The process of accepting payments is a labyrinth of complexity, and payment service providers are the guiding lights that help merchants navigate this maze. They assist in deciding which payments to accept, how to connect to networks, and, most crucially, how to optimize revenues and reduce risk.

But what about the providers themselves? Is their work getting more or less complicated? We sat down with Trevor Nies (SVP, Global Head of Digital) who leads Adyen’s digital payments organization, to explore this question as it relates to pay by bank. We discussed the pay by bank landscape in the US compared to other countries and why the US seems to be facing some headwinds. And, more importantly, what merchants should be thinking about when it comes to implementing pay by bank.

 

Yvette Bohanan:

Welcome to Payments On Fire, a podcast from Glenbrook Partners about the payments’ industry, how it works, and trends in its evolution.

Hello, I’m Yvette Bohanan, a partner at Glenbrook and your host for Payments on Fire. In April 2023, we recorded episode 197 with Carlos Netto and Sarah Hoisington of Matera to discuss Pix and the role of core processors in the successful adoption of fast payment systems. Let’s fast-forward to January of 2024, when Matera released a report citing an interesting statistic: 36% of consumer payments on Pix in December of 2023 were for purchases and bill payments. This is up from 24% in 2022. That’s a significant jump. For over a year, Pix transaction counts have exceeded debit and credit card volumes combined, but that’s Brazil. What about the rest of the world? Well, pay-by-bank outpace cards in countries like the US where cards have dominated retail payments for decades, and what will it take for that to happen?

Before we get much further, we should all agree on a definition of pay-by-bank, at least for this episode. Sometimes pay-by-bank solutions, use a fast payment network, but many pay-by-bank solutions. Use ACH networks or some combination of ACH and fast payments. For our discussion in this episode, we’ll just say any account-to-account, non-card network is what we’re talking about when we say pay-by-bank. Now that that’s settled, I’m very interested to hear what our guest has to say about this topic. Joining me for this episode is Trevor Nies, Adyen’s global head of digital. Trevor, welcome to Payments On Fire.

Trevor Nies:

Yeah, thanks for having me.

Yvette Bohanan:

So we’ve crossed paths a number of times over the years, and I just would really like to start by letting you share a little bit about how you got into payments and became what I would consider a true textbook payments geek, if that’s okay to say.

Trevor Nies:

Yeah, absolutely. And no doubt, I did not grow up in school thinking e-commerce payments is where I wanted to spend my career.

Yvette Bohanan:

E-commerce payments all the way, yeah.

Trevor Nies:

Exactly. I wish I had that vision, but I really didn’t. But now, yeah, I joined Microsoft many, many years ago, and probably within the first, I would say three or four years at being at Microsoft, I got tapped to go do something, which was pretty interesting. And basically what that was was somebody said, “Hey, Xbox, we process payments in the US today, but Trevor, can you figure out how to process payments internationally?” And of course, back then I’m very naive. I’m like, “We’ll, just use credit cards and we’ll use our single payment provider, and away we go, how hard can this be people?” Little did I know that people in Germany didn’t want to use credit. They wanted debit instruments. People in Japan wanted to go to a Lawson’s and 7-Eleven go to convenience store to pay with things. And that same kind of story just held for many other countries outside the US.

So I was actually floored with just the differences and the cultural differences of what people wanted to pay, how they paid, but then also started to dig in and understand the regulatory complexities about tax and what can you actually do in these countries? And then, “Oh, you mean not a single payment provider can actually support the world? Wow, okay.” So it really became something that I became very passionate about and luckily had the opportunity to hire some really bright people around the world that certainly were way more educated in the space than I was, but certainly were helping to teach me along the way and then help create and craft a strategy here. And so it started with Xbox, and then at Microsoft it was, “Well, what about for advertising? What about for online retail shipping of physical goods?” And wow, okay, payments is very different for a recurring subscription, versus an online retail, versus a B2B, versus a postpaid model, and it just keeps going from there. So that amount of complexity was pretty fascinating. But yeah, I’ve been in this space now for what, probably 20 years. It’s been a fun ride.

Yvette Bohanan:

That’s very cool. Well, thank you for sharing all of that. And now you’re with Adyen and you’re heading up the digital world. And I was fascinated when we were talking about bringing you onto the podcast that you are quite bullish on pay-by-bank right now. So why is that?

