Has researching Adyen make you rethink dLocal's future growth prospects? Especially in light of toughening competition in key markets like Brazil and Mexico.
Hey, my apologies, I forgot to reply to your comment. No, it hasn't. As I said in the article, I think Dlocal's aggregator approach is more advantageous in emerging markets. I think they can quickly solve problems and grow faster than Adyen there, especially in the smaller markets, which have higher take rates. (Look up the Spotify Nigeria example for Dlocal, I am not sure if Adyen could do this as fast) I think Adyen will do somewhat well in Mexico and Brazil, which could pressure the take-rates, but I don't think Dlocal will lose a lot of clients. Dlocal, on average, handles a client's volumes in 5+ countries for 40+ payment methods, with a bunch of bundling discounts. There is clearly trust there. Also, as a local emerging markets company, I think Dlocal is in a much better position to capture volumes of local companies. Also, the whole market is years behind developed markets, so there is a lot of volume to capture.
Thanks for this update, Ray! Really insightful. My view on the take-rate is a bit different: as the take rate decreases, it's actually a positive. Because at Adyen, the more volume you bring, the lower the take rate. So a merchant might bring 20% extra volume to the table, but gets a lower price so revenues 'only' increases 10%. This, in some way, reminds me of scale-economies shared, perhaps the most powerful competitive advantage out there.
One additional question: do you have any idea of the take-rate and customer base of DLocal?
Hey, my apologies, I forgot to reply to your comment. I am not sure I get your point. How can lower earnings be a good thing?
Regarding Dlocal and Adyen, it is very difficult to get a comparable take-rate comparison because of different business models and accounting standards. But Adyen's is generally lower, but there is less complexity in developed markets so emerging markets take rates are structurally higher.
Has researching Adyen make you rethink dLocal's future growth prospects? Especially in light of toughening competition in key markets like Brazil and Mexico.
Hey, my apologies, I forgot to reply to your comment. No, it hasn't. As I said in the article, I think Dlocal's aggregator approach is more advantageous in emerging markets. I think they can quickly solve problems and grow faster than Adyen there, especially in the smaller markets, which have higher take rates. (Look up the Spotify Nigeria example for Dlocal, I am not sure if Adyen could do this as fast) I think Adyen will do somewhat well in Mexico and Brazil, which could pressure the take-rates, but I don't think Dlocal will lose a lot of clients. Dlocal, on average, handles a client's volumes in 5+ countries for 40+ payment methods, with a bunch of bundling discounts. There is clearly trust there. Also, as a local emerging markets company, I think Dlocal is in a much better position to capture volumes of local companies. Also, the whole market is years behind developed markets, so there is a lot of volume to capture.
Thanks for this update, Ray! Really insightful. My view on the take-rate is a bit different: as the take rate decreases, it's actually a positive. Because at Adyen, the more volume you bring, the lower the take rate. So a merchant might bring 20% extra volume to the table, but gets a lower price so revenues 'only' increases 10%. This, in some way, reminds me of scale-economies shared, perhaps the most powerful competitive advantage out there.
One additional question: do you have any idea of the take-rate and customer base of DLocal?
Hey, my apologies, I forgot to reply to your comment. I am not sure I get your point. How can lower earnings be a good thing?
Regarding Dlocal and Adyen, it is very difficult to get a comparable take-rate comparison because of different business models and accounting standards. But Adyen's is generally lower, but there is less complexity in developed markets so emerging markets take rates are structurally higher.