Interview Series: Kamran Zaki, President of Adyen North America
Euromonitor International is pleased to present an interview with Kamran Zaki, President of Adyen North America, about how payments fit into a global, omnichannel world.
Can you tell us more about Adyen? What strategic advantage does Adyen offer retailers?
Adyen is a technology company that provides businesses with a single solution to accept payments anywhere in the world. The only provider of a modern end-to-end infrastructure connecting merchants directly to Visa, Mastercard, and all key 1payment methods globally, Adyen delivers frictionless payments across online, mobile, and in-store. Headquartered in Amsterdam and San Francisco, with offices across North America, South America, Europe, Asia and Australia, Adyen serves more than 4,500 businesses, including seven of the 10 largest U.S. Internet companies as well as three of the top five fashion global retail brands.
Global retailers are attracted to Adyen for our ability to provide a single platform and single acquirer solution across online and offline channels. Today, there is no other payments company that has all regions and all channels on a single platform. While there are many complexities around omnichannel, Adyen is best positioned to help retailers resolve payment challenges that exist when customers buy in one channel and expect seamless service across another channel.
In addition, with the Adyen solution, a retailer can have the same setup online and offline across the world using the same devices in store and consolidated reporting for all channels in one single place through one acquirer.
What are key barriers to the use of mobile payments in the retailing industry, and how does Adyen address them?
Our data shows there is consistent growth across all of our merchants for payments initiated in the mobile channel either phone or tablet. The biggest barriers for mobile payments are friction in the checkout flow through multiple steps, difficulty in typing card numbers and other personal information as well as risk verification that results in drop-off. Adyen offers mobile-specific payment types like Apple Pay and Android Pay, and we continuously improve non-card based payment flows for mobile. In addition, for retailers, we can tokenize a card payment in-store to make it easier to serve a card token in the mobile experience without having to type it in. This means that shoppers can tokenize their card at the POS, and then use that in their mobile web and in-app purchases after that.
What regions/countries are the fastest adopters of mobile payments, and why?
- China – This country is the largest ecommerce market in the world, with sales forecasted to reach US$575 billion by 2020 according to Euromonitor International. China has the largest smartphone user base in the world, as well, with an expected 73% of the population to have a smartphone in 2020. In 2015, mobile transactions more than doubled, climbing to $150 billion and pushing China ahead of the U.S. While WeChat Pay is advancing quickly, Alipay’s ewallet still retains the lead with approximately half of the mobile payments market.
- Southeast Asia – Home to over 600 million people, this region is on the verge of an ecommerce boom with online retail sales and growing mobile penetration. For example, Singapore’s smartphone penetration is 87% and tablets nearly 47%. According to The Paypers, 35% of online shoppers use their mobile devices to make purchases at least once a week. Meanwhile in the Philippines, smartphone penetration is expected to reach up to 64% in 2020 with an ecommerce annual growth rate prediction of 7.5% from 2015 to 2020, driven mainly by heavy Internet usage and this high mobile penetration.
APAC is always a little difficult to measure. On one hand, there are a high percentage of mobile payments and users who wish to pay via mobile. On the other hand, end-to-end conversion is low because most local payment methods offer sub-optimal mobile flow, for instance payment methods that require a high number of steps before checkout (which can kill conversions), issuers that don’t operate 24/7, which means shoppers have to wait until they open to complete a transaction, and methods that have UIs that are not optimized for mobile. That’s why it’s key to invest in optimized methods such as WeChat Pay and Alipay.
- Mexico – Mexico boasts the highest percentage of mobile online sales in the region with 30%, outpacing both Argentina and Brazil. It is one of the 22 countries leading the trend toward mobile commerce.
- Brazil – Brazil was a bit later in terms of smartphone adoption, but is catching up at an incredible pace with an average of almost two devices per person (around 400 million cell phones in total). Consequently, mcommerce is very much on the rise, climbing from 2% in 2011 of all online transactions to 6% in 2015.
How are payments changing in the midst of omnichannel retailing, and what role does Adyen play in impacting the shopper experience?
The new guiding principle for retail is now all about customer experience, with payments as a key enabler for successfully delivering omnichannel services. A key factor is to include payments-related aspects in the overall planning when it comes to defining and designing great experiences for customers.
One of the main concerns for retailers is the reduction of friction at the checkout phase. Recognizing shoppers across payment channels, and thereby enabling a faster check out regardless of location or device they are using, is a clear benefit of an omnichannel approach.
Adyen offers a single-view of the shopper regardless of where they pay (online, mobile, or in-store). We can recognize the same payment instrument across all of these channels, which gives retailers the ability to offer omnichannel experiences.
We can identify a shopper across channels in two ways: payment method and shopper reference.
Payment method – When a shopper uses the same credit card or any other payment type being used in different channels, we can recognize that shopper. As an example, if a shopper typically buys products online from a merchant and then shows up in-store with the same credit card, we could instantly recognize the shopper for the merchant because of the card number, and allow the merchant to aggregate purchase history or even offer a discount for loyalty. Since we have a single platform for all channels and across regions, we’re the only payments provider who can offer this seamlessly.
Shopper reference – We also allow a merchant to pass us a shopper reference (such as an email address) with payment. In this situation, if a shopper buys a product in-store and enters their email address when she purchases, when she goes to the mobile app or online, she could simply start with her email and we can match this with her credit card. This way a shopper never needs to type in her full credit card number as she moves between channels, since we already have linked her payment method across channels. We would simply ask if they want to use their Amex with last four digits ending in XXXX, and that would be it.
