very different in Latam compared to what it is in the US. I had to learn that about the US over the years.

I think next to that, I would say what is different is the scale naturally. The US is huge in scale. I think when I first moved to the US many years ago, I was learning about some businesses here. I remember flying to Texas and we were seeing this merchant. It was a big grocery chain. And I was like, all right, I mean, how big can that be? My expectations were not really high. But then in learning about that, I learned that they were like a $25 billion business in volume. I was like, wow. They operate in Texas alone. And I was like, wow, this is probably bigger than most of the businesses operating in Brazil. The scale is much bigger, which makes it more challenging and increases our responsibility as well as a business. There’s all of those types of things. The regulatory side of things is very different as well, the competition landscape. I guess things are very different from those lenses. Now, what is similar is to win.

Our recipe for success as Adyen has stayed the same, not only between Latin America and North America, but also when you look at Europe, when we look at APAC, and that’s essentially a few things. First, we are a customer-led organization. We service enterprises, and just like what I said about Latin America, there’s no one size fits all solution for enterprises. Enterprise is hard.

It takes time and it takes a lot of customer focus. And we pride ourselves for being a customer-led organization. We spend time with our customers. We learn about their business. We learn about their challenges, needs, and we build products on that basis, not otherwise. We don’t spend time in the room thinking about what great products could change the world and then we try and sell them. No, we build based on what matters for our customers.

That is very key, and it’s equally important here and in Latin America. Finally, the same approach that we took in Europe and here in terms of the single platform, we took in Latin America as well. We built it all from the ground up. We went after the licenses. We built a phenomenal team on the ground, experts that know this business inside out, that share the same passion and ambition with us, that share. The same core principles as we do as a company. And that’s again, important all over the world. So as I said, some things are very different, but others are very similar.

Historically, you focused on larger enterprises. Going forward, what do you think this sort of mix of enterprise and SMBs will look like?

Davi: We started the business focusing on enterprises and we continued that way for several different years. Our tech stack and our processes and workflows and even our commercial force, it’s all been wired for enterprises. There was a time at Adyen when we were like, well, “what if we could go down market? What if we could go direct to small businesses and maybe there’s a way we can service them really well?” In full transparency, we tried that. We failed miserably. Luckily, we failed fast and we learned a lesson. So we adjusted the strategy to focus on platforms, like I said.

The platform economy is growing very fast all over the world. There are all sorts of examples of platforms that will find a specific niche in the market. Take like Food and Beverage or take Beauty, take like any subvertical. Chances are there is a SaaS business there that is offering a range of different services to small businesses.

We want to go to those players and help them embed payments and help them embed finance. They own the relationships. They know how to service small and medium-sized customers. They know that much better than we do. So if we can empower them to do what they already do even better and expand the range of services they offer to small businesses and create stickiness and create new revenue streams. I think that’s a win-win for everyone.

We continue to focus solely on enterprises. Our way to service small and business owners is through platforms. Platforms are incredibly important and strategic to Adyen because that’s how we reach the small and medium-sized businesses. It’s indirect, not a direct relationship that we have with them.

That has been working really well between the eBays, the Etsys’ of the word, to on the SaaS side. There are several relationships that we have there with companies that are doing really well in their spaces.

Adyen’s partnerships with companies like BILL and Plaid

Davi: BILL is an example of what I just described. It’s a phenomenal platform, financial services platform for small businesses, especially when it comes to their account payable, account receivable side of things. Our partnership with BILL is to help them service their customers in a more efficient way, in a more scalable way when it comes to payment processing and money movement. We started that relationship many years ago, helping them again, just with card payments. If you are a small business and you need to pay a supplier or something and when it was your card. That’s where we can help. But also when it comes to money movement, we have card issuing capabilities. We can help businesses issue virtual cards or physical cards in different geographies in different ways. We recently expanded our relationship with BILL from only payment processing to also issuance of virtual cards. In general, that relationship kind of fits the story that I was sharing just a few minutes ago.

