PayPal Holdings Inc.’s shares dipped slightly late Thursday after a key Adyen N.V. executive told stock analysts that the Amsterdam-based company is “ready” to process “the majority” of eBay Inc.’s volume when eBay shifts to Adyen next year. Adyen also reported it is proceeding with an application for a banking license in the United States to support a faster-payout service it is planning for merchants.
PayPal’s agreement to process for eBay runs through the middle of 2020, but the big e-commerce marketplace has been shifting to a gateway service from Adyen that funnels transactions to a number of payment types, including PayPal.
By mid-morning Friday, PayPal’s shares were trading slightly down, as were Adyen’s and those of many other major payments providers in the midst of a market rout, including a 400-point drop in the Dow Industrial average. Following its initial public offering in June 2018, Adyen trades on the Euronext Amsterdam exchange.
While Adyen’s policy is not to discuss individual clients, analysts pressed the company’s chief financial officer Thursday for an update. “Of course, eBay is important to us. But the majority of the volume will come in 2020, at least that’s for until that moment they’re with PayPal,” said Ingo Jeroen Uytdehaage, according to a transcript. “EBay is still piloting with us, early stage. Majority of volume is still with their old provider [PayPal]. We’re ready for it. Majority of volume is still with their old provider … it’s not under our control.”
He added that “of course, we will be very happy to process all the volume. But for us, it’s very difficult to predict. We’re ready for it.”
EBay began moving away from PayPal last year with a “managed payments” program that lets merchants process through Adyen. While PayPal has been eBay’s processor for years (eBay owned PayPal until spinning it off in 2015), it will ultimately become one of many payment alternatives available on eBay.
Uytdehaage also updated analysts on Adyen’s pursuit of a U.S. banking license, though without disclosing much detail. He underscored how Adyen is interested in expanding its quick-payout service to U.S. merchants, which would allow merchants to collect proceeds soon after making a sale. To support the service, the company is pursuing what Uytdehaage called a “branch license” in the United States. “It’s relatively early in the application process,” he added.
Uytdehaage indicated the service’s success in other markets has spurred the company’s interest in expanding the availability of faster payouts. “Of course, because we see so much traction [in accelerated payout to merchants], we always ask ourselves, ‘Okay. In other markets, could we replicate this?’ This is one of the reasons why we indeed announced that we would look at a branch license in U.S.,” Uytdehaage said, without adding details.For the first half of the year, Adyen reported it processed 104.7 billion euros ($116.6 billion) in volume, up 49% over the first six months of 2018. Net revenue was 221.1 million euros ($246.2 million), up 41%.