Adyen's Banking License

Faster settlement times, greater stability, and innovative financial services

April 16, 2024
 ·  5 minutes

In 2017, we received our first banking license in the EU. As of 2023, Adyen holds banking licenses in the EU, UK, and the US. Before this, we did what many other payment service providers do: we used sponsor banks to facilitate money movement and provide compliance oversight. 

So why did Adyen acquire banking licenses?

Why Adyen has a banking license

Most payment providers rely on a patchwork of systems where it's not clear who offers which service and what impact it has on customers.

We want our customers to get the best results for every payment, and one way to achieve this is to manage the flow end-to-end. We accomplish this by becoming a bank.

By owning the whole process, there’s more opportunity to design solutions that impact each part of the payment journey. This includes the multi-channel gateway, risk management, processing, global acquiring, and now, settlement.

When we became a global acquirer, we directly connected our customers to card schemes. This gives them in-depth insights into each payment, which lets them optimize the process. This proved to be successful. Our customers can expect to generate additional income of 1.4% as a result.

This was great, but we still relied on partner banks regarding settlements. Our banking license takes care of this– providing faster settlement times, more automation, and greater stability.

We’re just getting started. With a banking license, we’re limited only by our imagination. This blog post explores the benefits of becoming a bank and what it means for our customers.

Unlock faster payouts

Transfer speed is critical when your business depends on payouts to disburse funds. Our banking license connects our customers directly to real-time banking and card schemes. 

This means minimizing banking maintenance windows, delayed delivery of funds, outages, and aging infrastructure that requires multiple troubleshooting days. By removing unnecessary delays and third parties, we free up millions in daily cash flow for our customers.

"With our banking license, we're no longer limited by the Sponsor Bank's infrastructure, resulting in additional speed and agility," says Adyen VP of Product, Vinay.

Moving funds within a single banking infrastructure means payments are processed up to three days faster than the industry standard. 

Let's look at what this means for our customers.

  • Adyen customers can access money faster to earn interest, invest in R&D for future growth, and reduce the need for external financing. 

  • For platform end-users, real-time payouts offer quicker access to their funds. 75% of SMBs say they need same-day settlement or faster. Adyen's platform customers can meet this demand by speeding up payouts and boosting their end-user experience.

Gain stability and flexibility

Holding a banking license is a clear sign of security. Applying for one means meeting a strict list of criteria, including keeping financial reserves on hand and ensuring data systems are secured. 

Even after becoming a bank, Adyen is subjected to direct regulatory oversight from banking authorities. This direct relationship with regulators leads to a more transparent and accountable regulatory framework, securing Adyen as a trustworthy institution within the financial landscape.

“Most traditional payment platforms sometimes use a sponsor bank as a treasury function and core banking services. For a customer, this means contractual obligations with the sponsor bank, limited regulation by the sponsor bank, and lack of flexibility on risk appetite based on the bank’s wider interests.”  - Vinay Nilakantan, Adyen VP of Product

Adyen’s banking license allows us to tailor our infrastructure to the payments space, resulting in more unique opportunities for our customers. 

Example opportunities for our customers:

  • We can modify the risk appetite per customer basis while accommodating potential contractual changes that are better suited for different industries.

  • We can support specific emerging industries typically under-served in the payments space.

Maintain a competitive edge in today’s market

The world's leading businesses look to us regarding the latest payment landscape trends. Not only does our banking license help our customers stay ahead of the curb, but it also opens the doors for us to empower them to tap into new revenue streams and optimize operations.

An example of this is our embedded financial services suite.

What is it? Embedded finance allows non-financial companies to offer banking services directly to their existing user base–an estimated $110 billion market opportunity in the US, UK, and Europe alone.

The following products help you develop your strategy to capture and maintain your position:

  • Embedded payments are payments that are processed natively without any redirects or third parties. For platforms, embedding payments does more than attract and retain users; it also opens new revenue streams for your businesses. Our research shows that established platforms see as much as 80% of their revenue from embedded payments.

  • Payouts disburse funds in real time. For enterprise businesses, you can pay your suppliers, vendors, and staff on their terms with flexible payout options. You can consolidate all payments into a single payout, regardless of where they were processed, and automate payments for efficient operations and faster reporting.

  • Embedded bank accounts empower users to manage their finances in one ecosystem. For marketplace businesses, you can make it easy for sellers to buy and sell on the platform and make funds instantly available in the seller's account.

  • Capital allows platforms to give users fast and flexible cash advances. For SaaS, you can embed business financing directly into your platform and connect business financing to cards and accounts. You become a one-stop shop for crucial business needs and build lasting relationships by filling the funding gap for your users.

  • Issuing enables businesses to create and manage their card program with our financial technology platform. Enterprises can streamline employees' business expenses or other team member benefits processes. Reducing time spent on manual expense management, allocating more time to do work that drives value for the business.

What could be next?

Becoming a bank has many benefits, and the future is bright with possibilities. One potential is the concept of Treasury-as-a-Service (TaaS). The idea allows businesses to streamline their treasury operations, manage banking relationships, and enhance the value of their cash flow. 

What are the implications for Adyen customers? Through Adyen’s Banking Infrastructure, API-based treasury services weave into the same single platform. This means real time visibility into cash flow, which enables better decision-making and improves overall operational efficiency. 

Here are some other possibilities that treasury services offer:

  • Consolidate acquired volume into a single bank account. 

  • Manage and move their funds through our APIs. 

  • Use the liquidity of the acquired payments volume to float the funds required on Issued Cards. 

  • Generate revenue with liquidity in an interest-bearing account.

Realize your ambitions with Adyen

At Adyen, we strive for ambition and build for all our customers. This philosophy drives us to innovate and make decisions that bring us a step closer to our goal. Acquiring a banking license is a part of that.

By owning the bank component of the value chain, we open more possibilities to create new products that increase speed, reliability, and growth opportunities without third parties holding us back.

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