Current changes in payments with Roelant Prins | Couchonomics with Arjun

Adyen we have the best technical solution here, it's going to make life so much easier for everyone. Why wouldn't everybody be very, very excited about this change? In payments is fast, but at the same time it's very slow. I used to always say that I think e-commerce is now, as a term, to me redundant, because you can conduct electronic commerce in the shop, right. There are a few of us who might say it's incredibly frustrating, but no, for the little I know you, Roelant, I met you two or three times, you are a half glass full kind of guy. The easier you can make it for people to complete a transaction, that still has a long, long way of making impact.

Ladies and gentlemen, welcome to... officer of Adyen, who's unfortunately not on my couch but actually online on this show. But before we get into the show, I owe Adyen a big thank you, because they've been part of the journey from when this show was conceived. They've been sponsors, partners from day one, and I think without their support, I don't think Kinomics would have become a reality. And I say that honestly, not because Roelant is sitting here. Also, I must mention that Roelant and I did a very, very interesting episode about a year and a half, two years ago, where I flew up to Amsterdam and we recorded this episode while walking down the streets in Amsterdam. And most of the world was wondering what are these two... Thank you for being here.

No, no, glad to be here. Feels like yesterday when we were walking there with a few microphones above our heads and just chatting away on the streets of Amsterdam. But that was great, and yeah, great to be back. Congrats on a fantastic ride since.

Thank you. I really think it's been an amazing journey. I must make the point, I think it was the one day where you had glorious sunshine in Amsterdam, because that was one of the things we were worried about: are we going to get on the street and is it going to start pouring down rain? But I didn't get Roelant getting into the conversation. Right, since we last met, there hasn't been a day, there hasn't been a minute where we don't read something around the world of... Legacy businesses still are there, and they're thriving, and they're still continuing to make tremendous amounts of money. But I'm very keen to hear your views on how do you see the payments landscape today, specifically especially in the last couple of years? How do you think it's evolved? What are some of the interesting dynamics that you see?

Yeah, that makes it super interesting to navigate. But I love your positive attitude. It makes it interesting, right?

So I'm going to peel this onion a little bit with you, right? So we're going to take this a little bit deeper in the conversation. I think you mentioned two very interesting segments which interest Adyen and the wider payments landscape. One is the customers, people like you and me, possibly if it's cross-border payments it's something else, and then there's the merchants, right? Which is the businesses. So if I ask a question to you in terms of let's look at the people who are more willing to adopt and evolve, right? Rather than the ones who have been resistant to evolution, for the ones who are more willing to adopt, what are the clear needs for them? And similarly from a merchant's perspective, one of the areas you know, I come from a merchant's background as you might remember, that's kind of how I first associated with Adyen before I came back into consulting. You know, I call it nothing short of madness in terms of the number of form factors for POS and types of payments I'm now supposed to deal with, right? And it's getting harder and more expensive, to be honest with you. So what are you seeing? What are the two or three things for consumers and merchants that are emerging as clear needs?

And I agree with you. So taking that innovation, I'm going to go a bit lower now, got two areas, two interesting sort of, if I may say, trends which are emerging. One is more specifically around our favorite brand here, Apple. So earlier in the year Apple announced that they're opening up the NFC on the iPhone, right? People got quite excited about Tap to Pay, which is basically transferring from one app to another app, and everyone gets quite excited. But where this gets interesting to me is that their intention is to extend that to a merchant, right? Because at the end of the day P2P to P2M, what's the difference? It's basically the merchant on record or the name on record. How do you see this disrupt... I'm not so bothered about the P2P on the consumer side, but the P2M side, how do you see that disrupting the offline payment world, right?

And all that... Can I ask you a question? Sorry to stop you midway. This has existed for a while, right? Android has had this for a while, why is this so much more significant now?

That I think e-commerce is now as a term to me redundant, because you can conduct electronic commerce in the shop, right? Because you know, the classic way was card present, card not present, that's how we used to oversimplify life, right? For me now, it doesn't make a difference if it's card present or card not present, because you can actually let someone check out at the store at the till, which to me is as good as an e-commerce transaction. Because to be honest, I don't necessarily need to see the client and speak to him or her, and yes, relationships are important and experience is where we should be focusing on. So that's quite interesting that you make that point. Because I do think that if this takes off, I think the traditional ECR POS terminal might be gone. Now, on the other front, I was in India about a month ago for an event called the Global Fintech Festival, which is hosted by the Reserve Bank of India and NPCI. NPCI obviously has this juggernaut called UPI, which is processing crazy half a billion transactions a day, right? You obviously have Pix in Italy, sorry, Pix in Brazil, and you have a number of other examples of these, I guess if I may call them, domestic public infrastructure players who are coming, and yes they're coming from a view around financial inclusion and digitization of the economy, but they've used payments as the use case, and correctly so, right? Because you bring them on, but they have a massively disruptive impact in terms of how the payment landscape evolves. Now I'll tell you my view, and please challenge me if you think I'm wrong. I think these domestic programs become the rails, the transaction rails, the settlement rails, the assurance in terms of transaction volume. And our payment players can actually innovate on top of that platform with all kinds of stuff, right? That's kind of oversimplified my answer. How do you see that? Because if I speak to the cross-border payment players, they're concerned, because if you start connecting these digital public infrastructures even on a bilateral manner, forget Project Nexus which is quite a complicated piece, you then start impacting cross-border payments, which is actually quite a rich business right? Because there's lots of inefficiency and lots of friction that creates cost. How does that translate for Adyen and players like you? How do you see this happening, because more and more countries want to go down this public infrastructure route, whether developed or developing? How do you see this?

