Case study
How Adobe found more profit in subscription payments
Adobe, the US software giant behind Creative Cloud, worked with Adyen to bring down debit costs, unify its global operations, and uncover profit that had been sitting untapped in its payment systems.
For years, Adobe treated payments as little more than a back-office cost of doing business. That changed in 2018, when the company behind creative staples like Photoshop and Illustrator brought the same inventive thinking that shapes its products to its Creative Cloud payments, by partnering with Adyen.
With Adobe growing well beyond its US home market, its Head of Payments set an ambitious goal: build one of the best payments functions in the business. That meant finding a partner who could match the ambition and technical depth of Adobe's own team, while keeping integration straightforward and leaving room to test and refine. The result is a partnership that has turned payments from a back-office function into a genuine competitive edge for Adobe's subscription business worldwide. We caught up with Valerie Kondratova, Senior Payments Manager, and Adam Hollenberg, Principal of Global Payments, to hear how that partnership has evolved.
Challenge 1: Navigating complex regulations
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Adobe saw the US debit payments landscape shifting. In July 2023, the 2010 Durbin Amendment was revised, mandating that all debit cards issued in the US be branded by at least one additional unaffiliated network, such as NYCE, STAR, PULSE, and Accel. The Durbin Amendment led to more opportunities for cost savings on debit payments but also increased complexity. Which card network should be prioritised? Where are the most efficient cost-saving opportunities? Since many of Adobe's customers pay their subscriptions via debit card, Adobe wanted to look for any cost-saving and revenue uplift opportunities they could unlock from processing via alternative debit networks. Solution: Combining technologies to increase profit margins
Adyen served as a holistic hands-on partner for Adobe in navigating the new landscape in US payments. Adobe combined Adyen’s Least Cost Routing (LCR), a segment of the new Intelligent Payment Routing for US Debit solution, with their own internal data that could help them make the best decision for Adobe regarding conversion rate. The AI solution fueled by Adyen’s ecosystem data was able to help Adobe determine which cards were co-branded and the specific debit network (or debit rail) each card was linked to. This helped Adobe to do a cost analysis and route the traffic to alternative debit rails (vs signature rails) before sending authorisation requests to Adyen. Result: Significant profit realised
By implementing Intelligent Payment Routing for US Debit transactions, Adobe achieved a 2.25% increase in authorisation rates, reducing costs and driving higher performance, ultimately leading to more sales and greater profitability.
Within a 90-day period: 2.25% auth rate uplift
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Challenge 2: Bringing global operations under one roof
It is critical for global enterprises like Adobe to shift payment strategies with minimal manual uplift, especially given the new opportunities in debit routing in the US.
Changing consumer trends, such as the increasing use of debit payments in the US, and ever-changing global regulations and mandates, for example, in Australia, where they heavily encourage the use of LCR, necessitate that payments be dynamic.
At the same time, enterprises like Adobe must ensure they are compliant. If not, they could face fines and lose customers, affecting their profit margins. Solution: Simple data management across regions
Adyen’s unified solution helped Adobe achieve its goals faster by simplifying operations that are typically inefficient such as accessing and analysing reporting data. Real-time reporting and a centralised dashboard allowed Adobe to have instant access to transaction data as well as a single view of their transactions across different regions. Result: The US, France, and Australia were activated
Thanks to the simplicity of Adyen’s solution, Adobe was able to implement local card schemes in major markets like France with Cartes Bancaires, Australia with Eftpos, and debit card routing in the US, while achieving high conversion rates and reducing costs by routing transactions through alternative networks. Adobe achieved over $2 million in cost savings by leveraging Adyen’s routing capabilities. Global Stat callouts:
Adobe achieved over $2 million in cost savings by leveraging Adyen’s routing capabilities to optimise special pricing negotiated directly with the unaffiliated networks.
Leveraged Adyen’s Eftpos integration in Australia to save $90,000 over 1 year.
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Challenge 3: Testing new payment flows without the risk
Adobe is always looking for new ways to increase conversion, letting more "good" or legitimate customers through their checkout flow. Recognising that with strict rules, some legitimate transactions may be unintentionally blocked (10-20%), Adobe sought to refine its process to safely let more payments through without increasing chargeback rates. Since any minor tweak can have a significant impact because of the sheer scale at which they operate, Adobe had to make sure any changes wouldn’t have a negative consequence. Solution: Easy testing capabilities
Adobe was able to identify and execute innovative solutions in real time, thanks to Adyen’s API-first approach, which allows for a safe and simulated space to test new configurations without affecting live transactions. Result: Two-way innovation
With easy experimentation and testing, Adobe was able to adjust their analysis and traffic routing, allowing more high-value customers to complete their checkout process - resulting in $2 million in cost savings. Additionally, due to said testing, and the increased transparency of data, Adobe is going to branch out and optimise other payment flows.
And it’s a two-way street. Adyen incorporated some of the reporting learnings into Adobe’s product roadmap to improve our new AI product, Intelligent Payment Routing for US Debit in order to benefit all our customers.
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The bigger picture
In the evolving landscape of US Debit, Adobe values its partnership with Adyen. By streamlining debit payments and enhancing global operations, Adobe is unlocking efficiencies and capturing additional value in its payments ecosystem.
As a global subscription business, this added value directly contributes to improved customer satisfaction, reduced churn, and increased revenue retention, ultimately impacting Adobe’s bottom line.
