Hi, all, and welcome to Adyen's 2022 Capital Markets Day. My name is Sanne Minnema. I'm here with Steven van Bommel. We together form the Adyen IR team, and today have the honor of being your hosts. We've prepared and hopefully equally interesting and entertaining program for today, but before we kick it off, we've got a small household note.
Yes. Today, you're gonna be hearing quite a few presentations from different experts within Adyen. We're gonna have plenty of room for Q&A, but that's gonna be at the end of the day. Please feel free throughout the course of the presentations to post any of your questions in the Q&A functionality in Zoom. Please do not use the chat function for that. At the end of the day, we're gonna invite all of the experts back on stage, during which we will ask you to unmute yourself, and you will be able to ask your question. That's it for now. I'm happy to hand over to our co-founder and CEO, Pieter van der Does.
Hi. Welcome to the Capital Markets Day. Unfortunately, still over video. We are broadcasting this from our headquarters in Amsterdam, and it's a full office. There's the real vibe here, and I wish that you could share in that. I hope this is the last one that we have to do this way, and that we can welcome you in our offices next time. There's been a lot of change in the way commerce in the way we do commerce, and all the change in the market also means that demand changes from the merchants. Today, we want to talk about which products we bring to them and how we respond to that. We are deepening our products, we are widening our products, and we'll talk you through today.
Let's start with that and look at the agenda. First, Roelant's gonna talk about the trends in the market, the new complexity, and how we respond to that. We'll have a session on the trends in the market, so on the innovations that we see and also on the innovations that we are gonna bring to the market. After that, we're gonna talk about unified commerce and the digital trends there. We move. I'm struggling a little. After that, we're gonna move to the next session. The next session is about platforms. What we have seen is platforms play a more and more important role, and that's also focus area for today. What are the trends with platforms and what are we gonna do there?
Kamran is gonna do a deep dive on those trends in the platforms. Karolina is gonna talk about how from 2016 when we started there until now we have developing ourselves. Then Tom and Mariët are gonna talk about financial services there. These are embedded financial products which we can choose to bring to that part of the market. As we are fully licensed in many regions, we can quite easily in modular way add those financial products to our services. I think that part is really cool. We're gonna talk after a break about the stuff that's underpinning this. What's underpinning this? Data. Data is a product that's being used by the company, so by Adyen, for various services, think about authorization improvements, think about stopping seller fraud, stopping shopper fraud.
Many of the products that we have use data, but data is also being used by us for our merchants to give insights, insight into shopper behavior, insight into their own trends. We dive into data, very important. Alex is gonna talk about the platform. It's a single platform that we're building. We're extending it. We built Adyen Bank, and also a lot of other services. Alex is gonna talk about how we do that to scale for the future. Brooke and I are gonna talk about HR, how we recruit for the extension of the company, for the expansion, how we retain people, and then we close off the day with Ingo, and he's gonna talk about how all these new things will be reflected in our reporting.
I'd now like to hand it over to Roelant to start with the trends in the market and additional complexity. Roelant.
Hi, I'm Roelant Prins, and I'm the Chief Commercial Officer at Adyen. I've been with the company for 14 years, looking after all the things we do on the commercial side of the company. At Adyen, over those 14-15 years, we've built a platform always by listening carefully to the needs of our customers and the trends in the market. When we started, we built an online payment solution, initially connecting to acquiring banks to help merchants accept card payments and other methods online. When we got a bit of volume there, we started to get complaints. Complaints by our customers around operational challenges, but also questions around approval rates, and we found it hard to solve for those. That's when we decided to integrate directly into Visa, Mastercard, directly into the schemes, and that solved a lot of those issues.
The volumes grew, we boarded more and more merchants, and they were happy on that. As we grew many of those merchants, a lot of them were retailers. They were asking us, "Hey, you're helping us online. Can you also help us in store? We have so many stores that need payments, but we have to work with local banks in every single country. It's complicated." We said like, "Okay, that's a great question," and we built our in-store payment solution. It took a while to get going. It was really hard, but we got there. Now many merchants are using our solutions in stores all over the world. Also smaller items like adding new payment methods or the building of our risk solution, RevenueProtect, has always been iteratively built by listening to the needs and questions that our customers have.
We listen and develop a product very much tied to the trends in the markets and what our customers are looking for. Now today in this session, we're gonna talk about our plans for the future. We thought it'd be helpful to give you a bit of an overview of the trends and the things we're seeing in the past few years in the industry, the trends that matter to our customers, to give you a bit of a flavor of how we see the world, to give you context on why we made the choices we made around our strategic direction. Of course, the pandemic played a big role there. It really fueled digital transformation and has led to a lot of accelerated change. I'll go through those trends now. I'll do it in about 15 minutes. Briefly prepared. It's gonna be a bit high pace.
You'll see examples. Some of them are customers, some of them are not. It's a general overview of the things that we think are important and also far from complete, but we choose the relevant ones. Let's start. How did the landscape evolve over those past few years? Let's have a look at retail first. Before the pandemic, back in 2019, 85% of all transactions happened at point of sale in stores. 85% in-store physical transactions. Then the pandemic hit. This is what the graph of transactions looked like in our platform around point of sale. A huge dip. Almost nothing left. Of course, stores had to close. What really happened as a result of this? A lot.
One thing is that contactless payments, for example, were about 28% by the beginning of 2020. A year later, this was up to 42%. Within a year, a massive growth of contactless payments. A lot of them obviously also made with phone. I think I never carry cash myself anymore. Everywhere you use your phone to make payments, and a lot of other people have learned how to do this. Another trend has been around what we call unified commerce. The graph we're looking at here shows the number of transactions where people buy with a retailer over a one-year window, both online and in store. This is what we call unified commerce. People transacting with a brand over those two different channels within a year. Over the past period, the growth in people doing that was 400%.
400% more people shopping in different channels with brands. That's a big, big change. On top of that, if you look at the amount of money spent with those retailers, people that buy both online as well as in store tend to spend twice the amount of money than people that only shop on a single channel. Those are impactful numbers, and of course, for our retailers that matters because everybody is on this journey towards unified commerce, trying to offer a very consistent service to their customers, whether they're shopping online, in app or in store. This is what they're aiming for, and the numbers in our platform show that it's worthwhile. The other thing that happened, of course, stores had to close, so things like curbside pickup were very, very prominently there.
For a lot of retailers for the first time, you shop online but then pick up the products in store. Also a lot of new ways of interacting with shoppers, over WhatsApp, over Zoom. Ways to interact, show them the products, send them a payment link, and you pick them up right there and take it home. The thing we've seen is that this buy online, pick up in store concept isn't going away, and that's a big topic. These changes are here to stay, we think, because last Cyber Monday, 2021, 18% of online transactions were buy online, pick up in store. These lessons that these retailers are learning are here to stay. Self-checkout, a concept where people are enabled to scan products themselves and potentially even pay for it in store using an app, was initially pre-pandemic, something grocery companies were experimenting with.
What we're seeing now is that it's moving beyond groceries. It's in much broader retailers like DICK'S, and it's going much further. People see the value of it. Consumers want control, consumers want convenience, and that's happening in an accelerated pace. Again, it means different payment infrastructure because suddenly you need to have an online payment for an in-store transaction, potentially. But the upside is you get much better data and insights about your customers. Also, self-checkout is in a lot of other retail areas. An example here where RFID tags are in the clothes, so you can self-checkout again, put it in a basket, pay and leave. Again, much more convenient and this is what consumers want. Finally, e-commerce has popped up in the most unexpected places now.
A brand like Hastings, a very personalized shopping experience traditionally, they actually took live, virtual shopping, online consultations, sending people a payment link, and still completing orders. Again, learning a lot about online commerce and taking that forward. Another big trend is direct to consumer. Nike, for example, now recently showed that 40% of their revenues are generated from direct to consumer commerce. This is a big trend because a direct relationship with customers means a more loyal relationship, often a better relationship, more understanding, so you can personalize the offering to your customer. Again, people that shop with you online, in store, they tend to spend more. Another trend we're seeing is that for a lot of brands, a lot of retailers, sustainability is a big topic. Here with Picture, you can rent an outfit. You don't need to buy it.
Patagonia is, of course, a leader in this space who often actually remind you, "Do you really need to buy this product?" Also other new companies are investing in this. What this means is that the relationship between brand and consumer becomes more and more important, but also companies want to really control the value chain themselves. Again, having your own direct relationship with a customer then really helps. In research that we do with our customers, it shows that seven out of ten consumers really want these new online commerce journeys to stay. What about other industries? This is a personal experience. This is my phone. Pre-pandemic, I had one app for in-store grocery shopping. Now after the pandemic, there's four.
This is over a two-year window, one for the weekly grocery deliveries, one for fresh products, and the other one for things you need right now. I use all of them. The other thing we're seeing, lots of autonomous stores. Companies like Aldi, Żabka in Poland, they are launching autonomous stores and are really going for this at the moment. A lot of activity. Again, it needs a different way to handle payments. No more payment terminals. Apps are used to get access to these stores. Another thing that we're seeing in restaurants, food and beverage, QR codes, especially in the U.S. and in Europe, prior to the pandemic, they were nowhere to be found. Then everything had to shut down.
QR codes were a fantastic way to enable ordering by delivery at your home or going to the restaurant, scan the menu, pay for it with the app, you touch nothing. It was really successful. Again, if you go to the restaurants now, they are everywhere. They're here to stay because consumers say, "Hey, this is convenient. I can choose quickly, order, and pay when I want." Order ahead and pick up at a restaurant. A lot of food and beverage brands, think of the likes of McDonald's, have launched and really grown their apps, enabling consumers to order ahead so they can pick up when the product is there. Convenient. They combine shopping with loyalty in these apps. Again, a lot of change. Finally, I want to mention here is hospitality.
Usually a bit later to the game, but again, due to the pandemic, it really accelerated a lot of change. Of course, it's much more convenient if you can control check-in, check-out, payment on your own terms. We all know the pain of having to wait when you're checking out in a long queue. That's going away. Other digital services, what else? Again, if I look at my own phone and my own usage of digital services, look at this. Prior to the pandemic, Shopify, Netflix is there. Those were the services I paid for. Now we're seeing such a growth of new initiatives that now you're paying for audiobooks, you're paying with YouTube, you're paying with other services. It's growing quickly, and this is something we're seeing everywhere. Gaming is by now the biggest media industry out there in terms of revenues.
A lot of companies are investing and lots of initiatives are out there. They are all global, and they all need the best performance in payments, but also enabling global reach to reach as many consumers as possible. Here's an example of a Chinese mobile gaming company. They launched a game and back in September 2020, Genshin Impact, and within two months, they already generated $400 million in App Store volume. The fact that these new games can generate that sort of impact nowadays shows the opportunity ahead of us. Within those gaming and virtual ecosystems, what you see is that new commerce models are growing. We're seeing a lot of companies now looking at like, "Hey, I've got this gaming ecosystem.
I have people that have virtual items that do well and have a certain value in the game. Can I sell them?" We're seeing people selling skins, marketplaces for these virtual items, and they're really successful and growing quickly. Now, of course, there's complexity around payments because you have people selling, you have people buying. How do you connect? How do you make sure there's no fraud, et cetera? Other areas where we see a lot of development. Online trading is growing and really, growing rapidly in volumes. Finally, education. Of course, over the pandemic, lots of parents saw the value, lots of people have been trying to learn new skills, all online and all requiring a certain new way of figuring out how to monetize that. Finally, let's have a look at platforms. We heard about it earlier.
It's a big part of the program today. Platforms are very important in the opportunity ahead of us. McKinsey has been projecting that by 2025, over 50% of all commerce will be happening on platforms, marketplaces. Think about Etsy, Amazon, Mercado Libre, et cetera. There's more to platforms than this. Platforms also play a big part in enabling smaller businesses. There's a lot of SaaS platforms that are now enabling small businesses to run their business, basically. Everything you need for the services you provide, accounting, customer management, payment, it's all in there. Let me give you a view of what we're seeing out there because there isn't an industry nowadays for which there is not a platform that services them. Toast is a great example.
They've been around for a while servicing the restaurant industry. Here's another example for stores, shops, retail. Fresha is a platform for if you wanna run your spa. If you wanna run a pizza parlor, here you go. There's a special platform that can help you really run that pizza place in the most effective way. Roller is for trampoline parks. LawPay, if you're running a law office, everything you need to manage that is in this platform. It's offered through the cloud. You can run it wherever you want. Very easy to set up. The same for medical doctors. We're seeing it for hospitality. Hotels can run their business. Tessitura for museums and arts organizations. There's one for Moneybird, running accounting, your invoicing systems. It goes on and on.
ArtCloud, there's OrderYOYO for food delivery, WineDirect for wineries, CleanCloud for dry cleaners. Everything has a platform nowadays. This is a big trend because we think, and BCG already highlighted that under 30% of small and medium-sized businesses in the U.S. today are on an integrated software platform. Well, if you think about it, if you would start a dry cleaning business next year or you set up a small restaurant, we think that the chances that you would source all the different things you need for that individually yourself are slim. It's very likely if you set up such a business, you'll be running it on a cloud-based platform where everything is already there, and you just configure it.
The opportunity for us as Adyen is, of course, that we can embed payments in that solution and enable the platform to offer payments to their customers. A very nice way for us to indirectly reach all these smaller merchants and really set up the platform for success. There's more to it because Forbes recently highlighted that only a third of small businesses feel that their primary bank understands their needs. Now, obviously, who can be better to understand the needs of such a business than these platforms? If you're a dry cleaning platform provider, you know the ins and outs of dry cleaning. You know what type of products they need, when they need it, what the risk score is of you as a business. They know you inside out.
They're so well-positioned to offer you broader financial services, offer you a loan, offer you bank accounts, et cetera. That's the opportunity for the years to come. For Adyen, that means we are really interested in that space, and we think we can play a big role. That's also triggering as we think about the future, we think about our ambition. We always talked about the company as a payments company, but recently we changed our ambition. We now talk about Adyen and our ambition about building the world's most customer-focused financial technology platform so businesses can succeed in the future of global commerce. Now, if you look at that ambition statement, it says a financial technology platform. We don't think about ourselves anymore only as a payments company, no, a broader financial technology platform. Businesses can succeed.