Trevor Nies:

Yeah, absolutely. I think in the US traditionally it’s always been cards, for many decades. And cards work great. As a consumer, they’re fantastic. I get my rewards, my miles, my points, it’s accepted everywhere I go. But times are changing and we’re seeing new payment methods become more prevalent. Anything from buy now, pay later to certainly the Apple and Google wallets, but even banking pay methods. And so I think now’s the time where we’re going to start seeing pay-by-bank emerge. And the reason why I am bullish on it and think that there’s a great future here is three things, and it’s just this perfect recipe.

So the first one is merchant demand. Merchants are looking for alternatives that are less costly and can drive better retention for their subscriber base. And if you take a look at the average American has a bank account for 17 years, which I went and looked at Wells Fargo, I went and looked at my bank account. I was like, “Wow, 17 years I’ve had my bank account for, pretty amazing” but how often did they actually have the same credit card or even debit card? It’s actually two or three years.

So you can already see, okay, now there’s continuity, that retention is naturally going to be better for that payment method. That’s just going to work. That customer continues have it. And then on the cost side, we know in the US interchange is very expensive. And so merchants are constantly pushing, especially coming out of the pandemic, they’ve been much more cost conscious, and so they’ve been focusing hard on how to lower their costs, but payment processing. So you have merchant demand is one.

The second thing now is customers are starting to get more comfortable using their bank account for e-commerce transactions or recurring transactions. And to give examples of that, think about your cable companies or cell phone service or utilities are already really adopting this. I know I get 10 bucks off a month if I add my bank account to these services. So no doubt I’m getting incented, I’m getting rewarded, but I’m happy to do it because I see that there’s value there. And at the end of the day, the utility is winning, they have cheaper costs, and of course the retention is important. And so I’m already getting used to, okay, I’m feeling comfortable as a consumer adding my bank account online to a service that I’m basically paying every single month. So we’re seeing some inroads there. It’s not prevalent, it’s not everywhere yet, but certainly some industries are already opening that up.

And then the third piece is around that customer experience. It’s so important to make that just easy. At the end of the day, for any payment method in the US to be successful, it’s going to have to be as easy as pulling out your credit card. And that’s a high bar because it is so simple today, and this is where we’re excited, we announced a partnership with Plaid back in November, and Plaid is no doubt a leader in the industry has done a really nice job on making it easy to add your bank account online.

And to give you a couple of examples of that, I think about when I do my taxes, which I need to do very soon now, and if I use a TurboTax or HR Block, some sort of online software, they make it very nice because if I have lots of, let’s say stocks that I bought or sold in a given year, I can just add my credentials, log onto my Fidelity account, they will then automatically pull in all of my sales and often enter them in one by one. So I’ve already been trained as a consumer to do this experience. Well, that’s the same experience that Plaid is doing there. They’re also doing for pay-by-bank.

And so instead of having to the old school way, find a checkbook, find my routing number, my checking account number, enter in probably twice, don’t fat finger it, make sure it’s right, hope it’s right. I just entered my credentials. I just logged into a bank account, which I know more than I know my credit card number on average. That’s it. And then I’ve logged in, I’ve authenticated, I’ve added it. It’s an easy experience, it’s frictionless and away we go. So when you think about these three things, the merchant demand customers already starting to get used to it more. It’s still early days. And the third thing is that friction now has been removed. I think there’s long-term success, it’s going to take time, but we’re set up there.

Yvette Bohanan:

And we’re seeing that around the world, this has already been happening. You look at whether it’s through more traditional ACH type systems or new fast systems, this account to account phenomenon is growing, and is it really the ease that’s kept us back here in the United States, do you think? What’s really been the adoption hurdle? Has it been consumers just not feeling comfortable, worried about data entry or is there anything else going on in the background?

Trevor Nies:

Yeah, there’s definitely multiple things playing here. No doubt in the US, we love our rewards. I won’t buy anything unless I get points or miles on a card. At the end of the day, that is less existent when you get outside the US. If you go to LatAm, it just rarely exists. So people aren’t even used to these rewards, meaning that they don’t have as much loyalty to certain payment methods that we’ve been taught and trained in the US. Now, it’s interesting because almost aligned with your previous question there, we’re seeing the younger demographics have less desire or less reliance upon these rewards, whereas people my age certainly love these rewards and can’t imagine life without them, at the end of the day. So we’re seeing a shift already with that, but that’s one.

