How Adyen 20X'ed revenues in less than a decade!
Adyen. Equity Research! Part 1/3
It has never been easier, safer, and faster to pay for goods and services online.
Not only do all e-commerce stores, streaming services, and apps accept credit cards, but they also accept a wide range of other payment methods. Mobile wallets, direct debits, local and regional payment methods, and more.
But rarely do people appreciate it or think about how it works!
Well, there is a whole ecosystem of companies that enable our modern digital financial system to function.
And one of the key players in this ecosystem is Adyen.
Adyen is a payment processing juggernaut, handling €1.3T in payments!
This makes Adyen one of the largest and most important financial services companies in the world.
Furthermore, thanks to the quality of their offering and massive scale, Adyen grew its revenues 20X in less than a decade!
In this 3-Part Deep Dive, I will explore what made them such a success and what lies in their future.
In Part 1, we will explore how Adyen came to be and its business model.
Next, we will look at competitors and business risks in Part 2.
The Deep Dive will conclude with a look at opportunities, valuation, and finances in Part 3.
1. The Story of Adyen
2. Business Model
3. Competitive Advantages
4. Management
5. Parts 2 and 3
1. The Story of Adyen
Adyen was founded in 2006 in Amsterdam, the Netherlands, by Pieter van der Does and Arnout Schuijff. The founders saw the opportunity that online payments could become and decided to tackle it with innovative technology solutions.
Funnily, this was actually their second attempt at founding a payments company!
During the 1990s, they formed a payments company called Bibit, which was successfully sold to the Royal Bank of Scotland in 2004. After the sale, the founders worked for a bit for the bank, but decided to quit and start again.
They saw the inefficiencies and fragmentation in the existing payment infrastructure and didn’t believe a bank could solve these.
The duo envisioned creating a new, unified payment platform that could simplify global transactions and meet the demands of the digital age.
They were right, and as of today, Adyen is a € 50B market cap company, processing trillions of euros in payments.
2. Business Model
Adyen is a payment processing financial technology company with revenues of €2B and net income of €925M.
Their approach to payments has been a huge success, enabling the company to process €1.3T in transactions!
As we can see in the graph above, since 2015, Adyen has grown payment volume with an impressive 49% CAGR, while in 2024 volumes grew by 33%.
This clearly demonstrates the quality of Adyen’s offering.
But what do they actually do?
Let’s discuss what being a payment processing company means.
When people talk about payment processing, they often imagine many different things. Is Adyen a bank? Do they compete with Visa?
While Adyen has a banking license, it is not a bank in a traditional sense. Adyen doesn’t collect deposits from clients, it doesn’t issue debit or credit cards with the Adyen logo on them, and they do not issue mortgages and other retail loans.
Let’s look at the players in the digital payments ecosystem and discuss how Adyen fits in.
Credit Card Networks – These companies operate payment networks that enable transactions to move between banks, merchants, and consumers.
Adyen doesn’t operate its own card payment network, rather, it enables merchants to participate in it!
Think of it this way, Visa and Mastercard own the train tracks that connect the global payment system. Adyen runs the taxi service from the bank to the train station. When a consumer makes a payment, Adyen’s taxi service takes that payment request to a card network train station.
Acquiring bank – This is one of Adyen’s key offerings. A merchant acquiring bank is a financial institution that enables merchants to accept credit and debit card payments. When a consumer makes a card payment, the funds first go to a special merchant account where they are held before being transferred to a merchant’s regular bank account.
An acquiring bank is responsible for:
Checking transaction authorization
Transaction clearing
Final settlement
Security of the transaction
Issuing bank – This is a financial institution that issues debit and credit cards for its clients. All the biggest banks that you are familiar with are issuing banks. JP Morgan, Citibank, Bank of America, HSBC, Bank of Montreal, Deutsche Bank, ING, Credit Suisse, etc.
Adyen is not an issuing bank in the traditional sense, but they are offering some issuing products, which we will discuss a bit later.
Gateways – Adyen is most certainly a payments gateway. A payment gateway is It's the first point of contact for a payment transaction.
It is the technology that securely captures key payment information, such as credit card details, and then sends it to the payment processor (which, in Adyen's case, is also Adyen) for authorization.
Key functions of a payments gateway are:
Secure data capture
Encryption
Connection to banks and card networks
Fraud prevention tools
Merchant integrations through APIs
Support for multiple payment methods
Independent Sales Organizations (ISOs) – These are 3rd party companies that partner with acquiring banks and payment processors to acquire merchants. ISOs don’t operate payment infrastructure, rather, they act as a middleman, selling access to a client’s infrastructure to merchants, taking a fee, of course.
