Bank’s €8bn cash call is backed by a cabal of mainly European rivals
Adyen's Hayashi: “Payments is not a one-size-fits-all business”
By Aman Kler
Warren Hayashi, president of Adyen Asia Pacific, a global payments platform, talks about how the company differs from its competitors in the market, the role of consumer experience, and its unified commerce solution.
- Adyen APAC addresses the shift in merchant needs towards enhancing the consumer experience
- Hayashi explains how Adyen differs from banks and payment service providers like PayPal
- He also explains the company’s unified commerce solution
Adyen is a payment gateway that facilitates payments across in-store and online channels to enhance the customer experience through the provision of a unified commerce solution. The unified commerce solution facilitates the creation of a well-integrated customer experience across all channels and platforms, offering merchants a comprehensive view of their consumers, which provides the basis of value-added services such as loyalty programmes and customised interactions with customers. Adyen has clients that include new economy companies like Facebook, Uber, Netflix and Spotify, and has processed $122 billion in volume for merchants in 2017, a 61% year-on-year increase from 2016, resulting in $1.14 billion in annual revenue for 2017, a $400 million increase from 2016. Furthermore, in 2016, Adyen Asia Pacific contributed to 10% of the company’s sales.
On Adyen’s place in the market, Warren Hayashi, President of Adyen Asia-Pacific claimed that the company is one of the few to offer comprehensive solutions, from the front-end to the back-end, internationally, as the company expanded from Europe, to the US, and Asia-Pacific, thus further differentiating from its competitors in the payments space. Having recently unveiled its unified commerce solution in Singapore, Adyen is poised to capitalise on the “substantial opportunity” in the region. A report by Temasek Holdings and Google forecasts that the Southeast Asian e-commerce market is expected to grow to $88 billion by 2020.
In the Asia Pacific region, there is a growing popularity of cashless payments, as increased competition in the arena has led to the availability of a variety of payment options. China is currently at the forefront of this development due to the popularity of mobile payments, with large players like Alipay and WeChat Pay dominating the market. In Southeast Asia, the large population of the unbanked and high mobile penetration rate have led to the proliferation of digital wallets such as GCash in the Philippines. However, the growth in demand is uneven between countries, with cash remaining the payment method of choice in some areas due to security concerns and lack of infrastructure or knowledge.
The Adyen difference
According to Hayashi, Adyen is better suited than banks in offering unified payment solutions in two ways. First, he claims that Adyen is more agile in the integration and addition of new technologies and functionalities, due to its nature as a technology company. Second, he asserts that the company operates with a more responsive, customer-centric approach. Instead of creating new payment methods as banks do, the company adds payment methods based on the demands of its customers, with more than 200 local payment methods, such as Alipay or UnionPay in China or the Doku Wallet in Indonesia, being added to its platform. Hewent on to contend that Adyen is able to offer a globalised unified payment solution, further gaining an edge over banks: “I don’t think there is any bank that can cover the payments processing globally, because of how they have grown through acquisitions. So, it’s about simplifying. It’s about making sure that we can offer the payments processing through the next ten countries on the same platform, in-store and online.”
Hayashi also emphasised that Adyen differs from PayPal, where Hayashi was previously employed,offering an integrated platform to give merchants greater control of the end-to-end user experience through multiple payment methods. “Payments is not a one-size-fits-all business,” he said. In February 2018, eBay announced its shift from PayPal to Adyen, citing lower costs, greater control of transactions and data for its merchants, and more payment options for customers.
The changing needs of merchants: the consumer experience
There have been changes in consumer demands with regards to retail experience. With the growing popularity of online retail and increasing propensity to shop online, consumers are increasingly engaging retailers through multiple channels, particularly through mobile and online channels, in addition to brick-and-mortar outlets. This has underscored the need for merchants to offer a seamless experience between channels to cater to this trend. Furthermore, consumers are moving towards alternative payment methods; and the ease of payment, security, transaction speed, and cost are all being considered.
Hayashi highlighted the evolution of the payments space, not only in terms of the shift in consumer preferences, but the growing importance of emerging markets.
“Payment preferences are becoming different as e-commerce grows. The fastest growing e-commerce companies are looking to catch the next consumer in Asia, in Latin America, or everywhere,” he explained.
When asked about the clientele, Hayashi said that the company looks at “the next generation of entrepreneurs” that have global ambitions and “that are looking at bigger opportunities”. He highlighted Singapore as an example, citing the wealth of choices consumers face in the Singaporean retail environment, which resulted in tougher competition among retailers from local and global companies.
Hayashi explained that the company offers growth as its core proposition to merchants. “We’re not here to compete on price. That’s the commoditisation of payments. We’re here to talk about growth, and when you talk about growth it’s really around the ability to globalise and enter new markets really quickly, through the same platform. It’s the ability to touch the consumers through local payment methods. Now with retail, it’s about unified commerce,” he said.