That's not only merchants, but also platforms, businesses. We're broadening the scope there. Obviously, we want our customers to succeed. That's our role. We're really well aligned with their interest. The final piece I wanted to share, I am responsible for the commercial side of the company. So what do we focus on? We have defined three specific areas: digital merchants, unified commerce, and platforms. You'll hear a lot about platforms later on today. But for now, we'd also like to spend some time on digital and unified commerce that we've been doing for a long time but remain equally important. Therefore, I'd like to hand it over to some of my colleagues who know the ins and outs of what we're doing there. So over to Steven to explore this a bit further.
Thank you, Roelant. Those are all very exciting trends. Before we deep dive a bit more into platforms, let's first touch upon unified commerce and digital. For that, I'm joined by three of my colleagues, Jan-Pieter, who's one of the commercial leads for our unified commerce pillar, Amber, who's one of the commercial leads for our digital pillar, and Edgar, who is our Global Head of Acquiring and one of the product leads for our payments product. Welcome, and thank you for joining me.
Thank you.
Maybe to start, we see consumers continue to demand the most seamless shopper journeys, and that's always been quite an area of strength to us. As these journeys continue to evolve, what does that mean for our product offering? Maybe, Amber, you can kick us off first.
Yes, absolutely.
For digital, this means that consumers are more comfortable with online and digital payments than ever. You just heard it from Roelant, the last two years have only accelerated that trend. With that, they expect very smooth shopping experience when they're shopping online. We all know how easy and convenient it is to pay for an Uber ride, but we see these use cases for nearly invisible payments. Coming back to the wider digital customer base, I think the in-game purchases is a really good example. If you're in the middle of the game and you want to buy skin, unlock the new level, the last thing that you want to do is get out your credit card and fill in all the details. That just simply creates friction.
Also in online retail, customers expect more. They expect there's less manual entry when they're buying online. Otherwise they just abandon the cart and don't complete the purchase. This is a real challenge for our merchants to further optimize that checkout process and keep those conversion levels high. We help them to drive that friction down and continue to do that. We're uniquely positioned to do that because we have direct connection in all the payment methods, schemes. We control the full integration, but also have a very close partnership with those payment methods.
As soon as there is a new improvement available, like an express checkout flow, we can immediately implement that and make that available to all of our customers, which is super valuable for them.
That's all really clear. What I hear you say is that we need to keep that friction to zero. We see payments moving to almost being invisible so that merchants can have their shoppers, and whether that's a gamer or a shopper in a retail store or an online retail store, that they can really focus on the process that they actually came there to do.
Yeah. Exactly.
Either a game or a shopping experience. That's all really clear. Pieter, do you have anything to add there from the unified commerce side?
Yeah. Driving down friction is also a big theme in unified commerce. What we see is a blurring of channels. The world used to be very straightforward. There were stores, and there was a website. Now we see people buy online and pick up in store, or they return a product in store, or in a store they buy from the e-commerce assortment and get the product sent home. We see these new channels where customers are maybe in contact with somebody in the store through chat or Zoom, and then they buy and pay through a payment link. Customers are expecting a consistent experience. They think of merchants as a brand, not a channel.
A lot of businesses are actually in the back end. These have different channels organized as silos. Most omni-channel businesses are on the road to unifying their back end, creating one source of inventory, connected financial systems and one view of the customer. Working with a single payment company across all channels with a single platform really is becoming a critical enabler. Now, at the same time, we see the role of the store changing. Stores are becoming hubs in these omni-channel experiences, and a lot of retailers are investing in the in-store experience. They want to move away from that reliance on, like, the fixed cash register with a terminal and people queuing up to pay for their product.
They want to help customers all the way throughout the store, and not just help the customer in a personalized way with choosing the right products, but then also do the transaction, do the payment right there and then. We support that in many different ways, including with our new Android terminals, which means that everything can be done with one device, and with some upcoming developments where regular mobile phones can be turned into payment terminals. There's a lot happening in the world of commerce and payment. It makes life a lot easier for consumers, but it also creates a much more complex environment for merchants.
Our role really and our added value is in simplifying the merchant environment, helping them through that digital transformation, and really simplify things with one contract with terminals that are easy to board, that work the same way in every different country, that can be managed easily through a portal. Importantly, one repository of transactional data. Our merchants need much smaller finance departments because reconciliation is so much easier.
That's all, that's all really clear. Thanks. Edgar, perhaps you can touch upon how those consumer and merchant needs translates into what you and your teams are building.
Yeah, I think the product strategy is actually, you can look at it from two ways, right? I think the key theme is reducing friction close to zero. One part is building the, let's say, the building blocks so that merchants can, no matter the channel, the country, the scenario, they can build these really seamless checkout experiences. It's also helping merchants to grow whenever they grow the business, helping them unlock a new country, new payment methods, replacing devices, keeping up to date with all the latest payment technology and trends in the market. That's really key, but that's also an area typically of friction for a business, right? When you're growing your business, you have a lot of challenges.
Payments is one of them, and we focus to make that as light as possible to stay up to date with all the latest trends. That's actually been quite consistent. You know about our global footprint, the expansion we've done over time, the direct integrations with our single full stack platform. That really gives us the rails to innovate on, and build all these new products on top of.
Yeah. That's really clear. What I take from that is that increased complexity leads to merchant needs that need to be simplified, and that on the back of what Amber and you as well both touched upon, our single platform offering with our local licenses and our global footprint really put us in a good position to help our merchants out there. Onto data. We see that the value of data and insights continues to increase. I was interested to know how our solution helps there when it comes to payments data and the insights that can be gained from that. Perhaps this time, Jan-Pieter, you can kick us off.
Yeah. Yeah, with all these changes in customer behavior, it becomes more and more important to have good customer insight. Now, online, it's not that difficult to kind of understand what customers do, but stores can be a different story. For many merchants, their stores are a bit like a black box of transactions, and they can't always connect the different transactions in there to consumers. They often have an incomplete view of customer behavior. Now, how we can help is through our tokens and technology, we can help merchants connect all those different transactions across different channels and different stores and different moments in time, so they can create a single view of the customer. With that, they can answer all kinds of questions. For example, what's the value of omni-channel?
Is my website a competition of my stores or do they strengthen each other? When I close a store, what happens to those customers? Do they go to other stores? Do they go online or have I lost them? Another example would be the use of payments data to measure the impact of promotions and marketing programs and loyalty programs. Because with the payments data, you can do pre- and post-analysis, you can compare different customer groups. There's a lot of use of that information in a time where having customer knowledge is absolutely critical.
Yeah. To add on that from the digital side, I think that we're providing similar insights to digital customers, but then tailored to the online environment. With that single view of the shopper that Jan-Pieter's mentioning, we know exactly how people like and prefer to pay online and can help merchants personalize the checkout to an individual shopper level. To give you an example, I for myself, I ordered Takeaway.com yesterday, and when I use that app and I get to the checkout, Apple Pay is the only payment method that's presented, which is super convenient, yeah, and really increases the speed and also makes me come back to the app. This is just an example of how we use Insights to help merchants improve conversion. Then secondly, for digital customers, authorization rates are super important.
If they lose the customer once due to a failed payment, they might lose them forever. That's a continuous focus for them and a challenge that they are solving for. Because we get the raw data from the shopper, then the issuer banks, so the banks of the shopper, data that normally gets lost through all the different parties that are involved in processing a payment, we use that big data set and build our revenue optimization products and risk mitigation products to help our merchants achieve better authorization rates and thereby an increased revenue. Yeah, we build together with our merchants, so one thing that they've been asking us is when they move into a new market, like, how are they performing in that market? What does great look like?
Are they able to benchmark their performance? Sunil later today is going to share some exciting new things that we're building on that side to help merchants understand their business and set them up for success.
Great. Yeah, the key word for me here is single. Working towards creating that single view of the customer.
Yeah.
Being quite well positioned on the back of a single platform, to do so and to unlock the true value of payments data. Onto the pandemic, I think it's fair to say, hopefully this is the last virtual capital markets day, that we've entered the new phase of the pandemic. We're getting out of it. I can imagine that there's been quite some impact from the pandemic. Is there anything specific here that you would wanna call out, Jan-Pieter?
Yes. As Roelant's already said, the pandemic has really turned these unified commerce strategies from nice to have to need to have. They've become critical business enablers. Now as we are coming through the pandemic, what we see is that customer behavior has changed. The reason for that is that a lot of the new journeys and a lot of the kind of forced behaviors of the pandemic take away friction. So for example, if on the way to work, you wanna pick up a coffee or a sandwich, then you know, having to wait for it to be prepared, that's friction as opposed to pre-ordering it, or buying a product online and not being able to return it in store, or even just queuing in a store.
Customers are now seeing what good looks like when it comes to customer experiences, and it's increased their expectations. Those increased expectations, they provide now a new urgency to kind of keep investing in customer journeys. It's at the same time, this is making what we do and the value we add relevant for new industries, for industries that we haven't traditionally penetrated much like, for example, grocery, where you see this huge adoption of journeys like curbside pickup, self-scanning, and home delivery. I think in summary, you can say that the digital transformation and all the changes it brings, it really plays to our strengths.
Do we see the same in digital, Amber?
Yeah, I think it follows nicely after what Jan-Pieter is saying. The shift in customer behavior and the shift in expectations is also shifting that we want everything now. We see, I think, the grocery example is a nice example that is moving to delivery or even further to ultra-fast delivery. We see them all over the city centers with parties like Gorillas and Flink, but there are also numerous other companies around the world that offer the same thing. With these fast-growing businesses, what you see is that they need a partner that moves fast and innovates as fast as they do, but also provides the local expertise. You can imagine if you're moving into a new country every week, you don't have time to think about your payment setup.
You just want to rely on a partner to set you up for success from the beginning. And we've seen a lot of success with these type of companies, and we help them through a quick integration so that they can start fast but also have a mature and global solution with which they can scale. We continue to do new initiatives. Also, merchants often start with us with online payment processing, but from there, we move into unified commerce or even a platform or issuing. There's a lot of opportunity that we're seeing there. What I'm also getting very excited about is some of the things that Roelant mentioned around the traditional verticals that are digitizing, like education, but also with consumer financing and public transport.
Those are all verticals that are now going through that digital transformation. Yeah, I'm very excited what's to come and how we can help them further.
Great. Yeah. My main takeaway from this is that the pandemic has made us realize that there was actually friction prior to the pandemic, and that now needs to be solved, and that brings complexity to many of our merchants that we need to simplify. That actually unlocks new verticals and new merchants to work with that perhaps prior to the pandemic we wouldn't have necessarily been able to help with. Edgar, I want to move on to you as well, because after we've heard all of this and all of these consumer and merchant needs, is there anything to add from a product and a payments perspective? How does that translate into what our teams are working on?
Yeah. I think one thing was already clearly stated, right? Acceleration of trends, and these trends are here to stay. The other thing is that if one vertical goes through a financial technology revolution, you could say, typically it pushes the boundaries for other verticals to follow along. The way we've built out our platform is we build in our single platform and we build to benefit all merchants, right? If it works well for one vertical and another vertical comes after, basically the products are already ready to help them go through a similar transition, actually. In terms of accelerated trends, of course, one was also highlighted, and that's reduction of cash.
One challenge merchants are facing as well is how to connect with charities, brands that share the same values and support donations. One product suite I would like to highlight is Adyen Impact, consisting of two products, Adyen Giving and Adyen Restore. Adyen Giving is our product to help merchants support donations, which is traditionally a really complex product from an accounting perspective, compliance perspective, quite a challenging way. In cash, it was typically something you put on the counter. Electronically it's a lot harder to solve for that.
The product we built and are now scaling up rapidly is a mechanism to allow merchants to take donations in store or through a digital channel, with the brands they prefer, but really isolating the financial flow so that it doesn't hurt their operations. Really it's just basically switching it on. I think we see a lot of growth, H&M, Etsy, ASOS really, merchants that can scale this across multiple markets. It's great to see our financial technology being used to really establish new transaction flows and new donation flows to good causes. The product is now evolving from a state that is currently opt-in, few merchants live. We're migrating over time to making it opt-out, right? Making it really available for any merchants globally.
To go even further, we're also dedicating 1% of our net revenues to charities and product developments related to the United Nations Sustainable Development Goals to really further drive impact in that sector and use our financial technology, our merchant network to make an impact.
That's really great to hear. What I take from this is that we don't only help our merchants with their business, but also helping them do good for this world. Thank you all for joining me here. This marks the end of our conversation on payments digital and unified. We're gonna be taking a short break now, after which we'll be back with Kamran Zaki, our Chief Operating Officer. He'll be talking a bit more about the opportunity that we see in the platform space. Hi, everyone. Thanks for joining us after the break. I would like to say it's a pleasure to be back in Amsterdam after quite a long time and be working with all of my colleagues in person again.
I'd like to spend a bit more time on the platform opportunity, which Roelant introduced. Before we do that, maybe take a step back in time. Where we started and our roots are in helping enterprise customers, right? Over the years, we've also started working with mid-market customers, and that's been one of our growth pillars for the last few years. What we've realized is that the high-end of mid-market customers have needs that are very similar to enterprise customers. You heard quite a bit about that in the session right before this, where we talked about digital and unified commerce-related opportunities and challenges that we're helping solve. When we look at the smaller end of mid-market and small and medium businesses, that's where we think partnering with platforms is really the best way to serve them, right?
If we look at what that means, one is the trend of digitization is impacting these small, medium businesses. They all need help. They don't have enough resources to do this themselves, and they're turning to these platforms. Platforms who are helping them with their commerce capabilities or who are powering their business with software, and they're saying, "Can you also help me with payments rather than I have to go to some legacy provider, fill out a lot of paper forms, and it takes weeks and sometimes months to get up and running." Two, they're realizing that there's a lot of regulatory complexity, right? If you're a platform and you want to help these small businesses with their payment needs, you have to help them with onboarding, with ongoing compliance, and that's where we think we can really provide value to them.
Third is they really remain underserved by traditional financial service providers. That means they can often not grow their business as fast as they would like, right? How do we help them, whether it's with issuing capabilities, or Adyen Capital or bank accounts? That's where we think the opportunity is massive to help the small and medium businesses, the platforms, and therefore also grow the Adyen business together. Here's one example. Often, these platforms start with no payment capabilities at all, then they evolve to some kind of partnership, right? Then it may be, "Hey, you're a preferred payments provider or partner," to all the way embedded payment capabilities and eventually financial capabilities.
