Mobile payment is a matching game – Adyen

Thursday 22 March 2012 | 12:00 CET | Background

Mobile payment is taking off, payment service provider Adyen reports. In September last year, 3.7 percent of online transactions processed by Adyen came from a mobile device. In March, this has risen to 6.2 percent, mainly from iPhone, iPad and Android devices. While the potential for m-payment and app-based payment is clear, there is no 'killer application'. Payment methods and user preferences vary between countries.

Payment service provider (PSP) Adyen was founded in 2006 by a group of people who left BiBit (after that company was integrated into RBS). Adyen has a head count of about 65 in Amsterdam and another 20 in small offices around the globe. Revenue was approximately EUR 44 million in 2011, rising to around 60 million in 2012. The proprietary payment platform was developed from scratch. A retailer (merchant) outsources payment, including security, fraud detection and compliance issues. As an intermediary, Adyen offers 85 different payment methods, including debit/credit cards, PayPal and local services, like Dutch iDEAL and German DirecteBank, also known as Sofortuberweisung.

Adyen has around 1,500 customers. While PayPal targets the long tail of small merchants and vendors, Adyen has customers like Vodafone, Royal Dutch Airlines, Groupon and game developers, such as SpilGames and PopCap (Plants vs. Zombies). Adyen has seen the presence of mobile devices almost double in six months, explains Roelant Prins, Chief Commercial Officer. In September last year, 3.7 percent of online transactions processed by Adyen came from a mobile device. In March, this has risen to 6.2 percent. iPhone, iPad and Android devices rank highest. The position of iOS and Android is even stronger in apps that offer payment for physical goods, like greeting cards or coffee. Last September, iPhones took 57 percent of that transaction volume, followed by iPad (25%) and Android (14%). In March this had shifted to 50% for iPhone, 29% for iPad and 20% for Android. BlackBerry has slipped from 4 percent to 1 percent, signaling a decline in absolute terms, even in a rocketing market.

The Netherlands show a surprising statistic: the number of conversions (where the customer completes the payment process) is higher in a mobile browser than in an app. This is caused by the popularity of iDEAL. The Dutch platform offers a ‘front door’ to the online banking portals of the three major banks (ABN AMRO, ING and Rabobank) and six smaller retail banks. Although iDEAL is not designed with mobile devices in mind, people do use it. ‘iDEAL Mobile’ would be an instant success, Adyen reckons. The success of iDEAL also underlines user preferences vary greatly between countries. The Dutch show a willingness to pay by direct transfer, a method which cannot be undone by the consumer. German buyers tend to favour the highest level of buyer protection. In the United States everything is done by credit card. In the UK, the credit card is preferred by 60 percent of the users, and also drawn for paying a latte or Frappuccino. However in most European countries alternatives must be offered.

In Brazil, one in five online payments is handled through ‘Boleto Bancário’ – where the buyer prints a receipt and takes that to a bank or service desk to deposit cash payment, often in a number of installments. In Japan, the tens of thousands of minimarkets are an important distribution channel for goods purchased online. In all, the future of mobile payment is not clear cut. There is no shortage of services, but most offer only a piece of the puzzle or exist as a proof of concept. Mobile wallets abound, but they lack sufficient scale. Tellingly, Nokia Money has already thrown in the towel and Ericsson Money will be integrated into Western Union. No single application will force a break through: m-commerce is a tangle of cards, loyalty, ticketing, location and/or time based offers, point-of-sale and peer-to-peer.

A Dutch start up, Ticketscript, offers online sales and access control solutions for theatres, concert halls and live events. Payment is handled through a mobile app, and a QR code is sent to the device to serve as a concert ticket. NFC has some way to go. In the UK, dual mode (EMV chip and NFC) cards are supplied by default, which means the penetration will approach universal soon enough. By contrast, Dutch banks do not supply them at all, so NFC will not be at the forefront of innovation. It has to be noted that the existing Dutch payment infrastructure is remarkably efficient, both to consumer and merchant. Services like Square and PayPal Here would not stand much of a chance, for various reasons. Nevertheless, Adyen expects a lot of innovation at point-of-sale. Since the introduction of PIN, the payment terminal has not changed much at all. Adyen has a working solution for payment of physical goods by a QR code shown on a mobile device. The QR code scanner is plug-and-play connected to the USB port of any internet enabled computer. Adyen will not be drawn into predictions, but believes online PSP’s have a future. The current office is rented with growth in mind.

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