Adyen are re-thinking consumer-focused payments

A conversation with Colin Neil, SVP Business Development (UK), Adyen, which took place at IRX18.

So, tell me a bit about how you came to join Adyen, and why.

I first met Adyen in 2014 when I was director of retail and payments for the Burberry group. I onboarded Adyen and across all of our global retail stores and our global e-commerce platform, which is where I started to develop an interest in payments. It was clearly something that has real potential to unlock a customer journey and give you real customer insight. It’s also an opportunity to access a huge business environment outside of London, which is often a bubble to some brands.

We’re a global brand and we give you access to a global business – it’s single platform, so you can expand internationally, rapidly, with Adyen, but we’re local insofar as we want to understand you.

How is Adyen different in that regard, in thinking about the customer?

Adyen was formed in 2006. Its founders originally founded a payments services solution, which they sold to the Royal Bank of Scotland, so they found themselves working in the banking sector. After two years they realised that they couldn’t be creative enough in that area, so they decided they needed to go back and do something again. The Surinamese word ‘adyen’ means ‘do it again’. The whole principle, what makes us unique, is that the guys looked at the payment landscape and said, “Over here you have customers who want to do things very differently”.

How you shop is probably very different to how I shopped when I was your age, and how I shop is probably very different to how my father shopped when he was my age. You probably use your phone an awful lot. What sits below all this is a really complicated, fragmented payment structure. The complexity is driven by the traditional chain that exists inside a payment, because you have to go through several technical steps to make payments work.

Adyen looked at this chain and decided to build it all in-house. There are several steps in a payment which can easily incur a technical problem, and something can fail, and each time you’re working on all of this horrible infrastructure. With Adyen, at the point that you hit checkout, you stay with us all the way through the process. Because we build all of that in-house, ours is a platform with no technical integration to the third party. We don’t acquire businesses to get global reach. We have acquiring licences, so we can have direct technical conversations with the issuers.

What really matters at the end of the day is that the consumer is changing. The customer that you’re serving today is not the same as the customer you served ten years ago, and they won’t be the same as the one you serve in ten years’ time. So, in order to make sure that you don’t detract from your customer journey, you have to have an agile platform – and payment is always the undervalued relative. What it unlocks, and why I love payments, is the fact that logic says, if you’re in a b2c business, every customer journey must end in a payment. So, to think that payment plays no part in the customer journey is wrong. It’s about understanding how important the payment is in that customer journey. For me it’s all about understanding the merchant. Let’s understand what they want to do. It could even be as simple as giving them the right payment methods for the countries they want to sell to.

Some argue that a totally frictionless payment process might encourage financial irresponsibility. Should there be a limit to the reduction of friction in the consumer payment experience?

Technology moves the boundaries of our expectations. But it moves the boundaries of those expectations based on what’s reasonable. Contactless and ApplePay solved a problem. If I’m out I nearly always have my phone with me, so if I’ve forgotten my wallet, I can use my phone to pay. The question is: what is a payment trying solve? If you’ve got a lot of friction inside of your store, then how much of that do you need to remove before the customer is not going to notice how efficient it is? So, if I’ve got a card with me and I could pay with contactless or pay with chip and pin, how valuable is it for me to be able to pay with my phone? Is entering your four-digit pin really a problem for the customer?

It’s interesting, because I never would have considered that to be a problem, but now I only really use contactless.

But if a retailer doesn’t offer contactless, does that deteriorate from your customer journey? If you were buying a coffee and the retailers asked you to enter your PIN…

I wouldn’t say, “Oh forget it”.

If a retailer doesn’t offer contactless, you might wonder why they don’t have it, but that wouldn’t stop you from going back. I think technology is there to solve a problem but then, once that problem is solved, the question is actually what does it then add?

I think contactless is small leap of faith, but self-checkout is quite a big leap of faith. I think sometimes in the payments sector, what you have to recognize is that making these changes isn’t just a technical shift, it’s a huge business shift. Think of a traditional retailer today, with the traditional model of the security guard on the door looking out for people leaving the store, with goods in a bag, and if the alarm goes they’re going to check a receipt. What happens when all of a sudden customers are using self checkout and there are no bags? Or these are self check-outs where you’re emailed a receipt? What do I demonstrate to this security guard to prove i’m not stealing a product? The way that they do it is through technology. It’s interesting because it just moves those dynamics.