The second thing that’s really interesting and unique that we’ve witnessed here is if you look at India with UPI, you look at Brazil with Pix, these are the two fastest growing local pay methods that we’ve ever seen that are based on the bank. And so why is that? Well, it turns out that there’s been a combination of regulation and also the central bank who are really pushing these payment types Pix is interested because what they’ve done is they said, “Okay, every bank app has to by law, basically, has to support Pix, and the Pix logo is going to look the same and be in the exact same place and the experience is going to be the same.” And so they’ve really done a nice job on not enforcing it per se, but definitely making it consistent, making it easy, making sure everybody supports its ubiquitous. And that’s been driving just tremendous adoption.

Whereas in the US, ACH has existed for many, many years, but even FedNow, which just launched, it’s out there. It doesn’t actually support pay-ins yet. It only supports payouts. And how many years is it going to take for all the banks to support it unless there’s some sort of regulation or central bank push on it, which debatable whether that will happen. So it’ll have to be driven by merchants, driven by customers, which will happen. It can happen, but it’ll just means it’ll take significantly longer for any sort of adoption.

Yvette Bohanan:

And I think what you’re hitting on here is the ubiquity principles and the consistency that the Reserve Bank of India, that the Central Bank of Brazil has built into the consumer experiences. Plus they’ve done a tremendous amount of public education, particularly around Pix. Quite impressive, right? Pix has become a verb there. “Pix me.” So it’s trust and ubiquity and consistency that are all combined. And then on the merchant side, in those countries, if the bank and the central bank’s coming out and saying, this is a good thing, merchants are going, “Okay, I am along for the ride here.”

In the US you have to convince merchants that this is a good thing. They don’t want to disrupt their checkout experience. They don’t want to. Maybe billers are a little bit different. Maybe billers have been trying to find a way to get people to come to their website and pay directly and use a lower cost option versus cards and online through banking apps and stuff like that. When you talk with merchants in the US, how do you convince them that this works? How do you explain to them this is going to work because, or it works because? How do you give them that explanation?

Trevor Nies:

Yeah,.

Yvette Bohanan:

Because they’re asking does it really work? I don’t want failure, I don’t want… A lot of them tried to use ACH and do the routing and account number thing, and it’s been a nightmare.

Trevor Nies:

And that’s exactly right. And I personally have had experience with ACH as well. It’s a struggle, because there’s no really good authentication that exists. Does that customer really have control over that bank account? Is it fraud? Do they have funds in their account? Are they actually going to pay their bill? There’s just so many of these open questions that it can work for a really low-risk recurring subscription, but that’s it. But that’s where we’re really hopeful and expecting pay-by-bank to change that game because now we’ve combined the reliability and the cheap processing capability of ACH, which has been around forever. And at some point we want to also pull in their FedNow and RTP, real-time payments, to provide another alternative, which has its own applications that make a lot of sense. And combine that with the Plaid solution I was mentioning earlier, which does solve those two things.

It solves for that authentication to make sure that customer has access to the account. And it also solves for what’s the propensity or likelihood that a customer is going to pay because now you have insights into how long has their account been open, can they actually make a payment, will they be able to pay it, et cetera. But now how do you convince the merchants, because you’re right, that’s the question I get right all the time. And to be fair, we just announced a partnership in November. We’re in Q2 here piloting the pay-by-bank solution. So we’re not up and running just yet, but we’re running, as you can imagine, quite fast to be up and running. And what it’s going to boil down to is proving the model and having some great customers go live with us initially, which is what we’re doing and illustrating, showing the great customer experience that we believe we’ve been able to create here.

Showing the reliability, showing the value, and showing the fact that it achieves everything that cards do as well. And it’s not going to be for everybody. Our job at Adyen is not to move merchants from one payment type to another. Now it’s about giving options that make sense for their business, for their customers, what they’re trying to accomplish at the end of the day. But we really are confident that we have a compelling solution here that our merchants will be wanting to adopt, but it’s going to take time. It’s going to take time to demonstrate and show it. You got to see it to believe it in some of these cases. So that’s what we’re off working towards.