As they do that creates incremental revenue opportunities for these small and medium businesses, the platforms, and as well as Adyen, if we can help them with these needs. What does this look like in terms of the sub-models within platforms? Roelant touched on a few of these, but if we drill down a bit. Retail marketplaces are probably the original place where this all started. Think eBay, think Vinted, think GoFundMe. As Caro will talk about in a little bit, that's how our Adyen for Platforms capabilities started. Second is commerce platforms. Think BigCommerce or Shopware or others like that, where they're providing commerce assistance to these small businesses, and payments is a very natural add-on. Think SaaS platforms. I think Roelant explained the countless ways, right?
If you're a dry cleaning business, a retail storefront, a restaurant, whatever it may be, they're providing the software that helps power your business, and they're saying payments is an integral part that they could use help with, and then, "Hey, could you extend that even further to additional financial, services and/or product capabilities?" Examples of on-demand platforms are Just Eat or in hospitality, Airbnb, same servicing lots of small businesses who had similar needs. Social networks are helping people monetize their content, right? Everything from if I am an expert in tax and giving an online course, could I somehow monetize that, right? Would people be willing to pay for that? We think this is not even an exhaustive list, but this is how we've seen at least quite a few categories pop up and that we're focusing on currently.
What does that mean in terms of the product? As Roelant said, we originally started with offering pay-in capabilities to our customers and in partnership with large acquirers. We heard that that wasn't meeting their needs, so we became an acquirer ourselves. We then heard from retailers and over time, food and beverage and hospitality industry folks that they needed help with unified commerce. We added that capability. Platforms said, "Hey, can you help us serve small businesses? We need all of those capabilities that are in the pay-in realm, but we also need help with onboarding and compliance, and we also need help with payouts." That's how we started Adyen for Platforms, and Caro will drill down on that a bit. A few years ago, we launched Issuing because that was an unmet need.
Today, Tom will talk about additional capabilities around FX, capital, and bank accounts that we could offer. I'd like to hand off to Caro next, who'll talk about how we got started with our Adyen for Platforms, how it's evolved over the last few years, and what comes next. Over to you, Caro.
Hi, everybody. I'm Carolina Noronha or Caro. And together with Tom, we are heading up our platforms and financial services solution on the product side. To build a little bit on what Kamran just said, for platforms, it's becoming more and more an integral part to own the payments experience. Why? Because that really helps them to differentiate their offering, it helps them to create better relationships with their customers, it helps them to add stickiness, and generate new revenue streams. If it's so cool, why isn't everybody doing it, right? Because it's actually not so easy to really own the whole payments experience yourself. A few things which I really would love to highlight. First is the local regulation and compliance. As a platform who owns payments, you own the money flow.
You are handling money of other users, so you're on top of the list of every regulator because they really wanna ensure that all the parties are well protected. If you are running a global platform, then you need to comply with those regulations in every single market and stay on top of all the changes which are happening all the time. Second part, payments is really not the core business of all those platforms, right? Like, GoFundMe was started because they really, really wanted to make it more fun, more seamless to give donations and make it simpler for people to receive them. A SaaS platform which is focusing on pizzerias, they really want to give those restaurant owners all the tools they need to drive their business on top of that and not really become a payments company like we are. The third part is payouts, right?
I mean, we are all like to get paid on time, but for those small and medium businesses who really have a tight situation from a cash flow perspective, it's super important that the funds are arriving on time, that payouts are predictable, reliable and fast. Imagine now you're a platform, you need to really manage that on scale 5 days of the week, ensuring that your hundreds, thousands, millions of customers are getting paid in time, which is quite a challenge. With that in mind, we thought, "Hmm, for the marketplaces which have been struggling at that point in time with all of those challenges, I think we can build something which takes a lot of the load off their shoulders. They can sit on our licenses. We can make sure they stay compliant.
We can drive payouts on scale for them and figure out really good ways how they can monetize. With that in mind, we built our marketplace offering following Adyen's original approach, focusing on the enterprise segment. Really we had three guiding principles in mind when we built it. First, we thought that the marketplaces really wanna own their user experience, so we built an API-first product which enables them to build whatever experience they need for their users, since they are the ones who know them the best. Second, we wanted to build something modular. We wanted to build a toolbox which has all the tools a marketplace could potentially need help with, and they can pick and choose for every region they are live with us, what do they want. That really helps us to grow with our customers, for the long way.
Thirdly, marketplaces come in many different shapes or forms, right? From your traditional marketplace like eBay, to a donation platform, to an e-commerce enabling platform, to an on-demand food delivery company. Each of them has quite a different user base. They have different expectations in terms of how much friction do they tolerate when onboarding, how do they monetize, and how quickly do the funds really need to arrive at the end of the day. We really wanted to cater for the variety of the use cases when we build it. We launched together with GoFundMe and slowly and steadily grew our business until 2.5 years in, eBay knocked on our door and we ended up winning the deal.
As you guys know better than I do, eBay at that point in time, 19 billion in GMV, quite a mountain to climb for us, for our fairly young product, which up until then was, like, more a side project of the company. We really, really needed to grow up quite fast, and ensure that the smallest job which we have in our offering is scalable and able to handle the volume. Also eBay really helped us to kind of get our offering to the next level from a maturity perspective. While we've been helping eBay to own their payments experience, we also talked to a lot of prospects, and more and more of those prospects ended up being in the platform space. We realized that what we've built for marketplaces, we can also help those platforms with one big exception.
They really needed in-store payments to support their restaurants, childcare centers, and gyms. Adyen at that point in time had already launched their unified commerce offering, and was really one of those big pivotal moments when we figured out a good way how we can make that unified commerce experience available for platforms, and with that enable all those really cool user journeys in the SMB segment. Being able to offer unified commerce for platforms accepting payments in-store was also another one of those really big moments for us which unlocked a whole new segment of users and an area of growth which was way quicker than we expected. We also rebranded our offering along the way, and yeah, now it's Adyen for Platforms, not MarketPay anymore. 2019 was special for another reason. We launched Issuing at the end of the year.
Issuing, our first step into financial services, but also another piece of the value chain which we own and can improve on. Amber told already a little bit what Issuing means on the enterprise level side. For us on the platform side, Issuing is super exciting because we can pay the users even quicker on the cards we have issued, save at least one day in the process. What's also cool is that we can support use cases for on-demand food delivery companies and make just-in-time funding on the cards the riders are having available for them. It's definitely a service offering which is still young. We are still learning. We are realizing that even donation platforms have really cool use cases what they can do with Issuing.
For them, it's really all about, like, transparency for the people who donated, how the funds are being spent. I think in 2020 we had, like, one of those really big moments when we realized how much the offering has actually scaled, when we realized in a week we are now onboarding as many customers as Adyen had overall until date, which is pretty cool KPI, which makes all of us very excited. Kind of we are now looking forward to the next one, how we can grow further. When we look today where we are and where we wanna go, it's really two things which are very much top of mind for us.
We wanna grow even further with our existing customers, offer them not only Issuing but really other cool financial services and unlock really new use cases for their users. The second part is you've seen like Roelant's slide with the McKinsey prediction, how many new players are entering the platform space, how many of the existing players want to own the payments experience. We're creating more and more tools which are allowing platforms which are not as mature, which don't have as many resources to own the payment experience. What does it mean in practice? It means we are creating front ends which are helping with onboarding, so they don't need to build it. We are creating statements which they can give to their users. We're helping with risk, right? Helping them navigate chargebacks, refunds, and taking some or more load there.
Really we are going wider in terms of the audience which we are supporting, and we are going deeper with the use case which we offer our platforms very soon. Now over to Tom.
Hi, everybody. My name is Thom Ruiter. I'm looking after our banking and financial products, and right now I will tell how we're building a modular-embedded financial product suite. As Caro already told before, we have a long-lasting and deep relationship with our platform partners. Besides doing their onboarding, doing the pay-ins and the payouts for these platforms, they asked us to do more and to help their users, which are usually SMBs, to help them with better financial experiences than they get today with, let's say, traditional banks. The reason they want to do this is that because they want to capitalize their user base.
First of all, they want to create a better customer experience by embedding these financial products, and therefore they create additional stickiness of existing customers, and they can onboard new users because they have a better offering. Furthermore, it's also if you offer financial services to your users, then they can grow better and they can generate more revenue. If the users grow, the platform grows. The third reason is all these financial products have additional monetization points. You can add new revenue streams to your existing revenue streams. These platforms don't want to go through these painful licensing processes, long projects to build the technology for that or to integrate numerous partners in order to embed these financial services into their offering.
Therefore, they asked us, "Can you make that part of your payments platform?" That's what we did. We invested for five years in not only our banking licenses but also in our own technology, and we made it an integral part of our payments platform. What we then can offer are these financial products. It's already mentioned before by Kamran. A platform can integrate to us, and we do not only do the payments, but the payments can also land on an account. Think of a bank account. If the money is on a bank account, we can also attach a card to that, a physical or virtual card, and the money can be spent. If the users are in need for urgent cash, we can help them with cash advances with Adyen Capital.
Last but not least, we have an extensive payout network around the globe. We can pay out to numerous countries by means of bank transfers or payouts to cards, and we can help with FX services. The platform users can also benefit from these capabilities. We do this as we started with Adyen for Platforms by means of an offering that's fully API-based. The platform owns the complete customer experience and the front end and the portal and the whole experience, and we are in the background helping by means of our APIs to embed these financial services into their offering. We take care of everything there. We do the compliance and the onboarding. We do the processing. We have the accounting and the ledger. We do the data, the reporting, the clearing connections, everything. Everything behind the APIs.
How does that look like in practice? In order to show this, we want to show you one of our platforms that is a SaaS hospitality platform that services bars, restaurants, stores with accounting and point of sale experience. They asked us, "Can you help us embedding the your financial services into our offering, so we create a better experience for our users?" In this case, we follow Dean, that is the owner of a successful donut store in Portland, Oregon. While he logs into the portal of the platform, so not our portal, it's the portal of the platform, and it's powered by our services. What you see here is basically his main dashboard. In the left, you see a menu. In the middle, you see how the sales was of today.
You see a bank account, and you see something about capital. Dean is at the end of the day, and he wants to see what the performance was in his store and online. He looks at the sales dashboard, and what you can see here is that he did $1,100 of sales today. What you can also see is that he does both online and in-store transactions. In-store is quite common for a donut store, but online, he only recently added in the last couple of years because of COVID, pickup and delivery were more and more important. You see that a significant portion of his revenue is also online. Now, today, Dean was reminded multiple times by a supplier, and he needs to pay an invoice.
His current balance on his bank account is not sufficient. What he sees on the top right of his overview that he's a bit over $2,000 of pending transactions. Those transactions are pending because Dean is currently at a T+2 payout schedule. That means that all the sales of Monday is paid out on Wednesday. What Dean could do in order to get quickly more cash, he can change his settlement schedule and move it from T+2 to T+1 or even T+0. That basically means same-day settlement. All the money that he made on Monday is paid out on Monday. That is structural, and Dean only needs the cash today.
He presses the cash out button on the top right. What happens is that he can, of course, pay a little fee and then he receives, in this case, $2,000 instantly on his bank account, so he can immediately use it to pay his supplier. Then we go to his bank account, and there you see that the balance went up from $700 to $2,700. He now has sufficient money to pay the invoice. If we look at the transaction overview in his bank account, there are some things I wanna point out. You see that the sales of the numerous sales days is credited to the bank account. That's basically the income of Dean. On the other side, he also has expenses for groceries, for insurance, he needs to pay employees.
You see that he can, from his bank account, can both pay for his expenses by means of bank transfers, for instance, to pay invoices or employees, and with cards in order to go to the grocery store or shop online. Everything in a single overview in the portal of the platform where he is every day. Now, Dean wants to pay the invoice. He clicks on the transfer, and here he creates a transfer of $1,500 to pay the invoice. In this case, it's a domestic supplier. But suppose he has international suppliers. He can also do, from his own portal in the platform, he can do international transactions, and we can even help him with FX. It's not applicable in this case, but basically a small SMB can leverage our international payouts network.
We go back to the main overview. You see that the balance is now $1,200, and you see that Dean has a single card. Recently, he hired additional employees, and working with a single card can be inconvenient. He wants to add an additional card to his existing card. He can do this in the portal. He creates a card, sets for instance spending limits, where the money can be spent, and he orders the card and it's immediately sent to his store. He doesn't have to contact a contact center or a customer service, provide all kinds of details. No, it's immediately there. He has an additional card. It's sent to his store. It's very convenient if you want to do basically where he is best, servicing customers.
Now, if you look at the balance on his bank account, we see $1,200 balance and we see two cards now. Dean had an unfortunate event today. His espresso machine broke down, and he's in need for urgent cash. He sees in the portal that he's pre-qualified for $8,000 of capital. With that amount, he can buy a new espresso machine. He clicks on the offering and he gets three offerings. In this case, $4,000, $6,000, and $8,000. He will select the $8,000 because that's sufficient to buy his espresso machine. What he then gets is basically when he accepts the terms and conditions, he will receive the money within a minute on his bank account, so he can immediately spend it.
He doesn't have to worry about repayments because we take, in this example, 15% of his daily sales going forward until he repaid the amount we lent plus a service fee for us and for the platform. He doesn't have to worry about this. It's a percentage of sales, so basically we take it, so no hassle for him. It's very flexible because in case the sales is high, it's 15% of a lot. In case the sales is low, it's 15% of a little. Now, this is a short version of our capital offering. What we do with our capital offering, we basically look at the payments data of all the users of the platforms, and we create a pre-qualified offering.
This is very convenient for the user because they don't have to provide KYC details because we already covered the KYC before. They don't have to provide financial details or access to the bank accounts, and they get a pre-qualified amount, which makes it easy to see how much you can get instead that you need to ask for an amount. Now we do the funds disbursement and the repayments. We take care because we are already in the money flow, so it's very convenient that we take care of that as well. Adyen Capital is something we will work on and pilot this year. It is early stage, but we wanted to show you how this works in practice.
Now we go back to the overview, and what you see here is that the balance is $9,200, and that's sufficient for Dean to go online, buy an espresso store that is delivered tomorrow, and he's immediately back in business for selling coffee. Now, with this overview, we basically showed how an experience could look like in the portals of one of our platform partners. But there is basically an infrastructure, a banking infrastructure behind this. So what we basically do for this platform in order to service this experience, we board the platform to our platform and we set up the right account structure. Then all the services you see around this can be in a modular way, can be activated.
