Adyen report reveals billions in payment cost-saving potential

Adyen has unveiled a new report detailing significant cost-saving opportunities for businesses through the implementation of advanced payments technology.

The report, titled "Strategies to reduce your total cost of payments", utilises data from 100 global enterprise businesses to highlight potential revenue boosts and cost reductions.

The analysis in the report demonstrates that optimising payment methods can substantially lower expenses, particularly interchange and scheme fees. Interchange and scheme fees represent 85% of total payment costs for businesses, and many transactions are categorised as cross-border.

According to the report, businesses can save up to 59% by ensuring domestic transactions where goods and services are sold locally, rather than incurring higher costs associated with cross-border transactions.

This study underscores the importance of evaluating payment providers on factors beyond just initial costs. "When it comes to the total cost of payments, the transaction fee is merely the tip of the iceberg," the report stresses. Hidden costs can emerge over time, meaning that initial savings do not always translate to long-term efficiency.

Adyen's Intelligent Payment Routing, which includes a recently launched US debit payment routing feature, aids in optimising payments for cost without compromising on authorisation rates. This adaptive technology aligns with a key finding from the report showing that strategic use of payment solutions has had a profound financial impact. Specifically, businesses increased their revenue by USD $7.55 billion through improved authorisation rates using network tokens compared to traditional primary account numbers.

Trevor Nies, Senior Vice President and Global Head of Digital at Adyen, commented on the findings: “The challenge is to find the perfect balance between optimising your conversions and ensuring your business and customers are protected. For example, the 100 businesses we analysed gained USD $7.55 billion in incremental revenue with network tokens over the past year.”

Another notable highlight from the report is the substantial revenue losses due to offline declined transactions. In 2023, businesses collectively lost USD $474 million from these declined transactions. However, the adoption of Adyen’s Store and Forward solution enabled the 10 largest enterprises to save two million in-person transactions, equating to a saving of USD $42.1 million.

The report also indicates that 80% of retail transactions are conducted in stores. Long checkout lines and suboptimal payment experiences, however, continue to erode potential revenue. Solutions such as self-checkouts and mobile POS (mPOS) systems, which streamline the in-person payment process, are becoming vital in reducing wait times and providing customers with flexible shopping options.

Adyen’s technological solutions offer broader benefits when expanding into new markets. The company claims that streamlined management of payment terminals via a centralised back office can reduce Full-Time Equivalent (FTE) costs by up to 75%. The consolidated approach of processing payments across different geographies and channels via a single provider also helps to reduce both operational complexity and reconciliation efforts.

Nies further addressed operational challenges faced by businesses: “In difficult operating circumstances that include supply chain challenges and high inflation, we know that business leaders face pressure to increase efficiencies. It is important that businesses have access to innovative payment technology to quickly launch in new markets, activate the latest payment methods, and seamlessly integrate with partners. Launching through a single platform reduces costly developer hours and accelerates time to market.”

The report's analysis, conducted from June 2023 to May 2024, provides insights intended to help enterprises navigate payment strategies more effectively. Adyen’s assessment indicates the significant potential for both cost savings and revenue generation through informed payment technology decisions.