Good piece from @justbrosef on Adyen v Checkout. It is an important discussion. I will offer some further + clarifying points from calls with ex-employees and following them for 2ish years. TLDR: Same same but different. Both likely do well & v good IRR investments from here..1/ https://twitter.com/justbrosef/status/1351282248985804817

Checkout’s apparent secret sauce is autho rates. They are “stunning” (rel to incumbent PSPs) and to a point where merchants are amazed and can’t believe it. Checkout would be a backup PSP for a particular merch and would get 20% out of the TPV pie (other two = 40% each).. 2/

As they prove themselves they move up to 40% allocation and become 1 of 2 primary PSPs. Issuing banks have a big say if transaction is approved. If an acquirer has a good track record /credit history, issuing bank will give them high score = higher prob transaction is approved 3/

Adyen ticks all the boxes for issuing bank so not clear why Checkout would be significantly higher vs Adyen. Esp bc Adyen offers Tokenisation themselves which no one else does right now- at least well. This = higher autho rates and a technical hack on getting better rates.. 4/

Checkout largely imitated Adyen’s tech stack i.e.: have taken the best pieces and brought everything in house on one uniform platform for merchants with various entities around the world.. 5/

Checkout became a direct acquirer/membership to V/MA >5 years ago. This = the same transaction costs as Adyen. when scaling you can compete better vs being a payfac. This doesn’t include US where BIN sponsorship is generally used given laborious process of getting fed charter 6/

Checkout pride themselves on a seamless + quick integration process--similar to Stripe--despite working with large merchants and > two lines of code. Their integration team are very responsive and give merchants the personal touch 7/

Checkout have been profitable since 12’. They did no PR, mkting and won biz off word of mouth. They did their Series A when they were 7 yrs old (rare) and that brought them into the public’s consciousness. The large Series A-C fundraising is growth. Period. 8/

Checkout prioritizes large enterprise merchants but in mkts that peers have not historically cared about = less comp. This has changed (Adyen is now in Dubai). Interested to see how this plays out 9/

They will also focus on niche verticals within industries (ie: $ remittance) and offer specialized customized solutions for said vertical. This has allowed them good will/customer wins in the space 10/

Guillaume is v charismatic (suited for US listing) and an excellent salesperson vs Adyen who are the polar opposite. Guillaume is obsessed with being the best and is v driven. As pointed out in note, he flies out to merchants to close deals 11/

Another cultural difference is appetite to spend $. For e.g.: pre-covid, Guillaume would spend 50-60 nights a year at London's Edition Hotel, which has a $480/night rack rate. Checkout’s margins are lower than Adyen because of their opex. Checkout believe in spending to win 12/

Main Q is that as Checkout scales can they offer this level of customization/TLC approach? Adyen are clearly the hardest to compete with esp now with their omni capabilities being the differentiator in RFPs. Think both will do well bc incumbents are giving away their share end/