Adyen also supports one-click functionality, which meets the needs of nearly half of consumers that value the convenience of not re-entering payment credentials for each purchase.
Very few merchants have a truly global omnichannel set-up because traditionally channels are run as complete separate entities. As a result, many merchants have a payments function that is set up separately for each channel and/or each country. Since Adyen is a single payments partner for all channels across all markets, merchants no longer have to reconcile payment flows from multiple sources; they can easily deploy changes across channels and/or across countries ensuring a faster time-to-market and a flexible solution that eliminates multiple contractual and technical partners that have to adjust to different systems and technologies. In addition, merchants can support all omnichannel scenarios, e.g. click and collect, endless aisle, cross-channel returns, etc., while lowering costs that are associated with duplicate internal resources to handle channels or countries.
In addition to offering online payment processing, Adyen also offers hardware that makes it possible for retailers to offer checkout terminals using smartphones.
Why and what types of retailers should adopt this technology?
We’re finding that retailers with high customer touch like those in high-end fashion or luxury goods can truly benefit from a mobile POS solution that enables sales associates to engage more closely with customers, provide a more customized experience and offer endless aisle solutions.
What role does Adyen play in assisting with retailers’ loyalty programs?
By recognizing the same payment instrument (e.g. a credit card) across multiple channels, Adyen can enable a retailer to recognize a shopper even when that shopper may not self identify in a specific channel. For example, a customer may have an online account with a retailer, but not provide that account when she shops in a store. The retailer could tie the purchase in-store with the overall loyalty account to get a better picture for that shopper’s preferences across channels to deliver a better experience.
Adyen works with other payment services such as Alipay in China. What does this partnership look like?
Adyen offers an integration with Alipay that supports standard web, web-to-mobile, and mobile-optimized transactions. This type of partnership was particularly useful for the leading workspace app, Evernote, when they wanted to accept Alipay in order to tap into the China market. To get up and running, Evernote had two choices—a direct connection with Alipay or to extend their connection with Adyen to support Alipay. A custom integration with Alipay was going to be complex and time-consuming. Evernote instead opted to leverage their existing connection with Adyen that supported credit cards, which meant they were able to start accepting Alipay payments in China in very little engineering time. The first integration they did was a payment redirect through a normal desktop browser; then by merely changing one line of code, Evernote optimized that integration to support mobile payments via Alipay. This type of collaboration that we have with Alipay and the benefits that it brings to our retailers is consistent across the payment methods that we offer.
What are some payment-related challenges for cross border commerce? How is Adyen uniquely positioned to assist businesses grow their cross-border commerce?
Cross border e-commerce is growing at more than double the rate of domestic e-commerce and the size of the market is poised to grow to over $300 billion in 2018 across the US, UK, Germany, Brazil, China, and Australia according to a study commissioned by PayPal. This means hundreds of millions of potential new shoppers. At Adyen, we understand the local payment culture and preferences that are necessary to capture this market, in addition to supporting 250-plus payment methods.
In most markets, credit cards aren’t king. In Europe, where countries like Germany, Switzerland, Belgium and the Netherlands, as well as the Nordics, represent a significant opportunity, major payment methods in these markets vary from iDEAL, SOFORT, Giropay, Bancontract/Mr. Cash, SEPA DD and buy-on-invoice methods (e.g. Klarna). Looking beyond Europe, there are many rapidly growing markets accessible without the need to set up a local entity, which can be costly and time-consuming. Working with Adyen, merchants can implement alternative payment methods in a straightforward, easy way, while working with a partner that understands your customers’ shopping behaviors, target markets, and language preference in the global arena.
For credit card transactions, we are connected globally in multiple regions to provide local acquiring through Adyen as well as through additional third party acquirers. This gives our retailers the flexibility to go local wherever it makes sense for their business, while providing multiple routes towards cross border acquiring as well.
S-commerce (commerce via social media) is anticipated to grow in the future. How can payment service providers like Adyen support this growth?
China is spearheading social commerce in a big way. Social platform WeChat has successfully integrated itself into the daily lives of over 200 million users, supporting functionalities like social networking, file sharing and peer-to-peer money transfers, to name but a few. Recently it has made successful inroads into business to consumer payments and is rapidly becoming a key player in China’s mobile payments landscape. We now offer WeChat Pay as a payment option through Adyen. In addition, we continue to work with other social networking platforms like Facebook as they consider S-commerce initiatives.
What does payments look like for retailers in the next 5 years? 10 years?
The point of sale landscape will change – the traditional cash register is slowly disappearing and less real estate will be dedicated to supporting them, especially with the rollout of more mPOS devices, in-app/on-web payments, click-and-collect, and other omnichannel solutions
Retailers are starting to implement omnichannel solutions, but this isn’t just about location – online, in-store, in-app. As retailers move to remove friction from the buying process, they will want to take endless aisle, buy online and pick in store, line busting and clienteling to the next level with a blurring of the physical and digital storefront. Similar to what payments has become for Uber and Starbucks, retailers are really going to try to provide a payments and buying experience that is invisible to the customer: browse, find, and take/deliver home and return in-store/by mail without ever thinking about the “buy” part.