First, if we look on the inflow side, you can see that we can do Adyen payments processing around the globe. If bank accounts are activated, you can do direct payments to the accounts of the users. On the outflow side, you see that we can do payouts to bank accounts around the globe, to cards around the globe, or we attach an Adyen-issued card and the money can be spent immediately in-store, online or withdrawn from an ATM. In order to make this a smooth process, we have various services. You see them at the bottom. We can help with FX services. Now, by Adyen Issuing, we can add physical or virtual cards. We can add various types of accounts, among all those bank accounts, and we can help with cash advances by means of capital.
This is not only a modular approach, it's also all the points you see on this slide are monetization points for both the platform and for us. Everything can be monetized in a different way. For instance, with Issuing, we can do, for instance, a revenue share on the interchange or with Capital, we can do a revenue share between us and the platform on the fee that the user is paying. Some of these products we do longer, like payments processing and payouts. Some are more recent, like Issuing. Some are fairly new, and we will pilot this year, think of bank accounts and Capital. You will hear more from us on that later this year.
Now, this is when a customer or a platform is live and processing, but before that, we need to board hundreds, thousands, or even millions of users to the platform. Therefore, we have our compliance and onboarding services. Mariëtte will tell you more about that.
Thank you, Tom. Hello, everyone. My name is Mariëtte Swart, and I'm Adyen's Chief Legal and Compliance Officer. In that capacity, I'm responsible for all the legal risk and compliance matters. It's also from that perspective that I would like to talk with you today about platforms. I've always been intrigued by platforms because they operate in such an interesting space, but also a very challenging space. It's one where sellers need to be onboarded quickly. It's one where having a really thorough understanding of the behavior of your sellers is most important. It's also one where the interaction between sellers and buyers creates the problem of multi-sided fraud. Well, when we started to build the product a couple of years ago, we wanted to solve for all of those problems. We've made a lot of iterations along the way.
We optimized our onboarding and monitoring procedures. We integrated KYC verification databases, and we automated all of those steps. I think we're now able to onboard millions of sellers at scale. The product is really at a great state. Before I tell you more about the product itself, let me take a step back and talk you through the whole regulatory landscape that we currently operate in, because I think that will allow you to better understand the challenges that the platforms are facing as well. About the regulatory landscape, it is evolving. Whereas we always have seen a certain alignment in the underlying principles of global laws and regulations, we see that is now changing. New rules are introduced quickly.
Whereas our early entry markets are rather slow in introducing new rules or regulations, we see that the new markets that we enter into are introducing regulatory laws rather quickly. Whereas the objective of all of these rules and regulations should be the same, there are important nuances to be made. Also in our more established countries, we see that there are challenges in front of us, mainly due to the fact that existing laws and regulations are very often subject to varying interpretation of regulators. That is very often caused by an unclear application of those laws on new market participants, nontraditional participants like fintechs and paytechs, and also platforms that offer payment services. What we do see is that all of these new rules and regulations are aimed to reform KYC and AML legislation that, in an effort to fight financial crime.
I expect in the years to come that there will be a sweeping change in APAC, Americas, and Europe on this point. Whereas financial institutions like Adyen have always been subject to AML legislation, we now see the focus shifting to other players within the payment chain as well, including platforms that are offering financial services. Well, all of that, of course, has an impact in the way how we operate. It makes it much more difficult to maintain one global approach, and it brings a lot of complexity. Complexity that will also affect platforms. Let me talk about the challenges that they are facing. I think the most important, and probably also the most obvious one, is that they need to board sellers in a compliant way and at scale.
For that, they need to build an infrastructure that will allow to continuously identify and verify the different KYC points of their sellers. Having an infrastructure in itself is not enough. It's also important to really have a thorough understanding of the KYC requirements that apply in all the local regions. Proof of identification and verification may be different on a country-by-country basis, and it's very often submitted in local languages. For that, the platforms will need to rely on the expertise of local operational teams. Once the platform has boarded its sellers, it shall need to continuously monitor their acts from a content perspective, but also from a transaction behavior perspective, because as I mentioned, regulators are urging platforms to really step up and really help in fighting financial crime. For that, platforms need to be able to detect unusual behavior.
When doing that, when looking at unusual behavior, platforms are really soon confronted with the difficulties, with the challenges of having a multi-sided setup where both the buyer and the seller can be a fraudulent actor. That creates new types of fraud, whereby very often the seller and the buyer are colluding. That can really become a serious problem for the larger platforms that have multiple accounts, a problem both from a financial risk perspective as well from a reputational risk perspective. All these challenges bring a certain complexity for the platforms, ones that they very often find difficult to deal with. They rather focus on their core business, which we understand. However, we also believe that when done right, having a really smooth onboarding flow and monitoring flow can really become a competitive advantage. It's important to get it right, and that's why we are keen to help.
That's what we like to do. How do we do that? Well, this slide has already been presented to you by Kamran and by Tom. It shows the various services that we can offer to platforms. I in particular would like to talk about onboarding and compliance. If I click on that, you can see which services we offer as part of that. Starting with KYC services, we make sure that all KYC checks are completed as quickly as possible, and we do that in an automated way. We allow the platform to really build the best user experience by offering modular KYC services. It's that modular approach that will allow platforms to deal with all the local differences that apply in KYC regulation. It will allow them to expand to other regions while solving for that complexity and maintaining compliance. KYC doesn't end at onboarding.
As a financial institution, Adyen is required to continuously screen and review the sellers. We do that on a periodic basis, and we do that on an event-driven basis. As part of the review, we will check whether the risk profile of a certain seller has changed. We look at certain static KYC details as well as dynamic indicators. We will make sure that whole process is done as frictionless as possible. We'll also make sure that we will share the results with the platform so that also the platform will continue to have an up-to-date view of the sellers. The dynamic indicators that we review, we will review with the help of our transaction monitoring engine. Our transaction monitoring engine makes use of advanced machine learning models that will help us to detect unusual behavior.
On top of that, our latest Adyen Score will help us to detect fraud, also in cases where the seller and the buyer are colluding. A platform can take those insights and can either integrate it within its own workflows, or it can make use of our automated flow, whereby decisions are made automatically, thereby reducing the operational workload of the platform. Of course, Adyen will always, in the background, conduct its own transaction monitoring, thereby reporting all of the unusual transactions to the authorities. All of these efforts will allow us eventually to create an enhanced profile of the seller, an enhanced risk profile, which we can share with the platform. The platform can then use that to help the seller grow. For instance, by offering one of these financial services, like credit.
Fully integrated, we can help the platform making the right choices, which of the seller is eligible for credit and to which amount. By doing that, we will reduce the risk of financial loss. Listening to all of that, when we've equipped the platform with all of these services, it will make sense that we eventually will also help them with their invoicing flows. Indeed, automated invoicing workflows is part of our long-term planning. We're currently looking with our merchants what would be a suitable business case for that, how we can help them best. Finally, all of these products and services are available to the platform via API or via a user interface. The platform can decide how it can configure those services best and can customize it accordingly.
As such, the platform will remain in the full control of the look and feel of its own presentation towards the sellers. The product is in a great state. That's what I told you. How are we different? Good question. I think we're different for a couple of reasons. First of all, we do this all from our one single platform. One single platform means to have one single onboarding flow and one single risk profile of the seller. The platform can use that for any of the other services that it wants to offer to that seller. That means that once the seller is onboarded, it does not need to go through a similar flow when it wants to take out capital or bank accounts. It only needs to do that once. How we are also different is that we do that in the background.
We are not visible. We allow the platforms to continue to have the full relationship with the seller. We would not interfere with that, and we will allow the platform to maintain to have full control over that. Finally, we do this all on our own licensing framework. As Tom already mentioned, in the last couple of years, we invested in getting all the regulatory licenses in all of the relevant regions. That makes it so we can offer these services now on our own licensing framework without having any dependencies or any limitations from any third party. I am really proud of the investments that we've made, really proud of our licensing framework, really proud of the product that we've built, and really proud of the team of regulatory experts that we have now all around the world.
I'm also really happy that we can utilize that now to the benefits of our platform merchants. Thank you for your attention. We're now on to Sunil who will talk about our data solution.
Thank you, Mariëtte. I'm Sunil. I'm one of the leads of the data solution. We're a collection of data scientists, data engineers, data analysts, and of course, product managers like myself, that are making simple for platforms and merchants to offer very complex payments and financial services and scale them globally. We've done this in the past through a few different services. RevenueProtect, for example. This is one way we've helped our merchants grow globally with lower risk in the transaction. Usually in a transaction flow, there are certain sellers, shoppers that you really wanna stop before they execute a payment. That's what RevenueProtect's been guarding against. We've also been looking at the revenue side of things. With every transaction, there's complexity that can actually prevent a transaction from succeeding and adding revenue to the merchant's bottom line.
Revenue Accelerate is meant to intelligently address some of those variances in the payment flow and ensure that every shopper, if they have the money to buy and a payment method that's valid, can convert. We've also started to focus our efforts on data in unified commerce. Unified commerce merchants that are looking to merge e-commerce in-store and online channels together, have relied on us to provide them with a single view of their shopper. Connecting through our back office, they can pull data about their shoppers in real time to know, hey, this is a shopper that I'm seeing for the first time in store but has shopped online many times. In addition, using our data, to show them areas where if they open a store, perhaps they're cannibalizing their own sales.
These are ways that we're using data today to help our merchants and have done so for the last many years. The game is changing. When we had a few hundred merchants, and then 1,000 merchants, and then more, several thousand merchants, the amount of data that we used, as well as the number of channels we were servicing increased considerably. The complexity of managing data, making decisions on data, became difficult, not just for us, but also for our merchants that were facing a more complex market. The size grows even more when you start adding platforms. Now you're not just talking about thousands of merchants and billions of transactions, but even millions of sellers on a platform. We needed to unify our efforts in a more centralized way to get more speed to offering better decisions for our merchants and platforms.
We're here to provide simplicity for those that don't need to understand payments in order to grow. That's for us to decide. Our structure looks a little bit like this. What we're building is essentially a big data platform, one platform connected to our payments platform, also one platform, and on top of that, a brain, an identity graph that can make better decisions in real time for pay-ins, for payouts, and for lower account risk. This takes the form of a number of different products that you can see below, but let's make that live a little bit. An identity graph or an intelligent decision-making engine built on top of big data is effectively a brain. It's a brain that optimizes decision-making on our single platform.
It's a brain that knows that Dean's Donuts can be safely given or offered $8,000 in capital to replace their espresso machine. It's a brain that knows in real time that an account's been hacked because that's way too many payments from so few shoppers. It's a brain that knows that 4:17 P.M. on a Wednesday is the best time for that particular bank to retry a transaction and ensure its success. Let's talk a little bit about what this means in various categories of value we're offering. On shopper conversion, merchants that work with us depend on us to be peerless when it comes to conversion of payments.
Our investments in this area will start on RevenueProtect, so on the risk side of things, where we need a broader set of data to work from to make better decisions, and our merchants can offer that data. We have an opt-in program called Network Signals that allows our merchants to share data with each other in a transparent and fully anonymized way to make sure that even if the shopper is the first time at one merchant, they can make a good risk decision on accepting a payment, because it's not the first time that shopper's been on another merchant. We're also looking at shopper conversion more holistically. On the Revenue Accelerate side, it's not just enough to look at authorization rates anymore.
This is a ten-year-old concept that has produced a lot of revenue for the industry, but it doesn't go far enough. With the brain that we're building, we could look at as varied circumstances as dropout and checkout conversion, maybe because the wrong method of authentication was used or perhaps a better local payment method might be better for that shopper. We're also looking at, in real time, decisions about how a transaction should be routed to different acquiring connections. Lastly, we're combining the strength of our risk engine with our revenue optimization, where perhaps using a risk-based decision, you might drop some of the components of a payment request to ensure that it has a higher chance of success with the bank with lower risk. On the seller risk side, there are a number of different capabilities we're advancing.
Roelant's brought up the example of Tessitura. Tessitura, it's a wonderful platform that is making it much easier to optimize experiences at museums. We don't expect them to understand that 3% of sellers that are boarding on platforms tend to be fraudulent. How can we help our platforms board sellers more effectively without digging into the details? First, we built Adyen KYC. Adyen KYC ensures that we collect the least amount of information to check whether a seller is fraudulent in the least amount of time, balancing the flow and the speed of seller onboarding with the amount of data we have to collect. Remember, many of these are individuals that have never been through a KYC process before. How can we present them with the least amount of information to make their experience clean?
It's not enough just to check risk upfront. You also need to check it in real time. That's why we have Adyen Score. Our brain is informing real-time decisions on seller risk as they accept transactions. In an anonymized way, we make decisions that know based on the behavior of sellers, whether they are actually fraudulent. What's best is because we built KYC and Score together, they interact with one another. Once we spot a bad seller, that improves our ability to actually check and do KYC for other platforms. In addition, we're not just handling risk for platforms. We're also helping them grow. Bringing up the Dean's Donuts example. Dean apparently finally realized that the best complement to donuts is coffee. He needs capital in order to buy an espresso machine.
The way we can feel low risk in offering capital through the platform to Dean is through better data and better decision-making in our brain. This way, the platforms can feel free to offer capital to their sellers. Not just decision-making is important here, it's also providing data and insight. We're doing this in a few different ways. In one way, we've been pretty good about providing merchants and our platforms with data on what is happening, settlement, real-time reports on payment activity. It's not enough. We've been asked for many years now to provide benchmarking because that provides meaning to the data. Is it normal that I'm getting these decline codes? Is it normal that my shoppers suddenly experience a drop in conversion, perhaps after a black swan event? With our merchant similarity score, we're helping to define what normal looks like.
It isn't just about comparing, say, one streaming service with another. It's actually about what their group of transactions look like, because not all streaming services are the same. Using merchant similarity scores, we can define normal and help them know what to take action on. This is the last step we're gonna go. Not just saying what's happening, but also figuring out what's normal, but helping them make decisions. Is there a tweak to the API call that I need to make? Do I need to change the messaging I'm sending to the bank? Do I need to offer a new payment method? This is ultimately the realm in which Insights will be playing. On the unified commerce side, we've done a pretty good job of providing merchants with essential data connecting on and offline shoppers.
The next step is through Shopper Connect. It's not just providing them with the data, but actually streaming the data to the data warehouse that the merchant uses. This is an advancement that a data solution like ours can offer. This is a lot of value we're offering. I'll just make a note on monetization. We will continue our practice of adding margin to our payments as we add value to our payment processing and our pay-ins. More important than the monetization side is trust. The merchants and platforms we work with need to trust the data that we have. They need to trust that we make good choices about and on that data, that ultimately is their data, we are just helping them make better decisions with it.
