Adyen is one of the most frequently requested deep dives by readers.
We have spent 2-3 quarters examining the payments space, and it is one of the most dynamic and challenging business segments we have encountered.
In this article, we will share our research notes on Adyen and the payments space. Given the complexity of this sector, this can serve as a primer to help you dig deeper.
The shares closed at €860 on 23rd Sep’26. This is ~70% below its 2021 peak.
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What does Adyen do?
If you are paying for an Uber ride, renewing Spotify, or buying coffee at Starbucks in London, there is a good chance that Adyen has processed that payment. Adyen collects your card details and checks with the issuing bank to confirm the funds are available. It screens for fraud and ensures that the merchant gets paid.
These types of workflows are conducted by Adyen online, inside apps (e.g., inside Netflix), and at checkout counters. Adyen operates in dozens of countries and uses 1 unified technology platform for all these end-use cases.
Adyen in the payments landscape
First, let's understand the value chain of the payments ecosystem. The following is a simplified version of the ecosystem. The system is much more complex, and key players across different segments compete for share across the value chain.
There are 5 parties to every card payment: you, your bank, the card network (Visa or Mastercard), the merchant, and the merchant's bank. The merchant's bank is called the acquirer. Adyen is an acquirer.
An acquirer holds a banking license and takes risk. If a shopper disputes a charge, the acquirer deducts the money and then has to recover it from the merchant. In most setups, different companies collect card details, check for fraud, and process the payment. A bank then acts as the acquirer. Adyen does all of this on a single system.
Below is an approximate breakdown of fees/charges across different parts of the payment space for every $100 or €100 in payments made.
As you can see above, Adyen takes a very small part of the total fees. In fact, Adyen’s overall take rate is ~17 basis points. Essentially, it makes ~$0.17 per $100 in payments facilitated. In 2025, Adyen processed €1.4 trillion in payments and retained €2.36bn as net revenue.
This thin slice matters for the risks later in this piece. When a cheaper way to pay comes along (UPI in India, Wero in Europe, stablecoins), it mostly squeezes the banks' and Visa/Mastercard's slices. Adyen's slice is already small, and it can process the new methods as well.
Two things have differentiated Adyen. First, it has built everything in-house. So it has one platform for all services, whether it is accepting card payments or accepting payments at a point-of-sale terminal. Second, it has banking licenses in the US, EU, and the UK.
Adyen’s Business Segments
The company has 3 business segments.
Digital: Adyen’s original business, and still more than half of its business. This segment serves customers who do business almost entirely online. Customers include Microsoft, Uber, and Spotify. Competition is high in this segment, especially from Stripe. Most customers use multiple payment vendors to reduce risk.
Volume grew 17% in H1 2026.
Unified Commerce: this segment is growing faster than the Digital segment and caters to businesses that sell both online and in person.
Customers here are Louis Vuitton, an airline, or a hotel. The key reason such customers do business with Adyen is that it runs the website, the app, and in-person payments on a single system. Most legacy payments companies still use separate systems for online and offline payments. This has enabled Adyen to take share. In-store volume grew 28% in H1 2026.
Platforms: here Adyen’s customer is usually a platform or software company. For example, Toast is a vertically integrated software platform for restaurants. They sell software to thousands of restaurants. Outside the US, Adyen processes Toast’s payments behind the scenes. Adyen and Toast split the fees. The 2 companies recently extended their partnership to the US.
Adyen also offers these small businesses bank accounts, cards, and loans. It earns a lower fee here (~0.12%) because each platform negotiates as one large customer. ~293,000 small businesses now use Adyen through platforms, up 51% in a year.
Adyen is a quality business
Mr. Buffett defines 3 types of businesses: the good, the great, and the gruesome.
Adyen is definitely in the ‘Great’ category. Consider this:
We estimate Adyen has a ROE of 22% based on the 2025 numbers. This number understates the quality of the business, as Adyen’s equity is inflated by ~€5B of cash on its balance sheet. Adjusting for that, we get an ROE of ~300%. As a licensed bank, Adyen must hold part of this cash as capital, so the true figure is lower. It is still exceptional.
Adyen had an EBITDA margin of ~53% in 2025. It turns ~86% of its EBITDA into free cash flow (before tax) and has no debt.
It has very low customer churn. Less than 1% of customers (by business value) left entirely in 2025. The business has very low concentration risk. The top 10 customers are only ~11% of revenue.
Most of the growth comes from existing customers expanding. This allows for a lean cost structure and operating leverage. A typical customer gives Adyen less than 20% of its payments in years 3-7 and more than 40% after year 12.
Why is the stock down?
The major reasons for Adyen’s drawdown are:
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