Yvette Bohanan:

How does this mechanically work? If I’m in a merchants shoes, I have three or four ways to go here, I could do this through a payment service provider or an orchestration provider. If they’re supporting this. I could go straight into Plaid and implement from there. I could go old school and just implement ACH with my bank. How have you done this with this integration to Plaid? Is it through your environment? Does it look different to me as a dev person going into your toolbox, going into your SDK to add in pay-by-bank as opposed to cards? Or have you really created a much more homogeneous layer? How does that work from the development side?

Trevor Nies:

Yeah, that’s really the beautiful thing about this and really the strong selling point here, and what we think we can differentiate is the fact that this is no different than adding any one of our other hundreds of local pay methods that we have on file. So if you wanted to add a Sofort or Giropay, there’s a couple of configuration changes. Now, if you own the checkout as a merchant, there’s a little UX work of course, that you have to do to make sure that you collect the right information or whatnot. If you rely on our checkout, then it’s seamless. We just add this as another configurative local payment method, and it just flows. And the great thing is it’s not just the integration piece that’s really minimized if you’re an existing Adyen and customer, but everything flows into the same reconciliation, the same reporting, and so there’s nothing separate there.

So is to your point, you could go directly with Plaid, and that might make sense to some customers. If you don’t need an authentication, you could just do ACH, which of course we support as well. But in this case, we believe there’s a really strong selling point on minimizing that merchant work because it’s just another local payment method that you add. There’s nothing special or unique about this relative to anything else that we offer. It just works that single connection, single integration, single reporting, that’s just one of the strengths really that adding has that we think makes this solution even more compelling to our merchants.

Yvette Bohanan:

So is it really cheaper for a merchant to accept pay-by-bank?

Trevor Nies:

Oh yeah. It’s 60% plus cheaper for sure.

Yvette Bohanan:

Wow.

Trevor Nies:

Yeah, significantly.

Yvette Bohanan:

So it’s 60% cheaper and you’re removing the risk of the pull transaction, the insufficient funds out of the equation.

Trevor Nies:

Exactly.

Yvette Bohanan:

So is there actually a hold being placed on funds in the consumer’s account when they do pay-by-bank, or is it just the fact that there’s some money there and you can make a calculated assessment that there’s going to be enough when it actually clears.

Trevor Nies:

And that is a slight difference?

Yvette Bohanan:

Either one would be an improvement over basic ACH, just to be clear.

Trevor Nies:

That is a slight nuance. In this model there is no, of course we could set up a guaranteed authorization too. Let’s be clear. That is possible. But traditionally the way this will work is, yeah, it’s not guaranteed. And because we are a bank in the USs, our settlement times are actually fairly quick. We can settle within a day as an example. So it’s pretty fast ACH, but it’s not real time ACH. So that authorization and funds will move pretty quickly, but it won’t be guaranteed per se. However, to your point, the expectation and the risk that we can remove by evaluating the average daily balance, are there funds in the account?

You can look at quite a bit of information to make a really accurate assessment on will there be funds tomorrow for this particular charge, and will there be funds available the next month and the month after based off the history they’re able to see. So you can eliminate the vast majority of the risk or sure, but is it guaranteed? No. But again, that is a product that we certainly can build and make available as well, which would be a guarantee. It’d be more costly, still cheaper than cards, but it could be more costly.

Yvette Bohanan:

And you’re in pilot here, but Adyen’s legacy is alternative payment methods all over the world, really if you think about it, as well as cards, I’m curious if in the piloting, if you’ve noticed anything from a consumer adoption perspective in the pilot yet, or is there anything anecdotal based on other countries? Are people more inclined once they see that payment option? Do they have to be incentivized? What’s the practice a merchant goes through to get people to try using this? Because it is a little new.

Trevor Nies:

Yeah, it is certainly a little new. As I mentioned, customers have gone through the experience, but for different scenarios, typically adding your taxes, pull information and et cetera. Venmo, another good example. So customers have gone through this quite a bit. Now, have they gone through it and then had an ACH run behind it and whatnot? Like that part itself, combining these two technologies that frankly have been around for a long time, a newer experience for a lot of customers. But to answer your question, so we’re piloting in Q2, so we don’t have piloted data just yet. So we’re still kind of early to see how it’s shaping up. We’re still in code mode, I would say at this point. But yeah, we’re looking forward to getting those lessons here in the next couple of months. And when we start seeing the results, rest assured we will be sharing this publicly on what we’re seeing in this space to continue to get people excited about this alternative, this opportunity.

