[samspenc]

$1 trillion in payments processed. $12 billion in revenue, which is 1.2% of payment volume. $100 million in earnings, that's less than 1% profit margin on revenue, and that is before taxes, depreciation etc.

This is why it's hard to build a profitable payment processing business.

[gregdoesit]

Take Adyen, a B2B payment processor - valued at $45B, and a company that we can no longer ignore when talking about Stripe. Founded a few years before Stripe, IPO’d in 2018, processing a similar volume and growing faster in 2022 than Stripe.

In 2022: processed €767.5B. Net revenue €1.3B. EBITDA of €728.3M. EBIDTA margin of 55% - similar to that of eg Visa or MasterCard.

The difference? Cost basis.

Adyen employs about half the people as Stripe, mostly in Europe (their HQ is in Amsterdam). It’s not just fewer people, but, most likely, lower cost per employee (European HQ vs US HQ, and the wage difference between the two).

They offer lower rates, collect less net revenue, and have a far bigger profit than Stripe.

Source on Adyen’s numbers: their annual report https://www.adyen.com/press-and-media/adyen-publishes-h2-202...

[readwriterick]

5 years ago the developer experience working with the Adyen API was significantly worse than Stripe's. Also, the initial in-person EMV implementation, and how it integrated with online payments, was inferior when compared to Stripe in my opinion.

Our rates were also significantly better with Stripe in the US, though we were doing into the billions in annual transactions, which likely has a lot to do with it (we wouldn't have moved all of those billions to Adyen right away).

Which is all to say, much of what you say is true, but it's not like Adyen is a clear winner.

[ckdarby]

I worked at a company for about four years with the payments processing in that time ranging from $300M to $3B.

The rate is the area to give the least concern to, but novices in the field always get hyper focused on.

Approval ratios, chargeback mitigation and other possible services are the bottom line real earners.

Today one of them could be break even but with 20000 customers could introduce a service that makes them incredibly profitable.

It is a bit of a jump, but Apples accessories department is currently accounting for 20% of Apples entire earnings. Not even the core product.

Payments example for either being discussed is they could just introduce the same services Ethoca was offering MasterCard acquired and they'd add on another $20-40M in EBITDA.

[ElCapitanMarkla]

Totally agree with that dev experience 5 years ago. I did integrate their DropIn product about 2 years ago and that was much nicer to work with but I always found their docs a little confusing. Stripe is hands down the winner in dev ux.

[proudeu]

Does it mean that it makes no economical sense to employ expensive talent at US hq when you can have just as good or better talent employed at EU hq? It made me think that all those recent layoffs just resulted in more positions moved overseas to Europe mostly (both west and east) in many forms (not direct hires but some freelance contractors and contracting firms)

[MichaelZuo]

This does sounds like a difficult business.

Taking on enough liability to wipe out the entire company in just a few days in the worst case scenario just to make a fraction of a cent of profits.

[fshbbdssbbgdd]

Interesting to compare to PayPal. Double the revenue, 15% margin, market cap $86B.

[antoniuschan99]

Just checked paypal. Pretty good numbers:

PayPal key statistics

PayPal generated $27.5 billion revenue in 2022, an 8.6% increase year-on-year

PayPal net profit declined in 2022, from $4.1 billion in 2021 to $2.4 billion

Over 22.3 billion transactions were completed in 2022 on PayPal, accounting for $1.36 trillion in transaction volume 435 million users and merchants use PayPal

https://www.businessofapps.com/data/paypal-statistics/