Well, we’ve recently seen Amazon’s new store come into effect in Silicon Valley.

Payment is facilitator, it doesn’t solve everything, and friction to me is relative. Ecommerce is a really good example, in that you can remove the need for the customer to keep putting in their card details. There are logical things like queue-busting inside a retail store. Those solutions are logical and they solve problems, but I think the Amazon case needs a lot more work doing to it yet, because how easy is it as a model for other retailers to adopt? Currently there’s only the one in Silicon Valley and it’s generally only employees that use it.

How long do you think it’s going to take for that kind of adoption to spread? Or will it?

I think it will. I think what’s going to happen is I think that the demand for convenience is going to mean that retailers will have to innovate and develop their entire portfolio of solutions. Payment, in the perverse sense, is probably the easy bit to do.

We offer retailers a frictionless checkout experience. We can remember the customer’s card, they can use a wallet, they can use a thumbprint. But what happens if you don’t have a third-party relationship with the carrier? It doesn’t matter how good the frictionless experience is here, if you can’t deliver the product I want, as quick as I want it, the payment doesn’t matter. Merchants will spend all their energy crafting and curating one part, but not another. It’s about how all the pieces in the puzzle talk to each other. And that, for me is where Adyen excel. We have a very easy integration, we have a single platform, and we have an amazing team. Our people are definitely our strength.

How do you approach the onboarding process with a new client?

We say two things to merchants. So, one is, in the nicest possible way, we don’t care about care you, we care about your customer. And what we say internally is, if the first conversation a merchant wants to have with us is, ‘How much are you going to cost us?’, they’re probably the wrong merchant.

Why’s that?

If you focus on payment as a commodity, how much it costs per transaction, you’re not focusing on what should be your primary concern as a merchant, which is, ‘What’s the cost of me not coming with you? What’s the benefit that you can bring my business? 1% saved on cost is nothing compared to a 1% improvement in growth.

It’s far more useful to drive growth through being more relevant to your customer, catering for the needs of customers in different countries, enhancing your customer journey, getting greater insight into your customer and simplifying your operating model.

Our current campaign slogan is ‘Business Not Boundaries’. We’re saying: don’t make payment a boundary. Give yourself the opportunity to grow, but actually be different and challenge the way you look at payment, challenge the way that you think about payment in your organisation, and if you do that, you have this real opportunity to embrace a completely different way of engaging with your customer.

What still needs to happen to improve customer experience in the online payment experience?

I’ll give you a slightly different answer. With legal frameworks like PSD2 and data protection we’re seeing that the way consumers pay really stretches the boundary of some of those legal frameworks. How do we continue to protect customer data, and not breach regulation, but give the customer flexibility to be able to do what they want to do?

My son is 20 years old, and he thinks absolutely nothing about sharing a password. He doesn’t think anything about saving payment methods. We’ve got to think about how we protect customers differently, because it’s the customers who are pushing the boundaries.

Do you think it’s going to be a difficult transition for a lot of businesses to be compliant with that kind of legislation?

The difficulty isn’t necessarily about how compliant they’ll be, but I think larger organisations will struggle because there’s potentially more investment required on their behalf to move forward. I think smaller businesses that have agile, smaller platforms will be in a better position to move forward.

We recently published an article on PaymentEye that argued a cashless society is about 25 years away. Do you think there’s any credence in that claim? Is a cashless society around the corner?

I think it is. In 25 years’ time, my daughter is going to be one of the older shoppers. The rate of technology today and how we’re embracing technology and new payment methods means that potentially my daughter’s daughter isn’t going to care about carrying cash. Do you carry cash every day?

No. I didn’t have any for the cloakroom on the way in.

Five years ago, you would have been worried about leaving the house without cash, whereas now you wouldn’t. Do I believe that cash will disappear? Yes, it’ll absolutely disappear. Will it have gone in 25 years’ time? No. But, by that point, I think it would be more of an inconvenience to pay with cash than it would be a convenience.

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