By doing that, we're going to help them build a bigger business. As far as the platform engineering required to make that a reality, let me pass it on to our CTO, Alex Mathey. Thanks very much.
Hello, my name is Alexander Mathey. I'm the Chief Technology Officer of Adyen. Let me quickly introduce myself. I'm with Adyen since 2015. Since I started, I've been involved in many different areas within the platform engineering team. One of the things I was focusing on in the past is that I was involved in the architecture and the initial iteration of our platform offering before becoming the CTO beginning of last year. Today I want to take the chance to talk a little bit more about the single platform. You've heard it many times today, and you have heard it also before.
I want to take the chance to talk a little bit about the principles that we use when we apply changes to our architecture, when we build the platform, but also when we maintain and scale it further. Let me start at the beginning for us. Building a single platform is not something new. It's actually something that we've done from the very start, and it is something where we always applied certain principles to it. One is that we maintain a single code base because it keeps us fast. Well, it is relatively simple. If you wanna have a single platform, then you need a single code base. What does that mean in real life?
In our case, that means that we use one code base in order to run all different instances worldwide for our platform. It also means that we are serving the same code base to all our merchants. That allows us to actually concentrate all our engineering efforts on building and improving this one single code base. If you think about all of the product offering and product updates that you have been hearing about today, well, our merchants are global, so they will want to have these product updates to be available everywhere. Historically, with some other players in the market, you will have to maintain multiple platforms.
What that means is that in our case, we would need to think about how do we actually roll out these product updates to different platforms, how do we prioritize between it? For our merchants, that would mean they need to maintain multiple integrations. They might not get the same updates everywhere and the same functionality. Therefore, we have taken a different approach. We have one single code base, which means there is one single integration and there's only one platform for update. That helps us to be fast with our merchants. The next principle I wanna touch upon is that we are agile and merchant driven. We have always been working very, very closely with our merchants, and that has been of great advantage to us, and we don't wanna change that.
For us, it is important to understand the problems and the needs of our merchants because that helps us to, on the one hand, help them quickly, and on the other hand, this helps us to prioritize the things that really matter to them. Together with our ability to implement these changes in a fast manner by having weekly release cycles as well as automated testing, that helps us to, while we are growing the platform and while we are growing the team, to continuously be as fast as we've always been. This, together with the single code base, is actually what we always mean when we are talking about the subscription to innovation.
The last principle I wanna talk about is that for us, it's really key to be in control. You already see that reflected in our in-house development and in the single code base and in our infrastructure. What we mean with that is we want to be in a position where we control all bits and pieces when it comes to our technology. Starting with our infrastructure, the way that we do this, we operate them in co-located spaces where we, for ourselves, own and control how our code is actually being run. Also for that code itself, independent of if it's dealing with infrastructure or if it's dealing with the application itself, it's built by Adyen developers, so we have all the knowledge in-house.
The technology itself, that's either built in-house or it's an open source technology so that we can look into it and we can take full control over it. That principle of being in control, that allows us to take full ownership about the platform, because it ultimately means there's no one else taking technical decision than our Adyen engineers. With that, you have maybe a little bit better understanding of what we mean with the single platform. I still want to go with you through maybe a little bit more tangible example of a payment request that reached us from the Internet. Let's suppose there is a payment request that is sent to us. It would arrive at one of our regions in which we have multiple availability zones.
In each of these availability zones, we do have multiple front-end services. Well, with these front-end services, what we do there is we focus on high availability, we focus on easy scaling, and we focus on speed. Because what we do there is we validate a transaction, we assess the risk, we process the transaction by going back to the schemes and see if a transaction is valid, and then as quick as possible, respond to the initial request so that our merchant can actually handle the transaction further with the shopper. Once that's done, what happens is that we consolidate all of these payment requests into our backend services.
At that point, we actually store all the transactions for the long term, and we finalize the processing by doing the reconciliation about the incoming funds from the payment methods as well as we do the payouts and the reporting. Now you could ask, with that growing platform and with all the changes that you've seen today, how do you plan to further maintain that? Well, we have laid out the guiding principles on how we take the right technical decision in our Adyen way of engineering. It really shows how we want to work together as a team. A lot of these things you can probably relate to, looking at what you've heard today. Just to give you a few examples, to think like a merchant and go meet them.
I just said how important it is for us to be merchant driven. If you think about what Tom talked about, the financial service product suite, that's something that we launch fast and we expose our work early, but we also know we need to iterate it. Obviously, I talked about how our tech stack is open source or built in-house in order to be in control. I want to focus also on redesign for 20x. That's something where you could say that speaks for itself, right? It's relatively simple. Whatever we build, we want it to be able to handle 20 times the volume that we currently have to handle. That's because we know of the constant increasing volumes that are coming our way. By having such a principle, we are always prepared.
Now, you've heard that and seen in the presentation so far that we have heavily invested into building our banking and big data services in the past. And while building them out, we actually applied exactly the same principles I was just talking about. How did we do that? Well, we added this functionality into our single code base, and that brings us into a position where we can actually roll out these services wherever we want to in the world, and we can offer them to everybody, to every merchant that is interested in it. And we stay in full control because we use open source technology, and we build it in-house. We have not added any additional dependencies to ourself.
We take a very agile approach, because on the one hand, we design for 20x, as we know we need to be there, but we go there in small steps and expose our work to our merchants early to get the feedback and actually stay sharp. What we have been doing ultimately is we've been adding a banking service and a big data service to our platform. Well, the platform was always able to handle multiple tasks at a time, so it's not really something completely new. We have done that in the past with payment processing. Now we've added additional services that we need to build out. But for our merchants, not a lot is changing because it stays one platform, it stays one integration. Yeah.
This is how we plan to continue with it. To close off my presentation, I want to stress the importance of the culture and the highly talented teams that are building this platform, or this one platform. This is because we are always seeking for our own solutions. As there is, you know, the problems that we are working with, they're at the edge of the industry. The way that we're approaching them is by thinking really about the problem that we need to solve rather than, you know, a specific technology that might shall be used. We have all the right people for that on board. We have all the right people to solve all of these problems.
By continuously working on these interesting challenges, we also stay attractive for the best-in-class engineers. When I'm looking at that talent pool and when I'm looking at how we have been able to grow it, this is what I'm really proud of. With that remark, I actually want to hand it over to Brooke and Pieter, who will talk a little bit more about people and culture. Thank you.
Thank you, Alexander. I'm indeed here with Pieter van der Does, our CEO and co-founder, and Brooke Noden, our head of HR. We've heard a lot of new plans today. We've heard briefly from Roelant Prins how we'll be organizing. Pieter, would it work for you to speak a bit more on how we'll organize ourselves and structure the company to execute on all the plans announced?
Yeah. If you see how we evolved over the years, we started with just having an engineering team and commercial group. That works for a smaller company. At a certain point, we said, "Let's do work streams." Why work streams? In a work stream, we want to have the commercial people and the engineers together, so you can quickly resolve problems, and you can quickly react to opportunities. That worked great for us. At a certain point now we see that we have so many work streams, it's time to group them in a different way. In the way we want to group them now is that we say, "Let's do focus on certain products and let's do commercial focus." Commercial focus we call commercial pillars. That's digital.
That is the product as we knew it from the beginning. We later added unified commerce to that, so merchants would also have store. That's the product that we have seen an enormous attraction in the market because with COVID, you saw stores being closed, online taking over, and being able to do it in one hand, that brought us a lot. Then thirdly, platforms. If you see how we structured product-wise, we say payments in general, and then we say platforms and embedded financial services underpinning that data and platform engineering.
Clear. That sounds like we're organizing ourselves to keep our speed, prioritize what our merchants need, so everything that we've announced today will be built. Brooke, when hearing all of these plans, I also think of what your schedule and your team's schedule looks like. You must be busy. There's a lot to do. The company is growing and we will be continuing to roll out everything that we've been speaking to today. What are our plans on the hiring front?
Yeah. I mean, I think first of all, everything that we're hearing today, I think from a people team perspective, we're super excited about how we can help continue to build the company from here. When it comes to how we're gonna grow, I think first of all, we have invested a lot in our people team, and we continue to. We're scaling our recruiting function, our HR function to ensure that we can really support the teams that are doing so much to build an amazing platform. We're also investing in how we bring talent into the organization. We've always been very lucky in that we have a really solid inflow of candidates applying to our roles.
We've always had really strong referral rates, but we're spending more and more time and energy, going out into the market and targeting specialized profiles, and investing in recruiting partnerships, especially those that help us unlock talent from underrepresented groups and really further our diversity, equity, and inclusion strategy.
Mm-hmm.
On top of that, though, I think we're also really betting on and doubling down on what got us to where we are today. I think the reason that folks have joined us in the past is the same reason they'll join us in the future. We want to ensure that we scale the culture of freedom that really makes us stand out in the market.
Aga, would you be able to also share a quick note on how we look at hiring engineers? 'Cause I think it's been no secret what that market currently looks like, so I'm very curious for your take and our plans there too.
Definitely. I think Alex just spoke to our Adyen way of engineering very well, and that's really what we find attracts engineers in. We give them really difficult problems that they get to work on and have the opportunity to see their work quickly having impact on some of our customers who are some of the greatest companies in the world. They're not just building something that sits on a shelf, but they're really seeing the impact of their work super quickly.
Mm-hmm. It also sounds like, as we're growing at speed, as we're rolling out so many projects, there's a lot of growth opportunity for the people that walk into these doors, people that have been here for maybe a relatively short time to join maybe at a relatively young age. How do you make sure that this talent is set up for success?
Yeah, it's a great question. First of all, I think we acknowledge that it's hard to build a company that's optimized for the eights, nines, and tens, but we ensure that we keep that top of mind in the way that we're building the company. We do this in a few ways. I think first of all, we have a very high bar, and those that are, you know, having the most impact, we don't just ignore them 'cause they're doing a great job. We really double down and spend extra time and invest in those having the most impact.
Mm-hmm.
On the other side of it, we take quick action on underperformance, and we're really direct about that.
Mm-hmm.
We constantly are pushing ourselves to make sure that we're rewarding impact and keeping that as a huge focus for us. That is not just on the compensation side, but also those that we give stretch opportunities to and really, you know, help them grow by getting experience working on things that they're super excited about.
Mm-hmm.
Finally, the other thing I would mention is, we minimize bureaucracy however we can and try to have as little red tape. We do that not just because we think the eights, nines, and tens hate dealing with it, but we also really think we have a group of people that we can trust, so we give them the freedom to have the most impact.
It sounds like you're investing a lot there, a lot to do, a lot of talent in through these doors. I think we've heard about hiring, we heard about how you're growing talent. How do you also make sure that talent stays?
Definitely. I think, you know, we've been really lucky in that, you know, over time, attrition goes up and down, but we've had a pretty consistent, you know, talent pool, and we've been able to really keep great talent in. You know, I think by keeping the talent bar high, making sure that we're also accessing talent in different markets and continuously bringing in people with different ideas, different backgrounds, we're able to keep the talent in.
Thanks for that, Brooke. Pieter, when I hear Brooke speak, when I hear about our plans, when you look at our merchant base, we're building a global company here. We're today happy to have Carl and Kamran joining from San Francisco, flying over. As restrictions are lifting in some areas, how do you think that we'll be building this company from a global perspective?
If you look how we're building this company, we see travel is back. At this moment, travel is to our merchants and to meetings where it's needed. It's not yet to the point where we were pre-pandemic, where we often had people two, four, or six weeks in another office. Unfortunately, not all offices can be as busy as this office today. We see offices as a central part, and by just having our office open, you see people coming in. Because we invest in our offices, we make sure that they are nice places to work in great locations. That has been instrumental for us for the exchange of ideas. Pre-COVID, we had people working from home.
Currently, we have people working from home. Pre-COVID, we even had some people fully remote. We might see more of that, but I think limited. You see that many people like to come in, that fits the way we work. If you look at the balance between being in our offices and working from home, that won't revert back fully to where it was pre-pandemic, but that's fine.
Mm-hmm. That's clear. When, as we're growing the team from the office, sometimes from home, traveling one weekend, also going and meeting our merchants, we all see that there's a lot of growth there. When it comes to scaling the company, scaling the team, the audience, I think, is already pretty familiar with their Adyen Formula. How does the Adyen Formula also help us scale the organization?
The Adyen Formula has been there from 2011, and it's a pretty consistent element, and it really tells the way how. It's really instructive actually if you read it, and it tells the way how we expect people to behave. Let's not forget there are a lot of lessons in there. Where it came from is how to run an international company, and that means picking up the phone. If you work through time zones, through different cultures, that's really important because what's the end of the day here is the beginning of somebody else's day. An email which is just not giving the right answer.
Mm-hmm.
Can frustrate somebody's full day. If you actually look at the Formula, it's how do we keep speed? That's the Formula is the answer to that. Even today, after so many years, it's still as relevant as it is today. We keep training people on working according to the Formula and that's a constant effort. You don't write it down once, and that's part of onboarding, it's part of how we train senior people, managers of managers, and that's the way how we, rather than saying, "This is what the future looks like," let's build towards that, make an organization which is agile, which can react to what happens in the market, also with this size, and we don't see a need to change that.
Actually, I think it delivers great value at the moment.
That's great to hear. I cannot but agree with you there. It sounds like the formula is also really being spread across a broader group of senior leaders currently. How do you spend time on that yourself, and how does it go into practice?
Yeah, that's a good point that you bring up there. If you look at how we spoke about commercial pillars, about the solutions, that's also widening the group of people which take responsibility, accountability, and that's an objective in itself. Because as the company grows, as we scale, and you see we grow very quickly, you don't wanna have six board members and then only work streams. You wanna have more people that are empowered and that feel we empower as low as possible in the organization, if you wanna look at it in a hierarchical way. But you also want to take people to take accountability, and we are widening the team. Currently, for example, we always do final interviews by board member. Also there, we're looking at maybe should make a next step.
Maybe we should grow that group from six to 12 to have a bit wider group doing that, so to take out bottlenecks. Things that serves us well, we run it to the point where we feel, hey, maybe now this is the point where we need to change it. Maybe this is the point where we extend that to a larger group.
Mm-hmm.
Still doing final interviews by a very selected group, but probably doubling the size now.