The company currently monetises through transactions. “I think the front-end of payments has become very much commoditised, so we think we have the best integration. So we don’t charge for that- that feels like a conflict of interest. We do charge on transactions, we keep our bond model very simple,” he added.
Offering unified commerce
Adyen has capitalised on the shifting tides of consumer preferences as it offers unified commerce as part of its core proposition. As the company incorporates local payment methods, most recently Alipay, it evolves along with the needs of retailers. The company seeks to provide a consumer experience, that retailers now focus on, that seamlessly integrates the in-store and online channels, particularly in terms of payments data and infrastructure, shifting from omni-channel to unified commerce. “It’s really around making sure you’re tailoring all the channels around the same consumer,” Hayashi pointed.
Another aspect of unified commerce that Hayashi mentionedwas customer recognition, for example, with regards to loyalty programmes and the linking of the payment instruments with the purchase registry, connecting shoppers that utilise different channels for the same retailer.
Moving forward, Hayashi hopes that Adyen Asia Pacific would eventually account for 30% of the global business. He intends to leverage the large potential for growth in the Asia Pacific region. The company is seeking high-growth businesses through the three offices that serve as spring boards into the regional markets: the Singapore office for the Southeast Asian market; the Shanghai office for the Chinese market; and the Australian office for the Oceania market. As the payments space continues to evolve with the changing needs of customers, there is a need for a more customer-centric approach to the solutions, which is tailored to maximise the customer experience through the multiple channels available.
Banks stay confident in the face of competition in the payments space
Adyen is but one player in a highly fragmented and crowded payments arena. It not only competes against banks, but against well-established players such as Wirecard, WorldPay, PayPal and Stripe. It also faces threats from new entries from a range of industries, including telecommunication companies such as Singtel, and the ride-sharing company Grab.
Even in terms of legislation, the environment is conducive for competition. For example, in Singapore, the Monetary Authority of Singapore urged banks to open their platforms to external providers through the use of application programming interfaces (APIs). In the rest of Southeast Asia, regulators seek to promote financial inclusion by promoting e-payments.
With its complicated value chain, the payment process is fragmented. Thus, new entries into the space need to bring together numerous stakeholders including consumers and merchants.
As such, there have been multiple partnerships forming. For example, in January 2018, Diners Club, EZi Wallet, EZ-Link, Liquid Pay, Mastercard, UnionPay and Wirecard collaborated to support an interoperable QR code platform. Another example would be Razer allowing Singtel to leverage its e-payment network.
Consumer preferences play a large part in shaping the e-payments space. With digitisation and the rise of ecommerce, consumers increasingly require the frictionless integration of payment options into their customer journey. As such, fintech companies such as Alipay and WeChat Pay leverage their ecosystems and extensive user penetration.
However, consumer preferences regarding payments vary, even across the Asia Pacific. Cash is currently the preferred payment method across most of Southeast Asia. The use of credit cards is prevalent in countries like Singapore and Thailand, particularly for online payments. In contrast, there is a widespread acceptance of mobile payments in China.
The complex and fragmented payments space is growing to address the pain points of customers and merchants, with the intent of moving consumers towards e-payments. Fintech companies and other new players are competing against banks and other traditional players that currently dominate the ecosystem. They are able to compete through their agility and innovative solutions.
Vincent Hui, General Manager and Head of Personal Banking Division of The Bank of East Asia describes these competitors to banks as: “more agile and flexible in doing business with merchants, as they may not need to face the same level of regulations as that of banks,”
However, banks are still the dominant force in the payment space. They leverage their high penetration rate, especially with their range of services offered
This aids in capturing the patronage of large merchants. Hui elaborates: “more payment options may not directly linked to better customer experience because merchant customers will value banks that provide a total solution on a whole for their banking needs, not just an acquiring service,” John Wong, head of global liquidity and cash management at Hang SengBank concurs, adding that there are other factors, including the merchants’ “trust and long term partnership with the provider.”
Banks have been investing in their own payment solutions as well. In Singapore, banks implemented PayNow to allow for mobile P2P fund transfers. NETS, the banks’ direct debit network, came up with its own QR-based payment solution. The Bank of East Asia recently launched its integrated payment platform, the i-Payment Hub. It provides merchants with a comprehensive range of mobile payments, including QR code payments, on a single platform. It allows the bank’s merchant customers to consolidate all offline and online mobile payments through a single platform.
The fragmented payments arena continues to grow, with the increased adoption of e-payments. Competition, according to Wong, “enhances the customer experience”. He opines: “Bankers have to be open minded to work out better customer experience to maintain their business share in the payment space.”
Keywords: E-commerce, Customer Experience, Payments
Institution: Adyen Asia Pacific
Country: Singapore
Region: Asia Pacific
People: Warren Hayashi
Leave your Comments