A Dutch Gateway Touts Pricing, Overseas Reach in U.S. Launch

Pressure from the down economy is pushing more online merchants to seek out ways of selling to overseas customers, creating an opportunity for startups like Adyen Inc., a Netherlands-based online payments gateway that announced this week it has started operations in the U.S. Gateways funnel payments for online merchants to back-end processors, and also typically run fraud-detection systems.

Adyen, founded in 2006 and run by former executives from Bibit, the European gateway acquired by Royal Bank of Scotland in 2004, confronts a U.S. market with entrenched competitors, including CyberSource Corp., Authorize.net (owned by CyberSource), and ClearCommerce (part of Fidelity National Information Services Inc.).

But its top U.S. official argues it has an edge in its interchange-plus pricing method and in its links to overseas payment systems. “Our value add is for U.S.-based merchants looking to sell on the Web either domestically or internationally with local payment methods,” Peter Caparso, president of the North American division, tells Digital Transactions News. While with Bibit, Caparso had similarly opened up U.S. operations for that company before joining Adyen two years ago.

Caparso says that of the more than 1,000 merchants using Adyen, between 100 and 150 are U.S.-based, a number he says is growing steadily. “We’re boarding multiple customers per month,” he says. “We’ve had some ramp-up in the U.S.” That merchant base could grow even more quickly as a result of a processing relationship Adyen has forged with Fifth Third Processing Solutions LLC, Cincinnati. Caparso projects that 30% to 35% of Adyen’s merchants will be U.S.-based by year’s end.

He says Adyen’s “simplistic” pricing model also appeals to merchants. With an interchange-plus approach, the company states its price based on the published interchange rate from the bank card networks and adds a markup. “We reveal the true cost of the transaction by country, and put a fixed markup on top of that,” he says. “Merchants have responded well to that.”

The company also offers to host payment pages for merchants, allowing for data analytics that show, for example, where shoppers clicked and at what point they dropped out of the site, if they didn’t complete a transaction. Some 16 widgets analyze the flow of e-commerce data on a site, he says, rendering the information in graphical formats. “In this recession, everyone is sharpening their pencils,” Caparso says.

Adyen handles payment methods in North America, Eastern and Western Europe, and in some parts of Asia. It is adding payments in South America, Caparso says. Owing to high levels of fraud, the company avoids Russia and Africa, he adds.

Foreign processors are increasingly eyeing opportunities in the U.S. Adyen’s entry in the market follows an announcement in February that France’s Hi-media Group Inc., a micropayments processor, will process payments for social networks and gaming sites in the U.S. (Digital Transactions News, Feb. 10, 2010).