That sounds like as we scale, the Formula scales, too. Formula is as flexible as we are, and it will continue to be a guiding set of principles. I think I would like to both thank you for joining the conversation. With that, closing on that Formula note, I would really like to hand over to Ingo Uytdehaage, our CFO, who will speak to how our plans that we announced today will be reflected in our financial reporting, too.
Hi, everyone. I'd like to take you through our changes in financial numbers as a result of the new view on our pillars. Because we think it gives a better overview how we look at our business ourselves, and that's of course also how we would like to present it to the investor community. Before I go into the new pillars, I'd like to take a step back and look at how we've presented so far our numbers. The current segmentation that you see with Enterprise, Unified Commerce and Mid-Market, that started when we IPO'd the business. Most of our business was back then in Enterprise. We thought basically being the bread and butter of our business, that had most of the emphasis. At the same time, we were investing in Unified Commerce and Mid-Market.
As you can see in the graph, a lot of growth has been achieved over the years in all the three segments. At the same time, we also had a few difficulties with this segmentation, because here, for instance, if you look at unified commerce, it's only defined as the volumes that were initiated by the physical point of sale and do not reflect any of the volumes that are traded online for retailers. If you look at mid-market strategy, we've been very effective in our mid-market strategy. It's basically helped us to further simplify our product, which also benefited the enterprise merchants. It does not really reflect the success that we have had with platforms, because we saw that if you wanna address mid-market and also smaller merchants, that the platform perspective is really important.
We want to make sure that that is also reflected in our numbers. That's why we made a change. The change that we have implemented is as follows. We follow the commercial pillars that everyone talked about today, Digital, Unified Commerce, and Platforms. We use internal definitions for segmenting our numbers. To start with Platforms, we look if volume from our merchants basically are processed through our platform offering. If at least 50% of volumes is going through this platform offering, we qualify it as Platforms. If it's less than that, it's either Unified Commerce or Digital, and the distinction between the two is whether there is significant or at least a little point of sale volume, and we have defined that as at least 0.5%.
By doing that, you get a really good overview how the business is performing. A good distinction between digital, unified commerce, and platforms. To look at the numbers, this is how we've always presented the numbers to you. Over 2021, we had over half a trillion EUR of processed volumes, where most of those volumes were processed in enterprise and a little in mid-market. Next to that, part of the volume was initiated through the point of sale, and that was what we then reflected as unified commerce, but it's basically a double count. How could we process or how could we present that in a better way? If you look at the new overview, we took that apart in line with the new definitions.
Then you get a very clear distinction between Digital, Unified Commerce, and Platforms. Within Unified Commerce, you see a significant part of point of sale volume. In Platforms, you see a relatively little part in point of sale volume, but that's growing quickly, and of course, it's crucial in our platform offering as also was presented today. How will that look if you look at three years in a row? You see basically in all three commercial pillars, significant growth. Digital has been growing since the start of our company, but also in the recent year, in 2021, we had very high growth numbers. The same for Unified Commerce. Although the pandemic had quite some impact on the in-store volumes, and that's quite visible if you compare 2020 with 2019.
You see that online has grown and really has helped us to be relevant in retail. I think that's a very strong evidence that our unified commerce strategy is working. On the platform side, you see the success of platforms. Volumes have grown very, very quickly. Of course, in platforms, eBay is included. Also if you would exclude eBay in these numbers, the trend is very similar with strong growth numbers also in 2021. What kind of impact does this have on revenues? If you look at the revenues and then specifically take rates, the take rates over the three pillars are very similar. The take rates are mostly defined by the size of a merchant.
The more volume you bring, the lower the take rates. I think that's something that we have highlighted also in the past. That is unchanged. If you'd like to make estimates like what the take rate will be for the different type of commercial pillars, you can assume the average that we have published so far applicable to those three pillars. The new products and the long-term net revenue opportunity, because the cool thing is, if you look at how we have grown over the recent year, there is still a lot of opportunity in both our unified commerce and digital space, the way how we process payments and continue to grow there. At the same time, also with the new products, we have very high ambitions.
At the same time, I think it's very good to also manage how far we are with issuing and capital. Issuing has just started, and we're processing like tens of millions EUR of volume compared to the billions EUR that we do in acquiring. We need to take that further, and we will do so. Capital has only just started. We're gonna pilot right now, and revenues from capital is still relatively limited, but also here we expect a lot of growth in the coming years. The key thing that we wanna say here is, like, because we have always had the organic growth strategy, we build our own products, but it takes years before you see it reflected in revenues. At the same time, it is very important to get to the long-term growth that we're aiming for.
Therefore, we're very excited to continue to invest in our business and make sure that we add this to our product portfolio. On the financial objectives, the financial objectives are unchanged. We reiterate our guidance, where net revenue growth on a compounded growth rate is between the mid-20s% and low 30s% for the coming years. Of course, the new products will help us to continue that trend even longer than with just payment processing. Although we still believe that payment processing is the core of our company, and in the next year will help us to realize this growth.
On EBITDA margin, we expect to get to at least 65% in the long run, but at the same time, as you have seen today, we keep investing in the business. We're not optimizing EBITDA in the short term. We wanna make sure that we invest in the right products, in the right people, and grow the company. In the long run, we will get to at least 65%. The EBITDA margin also includes the 1% that Edgar was talking about, that we wanna use to help charities to get to their sustainable development goals and also help our merchants. That is a great way of helping merchants and charities at the same time and be relevant to contributing to those sustainable development goals. The final point is the CapEx.
Also the CapEx guidance is unchanged to maximum 5% of net revenues. I think that's a very strong proof point that we have a very efficient platform where we can stay relevant with a relatively modest investment that we will continue. That is the presentation on our financial segmentation. Over to Steven for the last part of today.
Thank you, Ingo. This marks the end of the speaker section of today. We're gonna make sure to have all speakers back on stage to answer any questions that you may have. Before that, we're gonna take a short break so we can get them up here. If you haven't asked your questions yet in the Q&A function, please make sure to do so now. Please remember to state your full name and the firm you represent, so we'll make sure to address those questions after the break. Welcome back. As mentioned before the break, we managed to get all of our experts back on stage to answer any questions that you may have. It's gonna work as follows. We're gonna read out the name of the person asking the question.
You'll then be asked to unmute yourself, and you can go ahead and ask your question.
Thank you, Steven, for that intro. First up is Adam Wood from Morgan Stanley. Adam, you can now go ahead and unmute yourself, please.
Perfect. Thank you very much. Thank you for a really interesting presentation. Thought that was really useful and sounds very excited to be rolling out the financial offerings for the platforms. My questions are pretty related to that. First of all, just on the bank account side, it looks as if you will be enabling multi-currency bank accounts for merchants, and then I imagine payments across those bank accounts for those merchants. Could you talk a little bit about the backend infrastructure that you've built out to enable that? You know, we know from fintech players like Wise that they've spent many years building out connections to local payment networks so you don't have to run over the legacy banking infrastructure like SWIFT.
They've also found ways to manage FX movements, so they're very competitive on FX. Could you just talk a little bit about how you're gonna do this? And is this a big revenue opportunity for you, or is it really just to build stickiness for the merchants on those platforms? And then secondly, could you help us understand on the balance sheet side, on things like accelerated settlement, and then when you're doing actually direct lending through Adyen Capital, will that be the Adyen balance sheet or will you be working with partners to fund that into the merchants? Thank you.
Perfect. On the first question, backend infrastructure for multi-currency bank account payments. Tom, I think, that'd be a great one for you. Afterwards, we'll head over to Ingo for how we'll have capital reflected on our balance sheets.
Yeah. If we're looking at our banking infrastructure, I think the beauty is, one part of the question was about multi-currency. The beauty of our infrastructure is that every account can be set up as single and multi-currency, and our infrastructure is set up in such a way that it covers multi-currency accounting. Besides that, we're connected to local clearing networks in many countries of the world. We're also processing payments in many countries of the world. That means that we don't have to send money around the globe. We can leverage local infrastructures being direct in the core clearings in Europe and in the U.S. and working with partners in other parts of the world.
In terms of the monetization of this, or if this is a revenue opportunity, I think the most important thing is that we service our customers best and that we can help them with all their financial complexity. By means of doing that, we also help them and therefore there is a revenue opportunity. It's first and foremost to reduce their complexity and basically get the money where they need it.
Thanks, Tom, for a very clear and concise answer. Ingo, what would your question to the second part of the question be?
If you look at the capital product, I think the way we've built it is in a very flexible way. Of course, with our current cash at hand, we have enough room to provide capital to sellers of our platforms.
At the same time, you see that platforms itself are interested sometimes to provide credit. I think the beauty of our product is that we have this flexibility, and we wanna use that flexibility. Of course, if you look at the type of product, this is the first time that we're certainly gonna use our balance sheet. But I think we have all the data available to do that in a wise way and, yeah, basically take the right risk approach to this offering.
Clear. Thank you. We'll be building the product in a way how our merchants need it exactly, as how Roelant opened the day, too. Next up is Mohammed Moawalla from Goldman Sachs. Mo, you can now go ahead and please unmute yourself.
Great. Thank you. Thank you very much for the presentation as well and the sort of the detail on the new product. I had two questions. The first one was on platforms. Just as, you know, if we think of the core processing and payment acceptance, you know, you land and expand strategy of growing effectively, adding merchants, growing with them and adding kind of wallet share. If we think of this as strategy for platforms, you have a number of platform customers already. Should we think of this as sort of growing again within those platforms and adding kind of more share? Then how should we think of the up-sell of some of these additional product?
Should we see again a balance between those three vectors? Second question was on unified commerce. I know you sort of talked about not just online and offline, but a lot of interesting kind of new use cases emerging. I'm just curious in terms of sort of exploiting those, you know, how early are you in that opportunity? Are there any particular new verticals that come into play beyond some of the ones you have highlighted? Thank you so much.
Thank you, Mo. For the first part of the question, I'd like to direct it in the direction of Kamran, and afterwards, JP, if you can take the second part of the question and speak to our priority verticals in unified commerce.
Thanks, Anna. Yeah, on the first one, I think the beauty is we're seeing both. Definitely we're seeing with existing platform partners or customers that they want to avail issuing and some of the new products Tom talked about, just very natural extensions. We're also seeing with some platforms who are just about to start with us that they want to take the whole suite, right? I think it's gonna be definitely land and expand and with some new ones, the whole suite being part of the rollout plan.
Clear. Thank you, Kamran. J.P., on the second question.
Within unified commerce, the biggest vertical is retail. In retail, we still have a lot of growth opportunity. If you look at our share of retail payments, it's still relatively low. We definitely double down on growth there. Then food and beverage is an area where we've got great business, but also a lot of growth that we can chase. It's both quick service restaurants and table service and hospitality, so hotels, events and cinemas, for example. We're doubling down on those areas. If you look at what's new, it's really some more everyday retail categories. I mentioned grocery. A lot of grocery business is relatively straightforward payments in-stores, low margin.
That's not really as that interesting for us, but it's more the more difficult problems that we can solve, so the digital side of journeys, where we'll make our first inroads. I would say that's the focus for growth. Clearly those volumes are significant.
Thank you, J.P. It sounds like unified commerce is spreading across verticals, and that we'll be busy in the upcoming years.
Yep.
Next up is Hannes Leitner from UBS. Hannes, you can now go ahead and unmute yourself.
Yes, thanks for letting me on, and thank you for the detailed presentation. I got also a couple of questions. On the new platform solution covering acquiring and issuing, you mentioned to have now all licenses in-house. Could you talk about the geographic coverage and how you integrate third party to cover markets without all licenses? And then the second question, coming back to unified commerce, you often started off online, as you mentioned previously. Would be great to get a little bit more context on those, comparing those merchants where you're unified commerce, comparing them to the pure online merchants. How did the share of wallet in online increase after you expanded in the in-store offering? So kind of the cross-fertilization of the channels.
Thank you, Hannes. Maybe, Mariëtte, I can pass the first part of the question on licensing to you, and then we'll do a follow-up on unified commerce with Jan-Pieter.
Yeah, sure. Thank you. It's a good question. When investing in building our licensing framework, similar to what's discussed just recently, we also have the land and expand strategy, so we follow the needs of our merchants. Typically, whenever we enter into a new market, we first partner up with a BIN sponsor. That's another financial institution whom we can leverage the license, whilst at the same time we then confirm the business case and get more familiar with the regulatory framework. Once confirmed, we will then apply for our own licenses, that allows us to indeed do these products that we talked about today. We have these licenses now in our established markets.
Perfect. Thank you. Jan-Pieter, perhaps the second part on unified commerce.
Yeah. Indeed, often we start with one piece of business in a merchant. For unified commerce, that is often first digital and then an expansion into stores. I will say, though, that we also see it the other way around. For some merchants, we start with stores and then win online. In both scenarios, what we see is an increase in share of wallet, or our share of volume in both channels. That's because merchants learn what it's like to work with Adyen. They see how easy our tools are. They appreciate the fact that all the data is in one place, and they know they can get more efficiencies by consolidating more of their volume.
They get more consolidated insights because of course, the more volume they give, the more all that comes together. The answer to the question is yes. Even if from digital we start seeing point-of-sale volumes, digital will still see increase until we, well in some cases get all volume or almost all volume.
Thank you. That's clear. Next up is Josh Levin from Autonomous. Josh, you can now go ahead and unmute yourself.
Hi.
Hey, Josh. We can hear you. You can go ahead.
Have you estimated by how much Adyen platforms or this financial platform initiative expands your TAM? Is TAM expansion the right way to think about it? Unrelated to platforms, Stripe recently announced it's expanding into crypto. Checkout.com is already active in crypto. Does Adyen have any ambitions in crypto? If not, why not? Thank you.
I'm gonna pass the first part of that question to you, Kamran, and perhaps you wanna take the second part as well.
Sure. On the first one, I think as Roelant explained, and we mentioned a few times, we build based on our customer or prospective customer demand, and how do we solve problems for them. I don't think we think TAM first. I think absolutely it should expand the total TAM, but that's not really the priority for us, to be honest at this point. Crypto, same. We look to solve problems for our customers. If there's an unmet need, then we would be open to it and think of it that way. Currently, we think from a payment standpoint, crypto is not necessarily what we're hearing a lot of urgent demand for from our customers.
Thank you.
Perfect. Thank you, Kamran. Next up is James Goodman from Barclays. James, you can now go ahead, please unmute yourself.