Adyen takes a different approach, it doesn’t partner with these organizations as the company wants to handle the entire customer interaction and collect all of the transaction processing fees. In a sense, Adyen is its own sales organization.
Furthermore, Adyen doesn’t provide ISO services, as the company focuses on getting customers for their infrastructure, instead of partnering with other payment processors.
Core Products
Adyen reports its processed volumes in 3 key segments.
The Digital segment refers to Adyen’s work with online-only or digital-first enterprises. This is the largest, yet the most mature of Adyen’s offerings.
Adyen Digital processed volume reached €768B in LTM Q1 2025, growing with a CAGR of 30% since 2019!
Within this segment, Adyen works with large e-commerce players such as eBay and Etsy, subscription services such as Netflix and Spotify, and app-based companies such as Tinder.
Adyen helps these businesses by facilitating:
Fraud prevention
High authorization rates
Real-time data for optimization
Multi-regional reach and scalability
Fast, frictionless checkout experiences
However, not all businesses operate only online, as many also have brick-and-mortar stores. Understandably, these Adyen clients require a different approach to solving their payment needs. Adyen serves them under the Unified Commerce segment.
Adyen Unified Commerce processed volumes have reached €359B, growing with a CAGR of 49% since 2019!
Through this offering, Adyen enables the integration and easy management of:
Point of sale systems
Online payments
In-App payments
These services are especially important for clients in the hospitality, retail, food, and restaurant industries.
Clients such as H&M want to know their total in-store and online sales, offer various loyalty perks, and most importantly, manage all channels, locations, and geographies through a single backend.
Furthermore, combining POS with online processing makes it less likely that a customer will move to another provider.
Moving on, Platforms is Adyen’s 3rd segment. This encompasses Adyen’s offering to platform-based businesses, such as SaaS, marketplaces, and aggregators.
As these platforms serve a large number of small and medium-sized businesses, partnering with them is a clever way to indirectly acquire and serve a lot of customers. This segment is the fastest growing and has a lot of potential.
Adyen Platforms processed volumes have reached €176B, growing with a CAGR of 116% since 2019!
Adyen’s white label service is a key offering. Platforms can integrate Adyen’s products into their software and market them as their own. End users who use these services don’t know that they are working with Adyen, as the platform is the front-facing one.
This is how Adyen works together with Lightspeed Commerce, a Canadian commerce software provider.
Under its Lightspeed Payments offering, the company provides POS and online payments processing services to restaurants, golf courses, and retailers. Lightspeed bundles this offering with their other software services, such as inventory management, customer support, marketing, e-commerce websites, and analytics.
By partnering with Lightspeed, Adyen agrees to a lower take-rate, but in return, it gets access to billions in transaction volumes from smaller businesses that Adyen would struggle to acquire on its own.
Embedded Finance Products
Increasingly, Adyen has broadened its offering and gone beyond mere payment processing. The company offers many what it calls embedded finance products.
Issuing services
Payouts
Business bank accounts
Lending
Let’s expand on each.
Adyen doesn’t issue debit or credit cards with the Adyen logo on them.
Instead, the company empowers merchant and platform partners to issue cards to their customers!
For example, Bill.com, a US-based software company that offers payments, accounts receivable, accounts payable, and budgeting software to businesses, uses Adyen to issue Bill.com-branded cards to its clients.
Bill.com clients can use these cards as corporate cards to make various regular business purchases, all powered by Adyen.
In 2024, issuing volumes grew by 313% Y/Y!
Furthermore, Adyen has integrated a payout function in its offering. For many marketplace or platform businesses, paying out funds is as important as receiving them.
Thus, Adyen enables Uber to easily pay drivers and restaurants, their earnings. Meanwhile, hotels receive payments from Booking.com. Enabling both companies to manage pay-ins and payouts from a single unified platform simplifies their business, speeds up everything, and improves user experience.
Last, but not least, in certain countries, Adyen offers business bank accounts.
Platform users can receive funds into a special merchant bank account. This account can be used like any other bank account to pay vendors, issue cards, or transfer to their traditional bank account.
The same as with the cards, end users have no idea that this is powered by Adyen, as the platform is the front-facing one!
What are the advantages of using Adyen?
