The payments and fintech industry has seen a huge explosion of new solutions in the last several years. Why does Payoneer focus on B2B commerce?
The explosion of new solutions in FinTech has been far more concentrated on B2C than on B2B, which is interesting because B2B payments is a far larger market than consumer payments. If you think about it, consumer payments have been digital for a long time. In fact, consumer payments were “digital” before consumer commerce went online, with merchants electronically processing credit and debit cards in stores and catalogs, taking card numbers by mail and phone to enable purchases. So, many of the consumer payments businesses being built today are really value-added platforms on top of the credit card infrastructure that Visa and MasterCard have built and extended for decades. Even though B2B ecommerce is actually larger and growing faster than B2C ecommerce, B2B payments have never been digital and have not kept up with consumer payment infrastructure. At Payoneer, we see that B2B commerce is undergoing the same digital transformation globally as B2C ecommerce, that B2B payments is an industry that is larger than consumer payments, but that B2B payments have not only not kept pace with the increasingly digital world we live in, they have never really been digital at all. We believed that we were in a unique positon to address the massive complexity and need in the market, and create a platform that could bring all of the benefits of digital transactions to B2B commerce, while increasing the velocity of trade and reducing the cost and complexity of doing business for companies of all sizes, all over the world. As we’ve worked with companies ranging from some of the largest in the world like Amazon and Google, all the way through the smallest in the world, like sole proprietors in emerging markets such as Bangladesh, we’ve seen the transformational effect we can have by connecting the world on a digital cross-border B2B platform. We see it as our mission to connect businesses, professionals, countries and currencies together on our digital platform to enable more commerce to happen in more places, and in more ways than were possible before.
How does Payoneer stand out from other fintech companies?
Payoneer is really a pretty unique FinTech company.
•B2B Focus – we focus exclusively on business payments. While B2B payments has much larger volume than consumer payments, it has attracted just a fraction of the attention and the investment of B2C
•Global – we’re a truly global provider and company. We support customers that come from over 200 countries and enable them to transact through us in more than 150 currencies, and settle through more than 170 local clearing systems. We are regulated in the US, Europe and Asia, have offices from Silicon Valley to Tokyo, supporting our customers in more than 70 languages. We’re also really strong in emerging markets, with a lot of momentum in SE Asia, India, Latin America and Eastern Europe.
•Scale – we’re a profitable, well-funded company of more than 600 employees that moves many billions of dollars annually, works with large companies like Amazon, Google and Airbnb, and generates more than $100 million in revenues annually. We have bank relationships and partners all over the world, and have built a robust and redundant global payment infrastructure that ensures our clients get a strong, secure, scalable infrastructure partner they can count on.
•Brand – our brand has become meaningful, and represents economic empowerment for businesses and professionals all over the world, especially in developing markets. We are one of the 2000 most trafficked web sites per Alexa, and we get more than 150,000 applications each month from SMEs that are looking to connect to their trading partners, and get paid in new and better ways for their cross-border sales.
•Regulatory, Compliance and Security Strength – We’re fundamentally in the trust business, and we look at regulation and compliance as enabling infrastructure, which is why we’ve invested tens of millions of dollars to develop a state-of-the-art platform. We have embraced the complexity that is typically an obstacle to success, and turned it into a competitive advantage that our clients, customers, banking partners, and regulators know they can rely on. These unique capabilities also enable us to process millions of applications annually. Data security is more critical now than ever. We’ve successfully completed security reviews by Google before we could support them as a client, we are PCI level 1 certified, and we constantly invest to stay ahead of the curve. At the end of the day, we handle billions of dollars, and manage many different types of risk. Our customers trust us because they know our business isn’t just about having cool technology and a good sales pitch, it’s about protecting our customers and protecting the banking system from money laundering, terrorist financing and the many other risks that financial institutions deal with every day.
What’s driving the change in cross-border B2B?
Think about what’s happening in the world around us. The whole world is becoming connected and technology enabled. We’re truly in the middle of a transformational decade in cross-border B2B trade. BCG has estimated that from 2010 to 2020, cross-border B2B payments will grow by more than 250%, to more than $50 trillion annually. Maybe even more significant, the fastest growth by far is coming from the developing world, which grows from about half of the volume in 2010 to nearly 75% in 2020. There are multiple layers to the changes happening.
oLogistics and fulfillment infrastructure – A lot of this wouldn’t matter if there hadn’t been major advances in logistics and fulfillment. The increasing sophistication of tools available to businesses makes it far easier to quickly and reliably deliver smaller shipments to more places in the world than ever before. The increasingly available and global infrastructure is the grease that enables the wheels of cross-border commerce to keep spinning faster and faster.
oCloud-based software – the availability of new cloud-based software tools is enabling businesses to go more digital, for more of what they do, more quickly, simply and cost-effectively than ever. With open APIs, these platforms are accelerating the expectation for automation and integration among businesses of all sizes, all over the world. This calls for more digital solutions in an industry that has been stubbornly analog for decades.
Which geographies are going to be seeing the most change in the coming years, and why?
There is an incredible amount of change happening in the world right now. The fastest growth in internet connectivity and the adoption of new technologies is coming from the developing world, where literally billions of people and millions of businesses are now connected to the rest of the world for the first time and are eager to trade with new partners in new places. The largest scale of activity is coming from China right now, since many of the changes happening support new opportunities for exporters, and China has the most robust manufacturing base in the world. We’re seeing very fast growth in exports from China through digital channels. We also see other traditional manufacturing markets like Japan and Korea growing very quickly and across all of Asia from markets like Indonesia, Vietnam, Malaysia and the Philippines, all of which are growing well more than 100% annually. But the biggest transformation is coming in places like India, Bangladesh, Eastern Europe, Africa and Latin America. We see an entire generation of smart, hard working, resourceful and technically-savvy business owners looking globally for new trading opportunities, and looking to partners like Payoneer that they can trust, and that connect them to this new world of opportunities. We’re proud to be part of a great revolution occurring around the world that is creating opportunity based on talent and resourcefulness. .
What’s next for Payoneer?
With so much change in the world right now there are so many unmet payment needs, so we have a very long roadmap of new initiatives. Here are a few of the new initiatives we’re working on:
-Local Market Presence: We’re busy shrinking the world for our customers, making cross-border B2B payments local. We’ve also started to build more local presence in key markets like China, Japan and India to support local communities of businesses that are trading globally.
-Automating B2B Workflow: B2B payments are so much more complex than consumer payments and are about so much more than the movement of money. We’re introducing new products that support the end-to-end needs of businesses, including integration into accounting software to integrate global payments into invoicing, and support automated reconciliation; management of supplier tax forms to eliminate the headache and hassles of vendor management, and integrating payments into a global trading platform that connects buyers and suppliers together.
-Trust and Trade Services – we’re introducing new services to bridge the trust gap that exists between buyers and sellers that can stand in the way of cross-border trade. These gaps are being addressed by solutions, which haven’t been updated in decades.
Where do you see the global payments ecosystem heading in the next 12-18 months?
Businesses have started to recognize the shortcomings of the current B2B payments ecosystem. B2B payments aren’t digital, and the payments aren’t integrated into the B2B financial supply chain. Firms like Payoneer are developing solutions and cloud-based platforms that are digitizing B2B payments and will bring the same level of ease, security and integration to B2B trade that the B2C world already enjoys. I believe that in the next one to two years we’re going to see a massive change in the way businesses all over the world transact, with businesses of all sizes being able to transact securely and digitally with their global trading partners, and begin to enjoy the integration of data and payments, reducing the complexity that creates so much cost and inefficiency for businesses everywhere.