Yeah, good afternoon. Thank you very much. A couple from me as well then. First of all, just picking up on a reference I think that was made in the unified commerce presentation about the ability soon to accept payments directly onto the mobile device. Wondered if you could expand a little bit on how you see that developing, presumably in response to some of the news flow we see coming out of Apple. I guess more broadly, with Apple and again another sort of news article last night that Apple's looking to broaden its you know, its approach right across the financial value chain. Any comments there about the way you see the ecosystem generally evolving would be useful.
Then secondly, interesting expansion into, you know, embedded finance more broadly, but focusing back in on Issuing. I think, Ingo, you mentioned tens of millions of volume for the Issuing product now. Wondered if you could build on that a little bit with an update on where you are from a customer numbers perspective. We've seen the customers that you've announced, but is there a broader base of customers now? How mature is that? You know, how is this business growing? Yeah, any update just in terms of where you think this will be in a year or two's time would be helpful. Thank you.
Yeah. Thank you, James, for those questions. Jan-Pieter, it seems like you're a well requested speaker today. I would kindly ask you to also answer James' first two questions. How do we see payments on mobile devices develop, and when we see other players, larger players, also work on this and the ecosystem evolving, what will our role be there?
Yeah. Yeah, first of all, it's a really interesting development. The main use cases for merchants that we see first is enterprise merchants that want to have a mobile solution. For example, be able to help customers all the way through the store or in a restaurant, be able to help customers at the table. Now, at the moment, you need two devices for that. You need one device that has the cash register have to create the basket or scan the product, and you need a terminal to take the payment. That's not the most convenient way of doing it. There's two batteries to charge. You need to pair them, et cetera. The ability to do that with one device is really advantageous.
That's one use case for the ability to take a mobile phone and turn it into a terminal. The other one is in the platform space, is with small merchants either using their own mobile phone or using a mobile phone that also has their, the platform software, running on it. They have effectively all the software they need to run their business plus the payment in one device. These are really positive developments. The fact that Apple is moving in, as they've announced, can only be seen as very positive. I mean, the moment Apple kind of creates these journeys, they tend to be adopted more easily. That's really positive. Whether it changes the ecosystem, I mean, for Adyen, a payment is a payment.
It can be done through online or in store. A terminal is nothing but the way to read a card. Therefore, this transition doesn't really change much in that sense. It's part of the trend from kind of physical hardware to kind of more software-based payments. Fundamentally for us, it still remains a payment.
Perfect. Thank you, Jan-Pieter. From unified commerce, I'd like to go on to Issuing. Ingo, James' last question, could you provide a bit more detail on where the product is, maturity, what the volumes look like? Is it something you could briefly speak to?
Sure. Well, the volumes is still tens of millions. I can't bring that up in 30 minutes, unfortunately. I think the way how we look at a product is that we've built it from a very strategic perspective. We wanna help our merchants, our platforms, to have the ability to offer issuing to their sellers or to the ones that are on our platform. If you look at the customer feedback, it's now out of pilot phase. The feedback is very positive, so the way we've built issuing is different compared to what's out there in the market. The fact that we have here, again, a global offering, so both in the U.S. and in Europe, through a single platform, that is a key thing.
Of course, we can further expand on that when it's needed, also to Mariëtte's point. That's also how we currently look at it. Issuing, typically, if you have a deal with a merchant, it takes time to roll it out, so we also need time to work with them. It's still the early years, and I always compare it a bit to point of sale. It takes a few years before you really get to the numbers that are meaningful. But I think the product foundation is very, very positive, and I think that's most important to us. It fits really well with organic growth strategy. Of course, there are faster ways to get to issuing volumes, but it doesn't address the product needs from our merchants.
That's why we have chosen this approach, and gives a bit of time. I think that's how we look at it.
It once more ties back to Roelant's first opening of the day. We build what our merchants need, and then we grow with them over time. Thank you. James, I hope that was exactly what you were looking for. Next up is Noushin Nejati from Deutsche Bank. Noushin, please go ahead and unmute yourself to ask your question.
Hi. Thank you all for the presentation. This is really exciting and really good to see that you're getting into financial services as well. I have a couple. First of all, I wanted to know if you have a certain criteria for onboarding platforms. Let's say in terms of volume, if they need to be exceeding a certain volume for you to onboarding them. Then, I'm trying to understand in terms of your volume, if you're involved with many of the buy now, pay later providers, if a meaningful portion of your volume is coming from them. Third on Apple announcement again, maybe.
I want to know if you're also a partner over there and providing like, a significant portion of your volume again coming from the Apple Pay, how big do you think the risk is over there if Apple is doing the processing in-house and taking out those volumes in its own hand? I am thinking more they're gonna do with this financing, this buy now, pay later, and that also can affect maybe a portion of your volume. Thank you so much.
Thank you, Nooshin. We've had some trouble hearing you on the line, but I'm going to do my best to route your questions as best as possible. For the first question, for criteria onboarding for platforms, is there any size requirement? How do we look at that? Mariëtte, I hope you can take that one. Afterwards, Edgar, if you can take the questions on buy now, pay later and Apple Pay, that'd be great. Mariëtte?
Yeah, no. There are no certain restrictions on platforms in size or volume. I think we're open to all. Of course, when onboarding a certain platform, we will see and will identify whether a certain platform is in a high-risk country or in a high-risk industry. As such, more stringent onboarding requirements may apply, but we're open to all.
Clear. Thank you. Right behind you we see Edgar. Edgar, buy now, pay later. How do we look at that?
Yeah. I think the interesting thing is that every year or every other year, there's a payment trend that seems to, at least it seems like they're taking over everything. I think what we've seen over the past years, there's continuously new trends that are hitting the market. Merchants want to try it out. Some are there to stay, some are temporary thing and the merchants disable it again. Of course, these are trends that we see now for multiple years growing really well. It's really specific per vertical, per country if it's, let's say, substantial enough to call it out in specific reports. But I think it really fits the toolbox that we give to our merchants, right? Easy activation, try it out if it works for their business in a certain use case, and that will help them grow.
You could argue that in many ways underneath it's still a payment, right? It's maybe a different way to pay with an existing card or with your existing bank account or maybe a new provider. It's a new technical way to make it happen, but it's still payment underneath.
Clear. Buy now, pay later, a payment method like many others, that we serve certain verticals with. Very clear. There was another question also on Apple Pay. I'm not sure whether you wanna take it or I can help Nooshin and give the context that we integrate many payment methods and that we look the same way as Apple Pay.
I would say the same answer almost to all. We've been a long-term partner with Apple Pay expanding into multiple countries. I think the product really fits a lot of digital use cases or unified commerce use cases. Again, it's one of multiple. Every shopper has a different preference to pay. Even in the pandemic that we've seen, what Roelant mentioned in the beginning, if we look at Apple Pay, for instance, in the point of sale context, it's still around 40% of payments that are now being done contactless. The merchants from a complete toolbox, they still need a lot of additional parts to have a complete offering to their shoppers.
Thank you, Edgar.
Yeah.
Up next is Antonin Baudry from HSBC. Antonin, you can now go ahead and unmute yourself.
Yes, thank you very much. I have two questions, if I may, and thank you for this presentation. The first one is about OpEx related to the new service you announced today. Will it change something on the way we have to see OpEx with the launch of these services? So will it increase the cost base, at least in the short term? My second question is about monetization of data opportunities. You explain in detail how you can use data to increase conversion for merchants. Do you expect to monetize these services at merchants in the future or will it play as it is today, so included in your price? Thank you.
Perfect. I think the first part on OpEx and the investments that we're gonna be doing, Ingo, you can take. Maybe, Sunil, you can take a small part on the data part, and then, that can be finished off by Ingo on the monetization of it as well.
Yeah, sure. If you look at the OpEx, most of our OpEx is the investment that we make in the team. Pieter and Brooke also spoke about how we further scale the team. That's the most important cost driver going forward. Of course, they also help to build the new products. If you look at the new services in itself, also if you take a long-term perspective, we don't think it will have a dilutive effect on the EBITDA margins, for instance. It will in the end lead to the EBITDA margins that we have guided on. Of course, on the short term, we keep investing. It's not our intent to optimize on EBITDA on the short term.
At the same time, don't expect like huge swings, because we build the company in a responsible way. We wanna make sure that we don't add too many people at the same time. We wanna keep the culture. That also in itself avoids a situation where we get to, like, uncontrolled OpEx spending. We like to invest, I think that's for sure.
Thanks. That's very clear. Perhaps on data, Sunil?
Of course. Thanks for the question, Antonin. A really good one. Our focus is, of course, primarily on value. As long as we are increasing the value of our pay-ins and our payouts, we are quite confident that that then gets reflected in our EBITDA margin, and you see that in the steady growth of our EBITDA margin over time. As far as exactly how to monetize, it really depends on the preference of the merchant or platform and the region sometimes that we're working in. We remain flexible to price within the margin of the payments, but also, standalone for some products.
Perfect. That's really clear. Up next is Timothy Chiodo from Credit Suisse. You can go ahead and unmute yourself, Timothy.
Great. Thank you, Steven. Thanks for taking the question. I wanted to talk about platform RFPs. As you talk with the various vertical SaaS platforms, and you enter into these RFPs increasingly, I wanted to talk about the competitors that you're going up against. Really, I wanted to see how you would describe what you're seeing in terms of differences, in terms of the competition amongst the modern competitors that have built out these very cohesive payments and embedded finance offerings. Then how that might contrast to some of the more traditional scaled incumbent players that do have some other benefits, meaning they have a large install base and a lot of existing relationships with many of these ISVs and platforms. In summary, I really wanted to talk about who you view as your most credible competitors in the platform space.
Kamran, you wanna take this on the competitive environment within the platform space?
Sure. I think as we tried to highlight today, we think we have a fairly unique offering, right? It's one, we're really good at payments on a global scale. Two, we've been able to leverage our licenses and technology to build out the onboarding and ongoing compliance capabilities that's historically been very fragmented. Three, we leverage unified commerce. Four, we're offering an extended suite of financial products now. Honestly, we're not egotistical, but we think that's pretty unique out there when we look at the landscape and especially being able to do it already across Europe and U.S. and over time additional geographies, hopefully. I think, of course, we run into various competitors from legacy providers to some of the new ones.
That's what we focus on, is how can we really differentiate and solve the problems for these platforms, in a unique way that adds the most value to them.
Thank you, Kamran.IIngo , next up is Sébastien Sztabowicz from Kepler Cheuvreux. Sebastien, you can please unmute yourself and ask your question.
Yes, thanks for taking the question, and hi, everyone. You are benefiting from a solid traction on SMBs through your online offering with the platform and marketplace strategy. Were you planning to address the SMBs in store? Do you plan to speed up investment internally or you prefer to work with your strategic partners? And as a follow-up, have you seen any specific impact on transaction volume following the recent conflict between Russia and Ukraine? And could you please make an update on the transaction volumes since the beginning of the year if you have any data point for us? Thank you.
Perfect. Yeah, certainly. Thank you. Roelant, when it comes to addressing our platforms, also in store, how do you look at that? If you could take that answer, that'd be great. Ingo, if you could afterwards speak to how the situation in Ukraine is hitting our volumes. Thank you.
Yeah, sure. No, I think SMEs both in the online space as well as in the in-store space, we think clearly about addressing them through platforms. That's one of the things that, like Kamran mentioned, a unique part of our offering is the fact that we are able to combine the platform solution with our long-term experience in point of sale and in-store payments. It's absolutely a way to address that in many different verticals, yeah.
A lot to do. It seems like a very scalable manner of addressing SMBs and also providing us with our unified commerce solution. Ingo, on the second part, with developments in the Ukraine and how they have impacted our volumes.
Yeah, if you look at the impact on our volumes, it's relatively limited because our exposure to those markets have also been limited. We've not been active in Ukraine or Russia. We don't have employees there. Of course, we have employees from Russia and Ukraine working from us, so we wanna make sure that they are in a good place. From a volume perspective, it's not meaningful to us.
Thank you. To quickly repeat, a strong focus on the team, making sure that our people are doing well, and we keep a close eye on the situation. Next up is Michael Wheeler from Stanhope Capital. Michael, could you please go ahead and unmute yourself?
Hi, guys. Really interesting stuff today. Thanks for doing it. I have three questions, if I may. The first would be for Alexander. If you were building a new payment platform today, would you still use Adyen's existing tech stack and architecture, from the early days, so back in 2006? Or would you perhaps use, you know, more modern infrastructure? So if you could help maybe explain what are some of the merits and demerits of the latest technology. The second question may be for Pieter.
You know, when we have this capital markets day in, say, 2027, hopefully in person and not virtual, when we take stock of the business then, do you think your core acquiring business will still be the most important, or do you think we'll still be talking maybe about issuing or the push into financial services? Then for Ingo, I know I think you're 49 years old now, and when we look out to when you turn 55, is that medium or long term? Thank you.
Thank you. Thank you, Michael, and also for easing Steven and my job easier by already directing the questions. It's much appreciated. I think you directed them in the right direction. I would first like to ask Alexander to ask the what if we would build the platform today?
Yeah. I think it's a very good question, and obviously, the technology has moved forward within the last 12 years. By default, you would do things differently if you would start from scratch now. But I think the principles that we've talked about today, they stay completely true to us and, we still feel very, very much that this is the right way to continue to grow further. From that perspective, yeah, we would probably use different technology than 12 years ago. But also we right now modernize the platform and introduce new technology when it solves a problem that we really have. This is the way how we look at it. What we're trying to avoid is to implement a technology just for the technology.
What we are doing is we are looking at the problem, and we are thinking about what technology can help us to solve it. If there is a better one out there than the one that we currently use, well, then we think about how big the benefit will be, and we will further implement it. We can do that in our platform right now as well. We constantly do it.
Perfect. Thank you, Alexander. Pieter, what if we were five years ahead? What would acquiring mean to us? What's your view there?
Yeah, I think that's a really good question. We are a company that started in doing payment transactions, and we focus fully on the financial side of helping merchants to solve their problems there, the challenges there. So also in five years from today, I think all the adjacent services will be finance-oriented, so we don't suddenly go into logistics or something totally different. What I would say in 2027 is that where we are today is that the processed volume over our platform is actually quite a good proxy for how the company is developing. I would say that in 2027 should be less so because then a payout, we don't double count that, so you don't see that.