End-to-End Integration – Platforms can embed the account experience directly into their app. This means that customers don’t need to leave the app to check the balance or make payments. This improves user experience, makes their product stickier, and increases product usage, leading to higher revenues.
Speed – Adyen can deposit funds into a bank account managed by them much faster than into a normal bank account. Reducing the time from days and hours to minutes and sometimes even seconds.
Unified compliance – Adyen handles KYC, AML, sanctions screening, and other regulatory compliance. These tasks are tedious, costly, and come with huge downside risk if done incorrectly. Many platforms have chosen not to offer financial services solely due to these regulatory burdens.
Software integrations – Adyen offers API’s that enable platforms to allocate funds to budgets, automate expenses reimbursement, vendor payments, and limit access to funds according to employee needs.
Faster global expansion – Adyen is licensed in the EU, US, and many other countries. Companies that partner with Adyen can piggyback on their expertise and quickly expand to new regions without having to undergo expensive and time-consuming regulatory procedures.
For instance, Spendesk, a SaaS company specializing in corporate expense management, has partnered with Adyen to offer business bank accounts for its corporate clients. Now, thanks to Adyen, Spendesk can improve its value proposition and acquire new clients.
Spendesk clients can use Adyen-powered Spendesk bank account to instantly allocate funds to teams or employees, issue virtual cards tied to specific budgets, allow vendors to be paid directly from Spendesk, and automate reconciliation and reporting. All from a single platform without having to leave the app.
Spendesk, Bill.com, and Lighstpeed spend money on sales, marketing, and customer support to grow and manage their businesses. As they grow, Adyen issues more cards, processes more payments, and becomes more profitable without excessive customer acquisition costs.
Lastly, let’s talk about lending.
Through its Adyen Capital arm, the company offers loans to its customers. Loans can be extremely profitable as financial institutions earn a spread between the cost of capital and the interest rate paid by the customer.
In 2024, Adyen made €27M in interest income from lending, at a cost of €18.7M, so they generated €8.3M in net interest income.
While lending is a tiny segment, there is a lot of potential to grow it!
Clients can use these loans to fund inventory, help with payroll, or invest in marketing. Adyen withholds a pre-agreed share of payments it processes for the client till the loan is repaid.
3. Competitive Advantages
Single Platform
Through hard work and innovation, Adyen has built a platform that manages a large variety of payment needs. This technology enables them to serve clients globally under a single unified system.
This is unlike most competitors, who deal with fragmented architectures that combine legacy POS systems, multiple acquiring banks, payment gateways, and ISOs. This added complexity increases costs, lowers conversions, and expands fraud risk.
Furthermore, while their competitors spend heavily on acquisitions and mergers, Adyen builds everything in-house!
Additionally, Adyen takes a complete top-down approach to product development. Instead of thinking about what they can provide with their technology, the company thinks about what their customers need and then builds the technology to deliver that.
These core differentiators help them deliver a better user experience and lower costs, as the company doesn’t need to go through difficult, time-consuming, and expensive integration procedures.
Adyen’s single platform recently received glowing reviews from researchers at the consulting firm Forrester.
“Adyen’s strength is its single platform and single API approach to performing all different payment activities, in different geographies and channels.”
“Going from a legacy player to Adyen was ‘from a product perspective, like going from a Nokia to an iPhone.’” The Forrester Wave™ Merchant Payment Providers, Q1 2024 report.
Unified Commerce
Adyen’s Unified Commerce offering was a game changer in the payments industry, combining POS systems, online payments, and app payments.
There are a small number of competitors that can rival it, but none of them have the breadth, scale, and product integration of Adyen!
The unified commerce platform is more than just a collection of features, it represents a fundamental operational strength that directly translates into a superior customer experience.
This consolidation means businesses do not need to manage separate payment providers or systems for different sales channels. This significantly reduces operational complexity and IT overhead.
Unified commerce streamlines operations, saves costs, and helps clients improve decision-making with data!
This efficiency frees up resources that can be reallocated to core business activities, improving overall productivity and reducing hidden costs associated with managing multiple vendors.
Furthermore, a unified platform enables an uninterrupted payment experience.
This consistency across channels eliminates friction points, enhances customer satisfaction, and can lead to higher conversion rates by making the checkout process seamless, regardless of how or where a customer chooses to pay.
Smaller, or online only payment processors, could struggle acquiring merchants that have dual online and offline business models, whilst Adyen can easily serve the needs of these merchants.