When it comes to Plaid, then it’s a different thing. What we see is that the payments landscape across the world is evolving rapidly. Here in the US, it used to be very card-centric. Any merchant doing business across any industry could get away with Visa, Mastercard and American Express, maybe another one or two networks in their checkout. And that’s changing really fast. We saw over the last few years buy now pay later products growing. We saw wallets growing, things such as Vemo or Cash App. We saw more recently pay by bank solutions growing.

And that’s where, for one of the areas where this partnership with Plaid becomes strategic for us. We have the banking license, we have the technology to process an ACH transaction, but then Plaid can help us make that process of paying with a bank account for a consumer incredibly seamless.

At the end of the day, convenience matters a lot for consumers. If paying by bank or using a bank account is way more difficult than paying using your card, that’s just not going to fly. It’s not going to scale. So Plaid will help us on that side, like making sure that if you want to use your bank, that process is seamless. But also for the merchant, they can be sure that the bank account is legitimate. So that is one example.

Another example is think of marketplaces, like I said, or SaaS businesses that have to onboard and KYC sub-merchants, sub-sellers. Our partnership with Plaid is going to help us also help those platforms and marketplaces screen and underwrite, collect documents, verify accounts from those sub-merchants in a much more effective way. We’re very excited about that space. We’re very excited about the partnership. I think overall, it’s going to help our customers kind of expand their reach, but also streamline their operations.

Industry outlook and the future for Adyen

Davi: I think what has helped us in 2023, but also over the years, is we are very long-term oriented as a business. We realized that the word of commerce is moving really fast. There are so many different theses. There are so many different things going on out there.

If you don’t focus on a few things that move the needle for your customers, chances are you’re going to spread yourself too thin and things won’t really work well mid to long term. So from the very beginning again, by focusing on enterprises, by building our platform from the ground up, we have always had a lot of focus. We have always understood that our investments will take time to materialize.

That takes a lot of discipline. Many companies were tempted to make investments when new technologies arose or when tides have shifted or when it was easy to raise funds. They made very strategic decisions, you know, at that moment.

We always try to seize opportunities when they arise, but again, we always go back to our core principles. We always go back to the fundamental question. Is this going to help our customers grow? Is this going to generate exponential change for our customers? Or is it going to be only incremental? Or if we go ahead and build this, will our customers or the majority of our customers see value in it? So by being long term, we have always made very calculated and strategic decisions when it comes to our product. But we have also taken the same approach when it comes to how we grow our teams. So going through 2023, of course, there are macro-economic headwinds that ultimately impact our business.

But if you look at our fundamentals, our balance sheet, if you look at, again, all of the financials of our business, nothing fundamentally has changed. That helped us navigate the turbulence really well. When we think ahead, again, we’ll continue to adhere to those same core principles. We’re very excited about pay by bank. We’re very excited about embedded financial services.

But we’re not trying to optimize for the next quarter. That is absolutely not what we are doing.

We’re always optimizing for our customers and their mid-to-long-term success. We realize things will take time, but we definitely want to seize opportunities when they arise and we’ll make sure to build products when we know they matter, when we hear from our customers that they matter.

What trends do you expect to see in the payment space over the next 5–10 years?

Davi: If you go back, it’s really hard to think that 10 or 15 years ago, one would believe that you could pay using your biometrics or if you could make payments go invisible. Things just change really, really fast in our space. A lot of that is driven by shopping behavior. A lot of that is driven by regulation. There’s so many different forces acting here.

One of the fundamental challenges in this industry is, for many businesses, it is still quite complex to accept payments and prevent fraud. Especially if you’re trying to do that at global scale and across channels. We are really on a mission to tackle that head on and solve that problem for our customers. It should be very easy for any business.

To expand internationally, to accept the key payment methods, to create a beautiful seamless checkout, and to learn about their customers as they do so. The second piece that is challenging in this industry is many transactions fail. Payments isn’t a solved problem, especially if you look at e-commerce. In fact, we know for a fact that some 15% of all transactions in the online space fail. There is a lot of opportunity there. When I think about the future of the industry in the e-commerce side, I see that gap closing.

I really want to see it as a world where businesses don’t leave so much money on the table. The success rates for e-commerce, they go really high or comparable to what it is like for the in-person payment side. So that is one thing.