So your role then is what? Does Adyen view Pix as something they build on top of, or something alongside, or what?

I guess the question available... the question which I want to ask but I think what becomes interesting is that a lot of these are zero cost, low cost payment rails, right? So obviously they come with a certain challenge from an economics perspective, I would imagine.

Now you mentioned the word unified. Two years ago when I met you, you introduced me to a concept called Unified Commerce which I knew little about. There was no ChatGPT at that time, so I had to go on the internet to ask what Unified Commerce meant, right? So you know here, because I'd heard everything till now, I hadn't heard about Unified Commerce. And obviously I went and then I understood it. Are they being willing to, are they really understanding the value that is created by Unified Commerce with all that value-added services? Are they willing to actually adopt and pay for those kinds of things? Is it a mixed bag? Have you seen it run in particular sectors better than others?

So it's good to hear that, and I'm actually experiencing it. I'm a customer of what you've actually seen, and I'm actually seeing these experiences. And I think you picked a very interesting sector, which is hospitality. It might not be the fastest to adopt, but that whole concept of the Unified experience is actually quite relevant, because if you're a patron of a particular hotel or a particular chain, you want that sort of unification in terms of your whole experience. Now when I was with you, you also mentioned two very interesting areas where Adyen had expanded into. One was offline commerce, right? Which is not sort of originally the pedigree, you were very strong in e-commerce but as a part of that Unified, you felt you cannot ignore a very significant percentage of where actually commerce happens, right? So how have you seen that expansion into offline commerce and particularly in specific markets?

I'm obviously not going to be spared by your team in the Middle East if I don't ask you about that region, right? So if you look at the Middle East, right, you guys have been here for a while now, you stayed true to your message and positioning which is quite commendable because a lot of people dilute it and move things around. How have you seen this Middle East journey? Where do you see the big opportunities for Adyen in the foreseeable future?

I guess the one question everybody wants to ask you: when are you going to IPO? No, I'm joking. Obviously Brookfield, which had previously invested in Magnati which was spun out of FAB, the biggest bank, has now completed their investment in Network International. And well, the writing is on the wall: they're going to bring these two together. Somewhere around 60 to 70%, ask whoever you want to ask, of market share goes to this one unified entity, right? Yes, they've got a few other banks which are playing in the payments acquiring space. Acquiring licenses are becoming more easily available, at least that's what we hear, and there's a massive amount of applications for both PSP and acquiring licenses from what I gather. So when you look at consolidation in the market, what implications if any does it have to Adyen's strategy in the UAE?

I share that view, I share that view. I've got to be a bit careful with what I say when I say it, but I personally think you could land up with massive customer leakage in this merger. And obviously I'm not privy to the underlying business case which justifies the investment, but having been in the world of M&A not just for the last few minutes, I share that. Obviously coming back to the evolving world, we have this very interesting digital assets world which is coming around with CBDCs, and some countries are going with retail CBDCs, right? Whether people like it or not. There's also the emergence of tokens, stablecoins, alternative form factors. Now I could take your view from what you said earlier, which is if it seeks adoption we'll support it, right? That's the simplest way to look at it. But if I ask you from an Adyen perspective, but more of a payments practitioner's perspective, do you really see these new form factors or payment types as something that's going to drive value and push? And I think that's where the retail CBDC comes in, and again, is there going to be resistance against it because there's all kinds of privacy concerns? How do you as a payments practitioner see the emergence of these new formats of payments?

Last question. Secret Sauce question: what allows Adyen to continue to differentiate and stay ahead of the curve?

So Roelant, let me tell you: I went back to check the question I had asked you two years ago, right? And you know, this is commendable because you said most of these things. Last time you talked about core focus on enterprise customers, you talked about no conflict with the customer and building for what they needed, you talked about the single platform which you guys have remained wedded to, and you mentioned their strategic implementation of their strategies. But the core values, and I think what you just talked about to me are sort of core values of differentiation that should not be changed just for the sake of desperation, right? And I think with a lot of businesses, they forget the difference between the core values of their strategy and what they need to fix at the edges. Because you're right: how you compete in Brazil will be different than how you compete in Malaysia versus the US. But that's more in terms of the interpretation of the strategy. So you are on money, sir. I did check, I actually have it written here. I just wanted to check. But this was not catching you out. Hopefully I'll get to see you here or in sunny Amsterdam, but hopefully sooner rather than later. So thank you, sir.

No, my pleasure. Thanks for the invite, and again congrats on everything. Excellent. So ladies and gentlemen, that was Roelant Prins, who's the Chief Commercial Officer of Adyen. He is a second time guest if you might want to refer to it. He was there at the end of the first season, we did a special episode. So with that, I'll say goodbye and I'll see you next week. Cheers, bye-bye.