Settlement to bank account, if we do pre-funding of money in transit, if we do a loan, you don't see that. I would hope but also expect that at that time, we cannot use processed volume anymore as a proxy. Right now we have this target of going, passing 1 trillion, and after 1 trillion it will be a different target. The target will not be 2 trillion because volume remains, processed volume will remain, the proxy for how the company is doing.
Thank you, Pieter. Michael, for your last question. Ingo, you're 49 today. When you're 55.
Well, mentally that's very long term. Professionally, I think there's a very clear distinction between medium and long term for ourselves, how we'd like to invest. It's not so much maybe about the terms, but more about what is the right order. We prefer always revenue growth above the short-term profitability. I think that's what we want to reflect in the difference between medium and long term. We really wanna make sure that in the next couple of years, we continue to grow our revenue as we have done over the recent years and continue within basically our financial objectives as we have guided. Profitability will follow, and I think that's how we look at it and now continue to look at it.
Perfect. Thank you, Ingo. Michael, thank you for your questions. Thank you for reading our annual report so thoroughly that you even know when Ingo's birthday is. I think we're ready for our next questions.
That next question will come from Sanjay Sakhrani from KBW. Sanjay, you can go ahead and unmute yourself.
Hopefully you can hear me now.
Yes.
Sorry. Okay. Yeah, I guess my first question is about the new product initiatives you have, and maybe just think about the timing contributing and what regions specifically will you prioritize. Then I guess second question is, many of your peers also have an organic growth strategy, much like yourselves, but they have acquired technological capabilities to scale certain products and get to market quicker with their products. I'm just curious if anything has changed in, sort of the sentiment of acquiring maybe trendy technologies, rather than companies. Thank you.
Perfect. I'll pass the first part on which geographies we'll expand into first to Tom, and then the M&A strategy when it comes to technology, perhaps to Ingo.
Yeah. On the geographies for the financial products, we have our banking license here in Europe and in United States, and those are the first regions where we focus on for financial products.
That's clear.
Yeah, on the acquisition of technology, the way we've always looked at it is making sure that we build the right product for our merchants. Of course, if there would be a specific technology, we would never rule it out. There's also of course a question like what can we build ourselves. Building things ourselves, deeply understanding how it works and how we can solve a problem, so far has always led to, for us, the best outcome, which is basically merchants that are very happy with the performance that we bring. Going forward, we will never rule it out, but at the same time, it needs to make a real difference, and so far we haven't seen that.
Yeah, I think that's in line with what we've heard from many of the speakers today, how that single platform, own licenses, full stack, that really makes a difference in all the products that we've been doing and that we're adding to the product suite. All right. We're up next is James Friedman from Susquehanna. James, you can go ahead and unmute yourself.
Thank you, Steven. I had two questions. I first wanted to ask, Mariëtte, your presentation on the dynamic regulatory environment in platforms was really interesting to me. I wanted to ask you, in terms of what you outlined in terms of, KYC and AML, I'm just wondering, are you able to look across platforms to identify bad actors at this point, or is that aspirational? That's the first thing. Then Ingo, I was just wondering, under the new segmentation, I know it's early, but where would we expect to see the revenue from issuing and capital? Thank you.
Thanks, James. I think my role has been filled. Mariëtte, perhaps the first part.
Yeah, really good question. Yeah. I think that's one of the benefits that we have, is that from the very early design, all of our platform compliance was already taking into consideration. We have one KYC core database which hold all of the KYC data of all of our customers. That makes it very easy for us to monitor all those static KYC data points. We can tie that then to the much more dynamic indicators, the conduct and the transaction behavior, and as such, indeed, cross-platform do a filter on possible bad actors or unusual behavior.
Thank you.
Ingo, anything to add?
Yeah. On the new segmentation and the revenues of Capital and Issuing, it depends. The segmentation that we will introduce is based on the commercial pillar. How do we define our customer and which pillar are they? Depending on which pillar they're in, that's also how we eventually will segment revenues. So far we've only done on volumes, and as Capital and Issuing is mostly focusing on platforms, that's where you then eventually would see it. Maybe to be completely clear, like at the start, we will only give volumes per pillar, and revenues will still be consolidated like you are used to and split up per region.
Perfect. That's very clear.
Next question will come from Alexandre Faure from BNP Paribas Exane. Alexandre, if you can please, unmute yourself and ask your questions. Thank you.
Good afternoon. Can you hear me?
Yes, we can.
Fantastic. Thank you for letting me on. I've got a couple of questions, if I may. Firstly is on capital. If I got this right, this is essentially relatively small-sized loans at the moment. Would you consider in a, you know, distant future offering larger loans for?
Sub-sellers who are keen to kick-start their businesses and might need hundreds of thousands of dollars in funding. The second question is on your issuing services. I think in the past, you touched on a number of use cases around on-demand delivery. You talked about expense management and small business cards. Was wondering if you're now seeing traction in other use cases, perhaps in virtual cards for travel applications, for instance. Thank you very much.
Thank you for those questions, Alexandre. Ingo, could you take the first, Alexandre's first question on the ticket size of loans and capital?
Yeah, sure. The product that we're building is together with our platforms. I think it doesn't make sense to immediately go into large tickets. If there are use case in the future that could justify this, we would certainly look at it, but it's not the first focus for now. Yeah.
Clear.
The capital product is very much linked also to our payment processing. What we wanna achieve is if you do our payments with us, and we have good views on the history of a seller, that we can help them with capital. We don't want to go into the lending business ourselves, like in the sense that we're just providing loans because we can. That's not the intent. It's always linked to that broader business model. That's how we wanna build it.
Thank you. When speaking of the broader business model and how we can also be helping, platforms, I think, Caro, this is an easy segue into you. How do we see traction with virtual cards, for example, in the travel industry?
I think overall we are super excited about virtual cards because the lift for us and for the card partner is significantly smaller, right? You don't need to issue like hundreds or thousands of physical cards, ship them to your end users. Those are definitely one of our favorite use cases actually, which we are supporting. I'll definitely say that over the last two years that we got a good amount of traction in that segment, and it's definitely growing and a few really nice merchants kind of joining on board.
Perfect. Thank you for that answer. It's time for the next question from Spencer Kennedy from Evercore. Spencer, can you please unmute yourself and ask your question?
Yeah, thanks. It's
Spencer-
Thanks so much. Can you guys hear me?
I was going to say, Spencer, I think if you could start your question again, 'cause we've had some difficulties on the line, that'd be great. Stay tuned, Spencer. Thank you. We'll also always be able to address your questions offline. For now, we move to the next questions. Andrew Bauch, I hope I'm pronouncing your last name right, from SMBC Nikko Securities . You can now unmute yourself and ask your question.
Hey, thank you very much and fantastic presentation. Just wanna get a better sense of how you're planning to drive adoption of these products in your merchant base over time. Is there incentives or are you dedicating additional sales and marketing to kind of drive that expand strategy? Further to that point, you know, a lot of other platforms are working with comparable products. How could you comment on how each member of the value chain coexists? Then my last one is, does Adyen see payment friction creators on the horizon, be it regulatory or other, that really kind of enhances Adyen's value proposition?
Thank you for those questions, Andrew. On the first question, how we'll be driving adoption of this product within our current merchant base, Kamran, if you could speak to that question, that'd be great. And if you could take the second one on which platforms have similar products, I think that'd be awesome. The last question, Mariëtte, I think that's one that's right up your street.
Yeah. The first one, maybe we sound like a broken record, but as we said, we build based on what we see from our existing customers or prospective customers. That's why we have built Adyen for Platforms and Issuing and are launching the new product. We think there is a lot of demand in our existing user base. You know, within that, there's always gonna be some customers who want to be early adopters and some who would like to see it matured before they accept it. I don't think we're gonna see a challenge in market adoption from a longer term standpoint. Number two, when you say platforms, I think they don't have a lot of these products. That's again, the reason we're building it, unless I'm misunderstanding the question, right?
That they are looking for help in the compliance burden, in payouts, in FX, in being able to offer bank accounts and capital to their small and medium businesses. We think it's a huge opportunity, and there are very few platforms today that offer anything like that full suite.
I think you understand the question correctly. At least we both interpreted it the same way. On Andrew's third question, Mariëtte, could you speak to that? How do we see friction in the regulatory landscape enhance or impact our position?
Yeah. I think I already mentioned it briefly in my presentation. We do see an increase in regulatory scrutiny in the sense that new rules and regulations are being introduced, but they also are expanded to other players within the payment chain. That it's not only financial institutions, but also that other participants are expected to really step up and play a role in fighting financial crime. You see that brings a certain complexity that very often platforms find difficult to deal with. We are typically really well in solving for that complexity. I think that's also what I tried to explain today, is that all of these services should take that burden away from the platforms, that we will do that for them.
I think I heard an overlapping factor between both Kamran and your answer.
That's it.
There's a lot of complexity to solve for, which is outside of the platform's core business, and that's what we take on, as Caro also presented this afternoon. I think, it's time for the next question.
Yes. Next up is Sandeep Deshpande from J.P. Morgan. Sandeep, you can go ahead and unmute yourself. We cannot hear you yet, Sandeep.
Yeah. Can you hear me?
Yes.
Hi. My question is, Pieter just talked about the processed volume and that not being a metric for you beyond the 1 trillion level. You know, given that your business model is a long-term one as such, really, how should we think about the business then for the long term, in terms of thinking about how to derive a revenue number for Adyen beyond this period? What should be the metrics we should be looking for at least in the short term, so that we can potentially extrapolate it along the term? My second question is regarding competition in the market.
You know, you have a very unique position in the enterprise market and, I mean, have you seen anything change in the marketplace in terms of competition that makes the enterprise market any different from where you were when you started or in the last few years where, you know, essentially you've had a very, very strong market position?
Thank you, Sandeep. Perhaps, Pieter, you wanna give a bit more nuance to the comment on the 1 trillion metric?
Yeah. Rightly so that you tried to nail me down on that one. What I hope I said is that after EUR 1 trillion, our objective will not be EUR 2 trillion. We look long-term at when that's where we started today, widening and deepening our services. That means that at a certain point there should be traction beyond just doing payments. If you look at the payments market, we are single-digit in market penetration. We don't have a total addressable market problem. That is the core that is growing very fast.
If you look at how we are with point of sale, even with the pandemic years, how that's developing, there is so much addressable market there that I would say in five years from today, we'll target the company to also put some volume behind widening and deepening our services. The core, that's where payments is very large, and we have such a growth opportunity there that it's not that suddenly we think, "Oh, the total addressable market, uncertain, is gonna hit us," or that there's any problem there in rolling out. We do it because we always have been in the forefront.
We always have been very innovative, and that's where we say, "Hey, there's an unmet demand at our current merchant base, at our current platform base, and let's make sure we fulfill that so that they know." That's a statement which we make more often. You don't just take our services for where we are today, but you know there's constant innovation. You also have a good partner tomorrow, and that's what we announced today. Like, look for platforms. This is what you can expect from us. Part of it we have, part of it we're building.
Perfect. Thank you for clearing that up. Second part of your question, Sandeep, if I'm not mistaken, was on the competitive landscape. Perhaps, Roelant, you wanna take that?
Yeah, sure. You know, in general, we very much welcome competition in this space. That's a good thing. But I think if you look at our path ahead, we are very much building on the strengths of everything we've been investing and building over the past 14 years. Our strength is servicing companies that are in a bit more complex field. They are operating in multiple countries. They're a bit bigger. They are operating in-store and online. Those are things we're truly, really great at, and I think there's not a lot of companies that can do what we can do. Our focus is not on servicing directly and onboarding directly, you know, thousands and thousands of small merchants ourselves. That is something we've never specialized in. That's not an area we're going after.
We're doing that through platforms. Platforms can build on our platform, get the benefit of everything we do, and they're much better in servicing these smaller companies. I think we know really well where our strengths are, and there's massive growth opportunity we think because there's multiple industries we can go after. There's hospitality, there's potentially groceries down the line, and then there's all these next services that we're now building. There's a lot to do for us.
Perfect. I believe we're on to our last question, which will come again from Spencer Kennedy from Evercore. Spencer, you can go ahead and unmute yourself. We cannot hear you yet, Spencer.
Hey, guys. Can you hear me?
Yes. Now we can.
Okay, great. Thanks so much. This is Spencer Kennedy on behalf of David Togut.
Yes. What is your question, Spencer?
Okay. Can you guys hear me now?
Yes, we can.
Okay, great. Sorry about that, guys. Thinking through the evolution of the platforms and financial services, is there any way to think through sort of the roadmap for new products, whether that be payroll or maybe things like bill payment over time? The second question is for Ingo. I think you talked about sort of using the average take rate across all three of your newly introduced segmentation, you know, digital unified commerce and platforms. Clearly sort of the product introductions are gonna be take rate accretive to your platform segment. Is there any way to kind of think through, you know, the rapid volume growth of platforms and also as you kind of layer in the new revenue opportunities, any sort of take rate benchmarking that you can help us with here? Thanks so much.
Perfect. Thank you for that. Kamran, you wanna go ahead with the roadmap on the products within platforms and then-
Absolutely. I think we're excited that we announced quite a few new products, and I think honestly our focus is gonna be on building those and really adding value to our customers through that. At the same time, absolutely, we hope this is far from the end, right? We would love to keep adding more products, and again, we'll do it based on customer demand. It could be the ones highlighted here, but it could be many others. I think the focus in the short to medium term is let's build these new products, really add value to our partners and the small-medium businesses. Then based on what we're hearing back from those customers on what other pain points they have, we'd love to give continuous updates on what else is coming down the road.
Perfect. Thanks for that, Kamran. On take rates across the different pillars.
Yeah.
Ingo?
If you look at take rates over the different pillars, we assume that they will be consistent because they're mostly impacted by the volumes. I think the remark is right, that if you add new products, that on the long term they will be accretive. To already say like, "Okay, we're gonna give guidance on what that means from a take rate perspective," it's too early. Let's first make it a success. We talked about take rates of issuing in the past that from a structural perspective they're very similar to acquiring. For Capital, of course, it works slightly different because you're using your balance sheet.
The idea is long run it will help to increase take rates, but it's too early to give, like, guidance on that, how that will exactly be reflected in the numbers.
Perfect.
Perfect.
With that was our last question. Thank you everyone for dialing in. Thank you for joining us today at our Capital Markets Day. It was a pleasure sharing our plans with you. We're very excited what we'll be building in the future. We'll keep you posted when there are more developments to share. For now, on behalf of everyone that we have here, thank you for joining and see you next time.