The second thing I see is we talk a lot about how stores are being reimagined. In some cases that’s happening now. But I think, again, in 5–10 years, we’ll see that at scale, hopefully. I do think that stores are going to go more and more iOS and Android. So that experience at checkout will look very different. We won’t have to go to a particular corner of the store and then face a queue and then tap our card on a piece of brick. I don’t think those things will exist in the future. I like to think of that experience as a digital-first experience. I think that’s going to be fascinating. It’s going to be incredible for businesses, but also for consumers.

Adyen initially started in Europe. How has the company approached growing its presence in North America?

Davi: Not many people realize this, but we’ve been in North America for over a decade now. The thing about Adyen is we are behind the scenes. We want our customers to shine, not necessarily our brand or anything like that. And we like to think that if we do a great job, our customers will be so happy that, again, our business will grow as a consequence. So I think our strategy coming to this market has been first, “what are US companies looking for? What are their challenges? What are their needs? What do they really care about? What moves the needle for these businesses?”

I’ll tell you one thing: it’s way more common for US businesses to go international than a Brazilian business. And I do hope that changes, but I think especially where I am based here in the Valley, it’s very common to see a digital business that wants to conquer the world.

Understanding those challenges and expectations, was the first and foremost in our ranking of things that we wanted to get right. The second is, you need people that understand this market. You can’t approach North America from the European lens, just like you cannot approach Latin America or APAC from the American lenses. You really need to go very local, understand that landscape, understand how business is made, understand communication aspects, and all the different things that are important when it comes to those relationships. But then lastly, from a cultural standpoint, there are certain things that have to be the same globally. Here I’m talking about core principles. In our case, we have something called the Adyen Formula and it’s a set of eight guiding principles that we believe are absolutely critical for the success of our business. They apply to every single office of Adyen all around the world.

So when we approach expansion, we take a very calculated approach. We focus on our customers, but we focus a lot on culture. Every single person that joins Adyen, regardless of where they are joining us, which function, which seniority level, every single one will interview with one of our board members or one of our global leadership team members, every single one. We take culture very seriously, and we do the same in the US. Its really helped us. I think the US is now almost 30% of our net revenues globally. It’s growing the fastest. We’re very proud to service some of the largest and most transformative businesses in this region.

Looking to the future, what are Adyen’s plans for North America commercial and growth strategy?

Davi: When we look at where we are, again, we’re far from being a beginner in this market. We’ve been here over 10 years. We partner with incredible businesses across digital, unified commerce platforms. We have a large office here in San Francisco. We have a big office in New York and in Chicago. We’re definitely not in the beginning of our journey, but we’re also very far from where we think we could and should be. As I said, despite our size, we processed $1 trillion last year. We still have single digit market share. There’s an enormous growth opportunity for us. We see enormous opportunities for our customers.

Going back full circle, I think our focus is really there. If we can do a really great job helping the largest businesses in North America continue to grow or expand to new geographies or streamline their businesses, being more efficient, our business will grow by consequence. That is really our focus. And again, if we do that well, I think we’ll go from single-digit market share to double-digit.

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About Adyen

Adyen (AMS: ADYEN) is the financial technology platform of choice for leading companies. By providing end-to-end payments capabilities, data-driven insights, and financial products in a single global solution, Adyen helps businesses achieve their ambitions faster. With offices around the world, Adyen works with the likes of Meta, Uber, H&M, eBay, and Microsoft.

About Davi Strazza

Davi Strazza is the President North America at Adyen leading the charge on the fintech’s largest market for growth. He began his career as the sales manager for Latin America and continued to learn and grow within the company, leading him to his current role which he has held since January 2023. Prior to overseeing the North America market, he was the President Latin America at Adyen. Davi received a bachelor’s degree in economics from the Universidade Estadual Paulista Julio de Mesquita Filho.

About the Author

Kailee Costello is an MBA Candidate at The Wharton School, where she leads the Wharton FinTech Podcast team. She’s most passionate about how FinTech is breaking down barriers to make financial products and services more accessible — particularly in the personal finance space. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at [email protected].

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