Platforms
Through its Adyen for Platforms offering, the company increases its competitive advantage by acquiring hundreds of thousands of new customers!
Let’s remember that Adyen enables platforms to use Adyen’s rails to serve the payment needs of its customers and create new monetization venues.
Going back to Adyen’s partnership with Lightspeed Commerce. The Canadian company serves thousands of clients who in 2024 had 162 thousand retail locations with gross transaction volumes of $91.3B.
Only $33.9B of those transaction volumes are processed by Lightspeed’s Payment product (using Adyen for Platforms). Lightspeed is heavily incentivized to move all these transaction volumes to their own payment offering, as that earns them transaction and loan product fees. Furthermore, it is quite likely that in the future, Lightspeed will offer more of Adyen’s embedded finance products.
Adyen would never have been able to get these payment volumes without Lightspeed, as they serve small and medium-sized businesses.
By leveraging Adyen's robust, compliant infrastructure without having to build it all from scratch, Lightspeed and other platform partners piggyback on Adyen’s infrastructure and create a new revenue source.
Adyen transforms payment processing from a cost center into a profit center!
This makes their platform offering extremely sticky. Their partners are unlikely to leave Adyen, as they are making money from the partnership.
Furthermore, this is a very low-cost and low-risk way of acquiring customers for Adyen.
They don’t need a large sales force to go after these smaller customers, as partners handle that.
Adyen doesn’t need to pay its partners anything up front, platforms add a mark-up on Adyen’s offering.
Most importantly, there is little conflict of interest as Adyen partners with platforms whose target customers are different from Adyen’s large enterprise customers.
Through this offering, Adyen benefits from the growth of some of the fastest-growing digital businesses and embeds itself deeper in the global payment ecosystem.
This makes it harder for other companies to compete with Adyen!
Scale
I previously mentioned how Adyen operates at a massive scale, processing over a trillion euros a year, and there are only a handful of companies operating at a similar scale.
Operating at such a scale comes with massive advantages that help Adyen outcompete rivals!
Financial services are generally considered to be a highly scalable industry. This is because expenses don’t increase linearly with costs, as each additional € of business is more profitable than the previous. This is doubly so in payment processing.
Building a payment processing network, integrating new technologies, and acquiring clients is extremely expensive. But once that is done, and a certain payment volume is reached, margins can expand and reach very high levels.
Now, thanks to its scale advantage, Adyen has the resources to invest in expanding its offering further. Entering new countries, getting acquiring licenses, building new products, and investing in AI.
Huge scale and efficient operations have allowed Adyen to have a very high revenue per employee. Each employee made Adyen $489K in 2024, more than double what FIS and Worldline make per employee.
4. Management
Adyen has chosen a unique management strategy, instead of a single CEO, the company is led by two Co-CEOs. The founder, Pieter van der Does, shares the CEO position with Ingo Uytdehaage.
As I mentioned previously, Pieter sold another fintech start-up before founding Adyen, so he is a very experienced manager with over 20 years of experience in payments. Before becoming an entrepreneur, he got his master’s in economics from the University of Amsterdam (UvA) in the 1990s.
Ingo was hired by Adyen in 2011 to be their first CFO, and he was instrumental in scaling Adyen’s finance team to manage a large, globe-spanning enterprise. He got his finance and accounting bachelor’s from Maastricht University and a master’s from Vrije Universiteit in Amsterdam (VU).
Pieter owns around 3% of Adyen, worth around €1.5B, while Ingo’s 0.6% stake is worth €300M.
As a European company, Adyen’s management salary is significantly lower than that of its American counterparts!
In 2024, each of the Co-CEOs made around €800K. For comparison, the CEO of Adyen’s competitor with a similar market cap, Fidelity National Information Services, was paid $21M last year.
Furthermore, in a stark contrast to other fast-growing technology companies, Adyen doesn’t exclusively use stock-based compensation to enrich employees and management at the expense of shareholders. In 2024, their SBC was just 1.7% of revenues, compared to 3.9% for PayPal and 5.3% for Block.
5. Parts 2 and 3
Thank you for reading Part 1 of this Deep Dive.
Next week in Part 2, I will explore how Adyen competes with Stripe, PayPal, Dlocal, and others.
Furthermore, I will analyse the biggest business risks, including cybersecurity.
In Part 3, I will take a look at Adyen’s opportunities for growth, including geographic expansion and lending.
As always, the Deep Dive will conclude with a full valuation and financial analysis.
See you next week!
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