Yvette Bohanan:

So let’s talk use cases. Where do you see this actually taking hold?

Trevor Nies:

Yeah, I think probably the most obvious use case, and really the first use case is subscriptions. And I mentioned before that utilities, cable companies, telcos, they’ve already been doing a really nice job on introducing bank accounts and asking and pushing customers to use their bank account, whether they add it online or call or whatever it might be, to put on their account and just be charged every single month on their bank account. That’s a natural transition to a streaming service or something else where you’re paying 10, 15, 20 bucks a month on a recurring basis. And that’s where you have the upfront authentication just to confirm, “Yep, okay, we know that the customer knows the account.” And then that nice cheap ACH payment method on the back end running every single month. The nice pull method, which is what you need for that case. So I think that’s a natural progression.

The other case that I’m pretty bullish on too is thinking about advertising cloud services. And the reason why is twofold. One is because these are B2Bs, and so businesses are more [inaudible 00:21:38], more willing to use bank accounts. And then the second thing is because these are pretty large transactions on average, these are hundreds of dollars if not thousands of dollars. And so merchants are of course very much already either A, they might already be invoicing as it is, or B, they’re looking for alternatives that are going to be much cheaper for that type of transaction size can really benefit for the merchant, but also have a better accuracy and reliability each month on collecting that payment every single month going forward.

So I think those are going to be the initial use cases. We’re hopeful we get into online retail and other things as well as time goes on. That will also be, I think, somewhat dependent on can we get to real-time payments being part of the solution like the FedNow and RTP, which probably another podcast altogether because we know there’s a lot more work that needs to be done in the industry to really get those up to speed. We’re also bullish on those. Those will be long-term, but other opportunity.

Yvette Bohanan:

Yeah, I think what the path you’re on is really interesting. I would agree that we’ve both been around long enough to remember a lot of the attempts and some people are doing this I think still today, but the attempts of, well, you don’t have a true guaranteed auth type function in ACH, but you do in cards. So let’s do the first transaction through cards, but then let’s back that up with the recurring on the ACH rails. And that sounded good on paper. I don’t know if that really penciled out long-term for anyone. Here you’re getting a step closer to something that’s reliable and also less risky, and you’re not hopping networks to do it, right? You’re on the ACH from the beginning, the first transaction to any other transaction.

So it’s just a slightly different pattern that might make a lot more sense for people. So subscriptions and billing, in fact, it’s hard to distinguish sometimes. Are you a biller? Are you a recurring subscription provider? So definitely a pretty natural entree into this space. And I agree, you get to true commerce transactions and purchases and you’re in a whole different world and you need a lot in order to be super successful in that space, especially in digital channels and online. So it’s a progression like anything, but we’ll see what happens.

It’s a little bit of a battlefield out there around commerce. So in the US.

Trevor Nies:

Yep, that’s right. That’s what makes it fun though.

Yvette Bohanan:

That’s what makes it interesting, that’s for sure. A lot of competition for volume always in payments.

Trevor Nies:

Yeah.

Yvette Bohanan:

All right, that’s cool. That’s cool. So let’s switch gears a little bit. I understand now why you’re bullish. So you’re putting a lot of wood behind the arrow here along with Plaid. That being said, there’s no one size fits all payment method out there, right? You were just saying in your career, I’ve had the same experiences in mine. A lot of people have out there. You go to another country and it’s like, “Well, that’s not how we roll.” So you go to the next country and you’re like, “Yeah, I know we’re next door to those guys, but we don’t do things this way.” So you look at different channels, different payment situations. We’ve seen a rise in buy now, pay later. We see digital wallets exploding all over the world, now we’re talking about pay-by-bank. If I’m a merchant sitting here trying to figure out how to think about all these new options relative to cards for my US market, what words of wisdom do you have for the US?

Because it’s pay-by-banks just like, “Oh, I have another one coming through my door now,” if I’m a merchant. So I’ve had X number of buy now, pay later people, and it seems like every time I put a buy now pay later on my checkout page, I get uplift. This is crazy. I’ve never had that happen in my life. That would be one perspective people might have. And now we have this other thing. Is it going to be cannibalistic to other payment methods? Is it going to be truly incremental? How do you help them think about all of that?

Trevor Nies:

Yeah, what’s fascinating here is the US has traditionally been very simple and now it’s becoming complex like the rest of the world. Everything you just described is the same scenario that existed and to exist today. In France, in Germany, picking a European country for that matter, these are the complexities that they’ve been dealing with for years, is multiple local payment methods. Cards still have a very important place as well. Wallets have had a place, banking pay methods have had a place and there continues to be more and more that get introduced, buy now pay laters are becoming popular in Europe as well. And then we want to talk about more complexity, add regulation on top of that. And think about what’s happening not only with PSD2, data privacy, everything else that happens in Europe, but even in the US, you can throw in the Durbin amendment and how do we think about debit cards.

And now they have alternative rails, they can also go down. And so the complexity is just mounting up. And for us at Adyen, actually we welcome this because that’s how Adyen was basically built, was built to simplify all of these complexities so that again, one integration, we will minimize the complexities for you, whether it’s regulation, whether it’s making sure you have all the right payment types. But as a merchant, the advice that I would give though would be around know your customer. What do your customers really want to pay with? What do they expect? Buy now, pay later makes a lot of sense for online retail doesn’t really make sense for subscriptions or other businesses. So in Apple Pay, Google Pay, boy, I tell you, if I have most of my customers buying with their phone, I know as a consumer I love it when I can just hit Apple Pay and away we go.

So it makes sense. And in fact, certain scenarios we see even higher approval rates with Apple Pay than we do with just cards. And so how to think about that. So from a merchant perspective is really, I’d say two things. One is understand what are your customer’s buying? How do they want buy with? But leverage your payment provider to get Intel, to get information, to get best practices, to understand what are your peers doing in that space that’s worked well when they launched buy now, pay later, what lift did they see?

What cost reductions do they see or more costs that they incur? Do they see better retention? What KPIs or OKRs are even important to you? Do cost matter? Is it all about approval rates? Is it all about retention? It’s a lot. It’s a lot for every merchant to consider, but the good news is paying providers, whether it’s us or whoever else that’s out there, that’s what we’re here to do, is to help simplify that for them, help guide them and make it easy to add new payment types. But it’s only getting more complex in the US and I don’t see any end in sight frankly. I think it’s going to continue to get more complex.

Yvette Bohanan:

I would agree. We’ve had a couple different guests on in the last few weeks and there is some violent agreement about the increasing complexity in this space and you add in data privacy and it goes up from there and all of the regulation around that, which is good, it’s good, it’s good that all of this is happening. It’s just a lot. And you’re right, it used to be like it’s pretty simple in the United States and you go outside of the United States and it becomes complicated. And now it’s equally complicated here as well. So nothing’s getting easier under the hood, if you will, but we’re trying to make it super simple for the consumer and hopefully for the merchant to some-

Trevor Nies:

That’s right.

Yvette Bohanan:

Yeah, interesting times. What other observations, market trends are you watching right now that you’re keeping an eye on from your vantage point? You’ve moved, you’ve shifted in your career from being on the merchant side of things basically to being on the provider, the payment service provider side of the world. And when you’ve changed your perspective like that recently, what are you suddenly seeing on your radar? Maybe you’re seeing it through a different lens now, or you have a different appreciation for something as the global head of digital at a big multinational payment service provider versus the head of merchant payments at a big company, big multinational company.

Trevor Nies:

And that’s exactly why I came to Adyen, honestly, is to see the other side, to see how I can learn more about the industry as a whole. Adyen has got thousands of voices, Microsoft had a single voice. How can we leverage this for the best of the merchant community? And every day I wear my merchant hat everywhere I go, and it’s a good thing for myself, it’s a good thing for Adyen, it’s a good thing for our customers, our merchants, everybody wins. But everything that I’m looking at is really thinking about the future products that we invest in and how do we drive value and innovation for our customers. So what are the things that have been super interesting? I think what’s been interesting to me is seeing and talking to so many different merchants now, which I already in the past had certain a lot of relationships, but I’ve been able to really exponentially increase those relationships here in the last year.

And seeing just how much difference there does exist between merchants on what’s important and the levers that are available are way more than I actually expected or even new to do certain things, whether it was lowering costs, okay, well how do we lower costs? Well, there’s a lot of things that you can actually do, not just move to a different payment type, even with own your own existing payment type. There’s as you know, so many different interchanges that even exist. There’s actually a lot more opportunity where Visa and Master have done a nice job on giving out opportunities for different rates for certain types of transactions that actually exist publicly that are there that I think it’s merchant. I didn’t actually know all existed. And now I’m like, “Oh wow, okay. There’s some other things that are available to merchants to help lower their costs if they know if they exist.”

And so that’s where your payment provider can certainly come into play. I think also understanding and seeing the maturity level in certain areas, debit networks for example, versus signature rails. How mature are they relative to that? What are the areas of focus for the card networks and how are they thinking about helping to improve rates is pretty fascinating. Learning about certain merchants who purposely don’t want to have local entities in certain markets because of the complications around taxes and other areas. But at the same time, trying to find that perfect balance on that. Well, how do you get better approval rates and lower costs if you don’t build local entities? And of course, just appreciating and understanding that I was fortunate at Microsoft, we have such a large scale and a breadth and we’re really resourced quite well to have a payment scheme in general.

Amazing. A lot of big merchants are still early in their journey and they’re growing superfast, but they haven’t had the opportunity to invest as heavily payments as perhaps I have been able to do in the past. And so seeing that opportunity for Adyen to help guide and help provide consultation, be proactive on, “Hey, here’s some things we can do for you that we already know that work,” and just make that easier for them to accomplish their goals. But yeah, somewhere it’s cost that are focused on, of course a lot are about performance, approval rates, thinking about that whole purchase funnel and then more and more now retention for subscribers. Like, “How do we as a provider actually help with retention,” which is something that I didn’t really think too much about as a merchant. I was like, “Okay, this is kind my problem, have to go figure this out.”

But come to find out, a provider can actually help quite a bit in this particular space and there’s opportunity there that can happen. But it’s fun to see being on the side of the fence here. Everybody has the same goal, whether you’re Visa, Mastercard or AmEx or Discover whether you’re an issuer, whether you’re a merchant, or whether you’re a paying provider. We all want good transactions just to work with low friction and we all want no fraud. So that’s the beautiful thing is we have a common goal, but there’s so much complexity as we talked about, and there’s just so much more room for improvement in the space and nobody has enough engineering resources to do everything. So how to prioritize and focus on things that matter. It’s a lot, but that’s what makes it fun.

Yvette Bohanan:

And a lot of the folks who are at those companies where they have hundreds of engineers focused on payments, it’s funny, a lot of those engineers did not expect to be focused on developing payments implementations when they signed up. So it can be a shock to the system when they find themselves in an industry. And in fact, a lot of people we talk with fall in that way, into the industry, and then they decide not to leave too.

Trevor Nies:

Yeah, no, it’s the same story for me, how I fell into it as well. It’s seeing that there’s challenge opportunities and the fact that you can impact customers-

Yvette Bohanan:

And it starts with a real business challenge. It’s not just an aspirational, “I want to go find out about payments.” It’s like, “How are we going to do this? How are we going to scale the business to another country and get paid for it?”

Trevor Nies:

Exactly, right.

Yvette Bohanan:

Very practical stuff. All right, Well Trevor, thank you so much for joining us on this podcast. It has been a pleasure talking with you and I’m really, really glad we had time to catch up. I’m interested in hearing about the results of your piloting once you have some results. I hope we could have you or someone back to talk a little bit about that. And I believe you have a retail report coming out again pretty soon that you all publish, which is excellent. Some of the largest sample sizes of merchants and consumers out there in that report. So, I’m sure somebody somewhere in your organization is busy compiling data right now for that and putting that together. But maybe we can talk with you all again about those topics.

Trevor Nies:

Yeah, yeah. We would love to be back on the show and certainly you’re absolutely right. Once we have some great data to share, certainly we would love to talk about it, the online retail report for sure. And there’s other areas that we’re also doing research on that might be a great, great thing for us to share as well. Yeah, great. Great seeing you again, Yvette, and appreciate you having me on.

Yvette Bohanan:

Great. Thank you so much. And to all of you listening, thanks for joining us and until next time, keep up the good work. Bye for now.

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