Where does Payoneer fit in in the fintech space?
The story of Payoneer is really a story of the digitalization of commerce globally. We’ve built a global platform that connects businesses of all sizes from the entire world. We have customers that come from over 190 countries and we work with very large digital businesses typically like an Amazon, or a Google, or an Airbnb.
And then the biggest part of our business is we actually work with small businesses that come from all over the world, who are using us to support their global export activity. There’s an entire digital movement around the world where essentially small business owners from every market see opportunities in a digital world to actually be relevant globally. But there isn’t an easy way for them to access money globally and to actually engage in financial and commercial activity globally. We built this as a connective digital platform and make it as easy to do business globally as it is locally. And so that’s where we fit in in all B2B digital commerce realm.
You have a good presence in both developed and emerging markets. How are these two different in terms of payment behavior?
I’ll start with where the scope for growth is and part of what’s exciting is that there really is tremendous growth opportunity everywhere. But when we think about what we’re doing, we tend to focus on our customers more than what we do.
The most transformational change happening is that there’s a democratization of opportunity. There are smart, talented, hard-working entrepreneurs all over the world, that through technology and the internet have access to global opportunities.
So while we see tremendous opportunities in the United States, Western Europe, Australia, Japan and other developed markets, the most exciting part of what we do is the opportunity to work with talented people in the developing markets. That’s where we’re most excited and where we think there’s the biggest scope of opportunity ahead.
Technology change makes it hard for any bank, be it developed or developing markets, to be relevant for digitally savvy businesses. And so that’s why we have so much opportunity everywhere.
Are you seeing any major differences in payment behavior or volume strength pre and post-pandemic?
Through the pandemic, we started to see a lot of accelerated investment in digital activity. So application volumes have gone up, especially in developing markets. Even local businesses that might have actually focused on their physical presence have recognized that in a Covid world, customers may not want to pay in cash. And so what we see is acceleration on all fronts.
Tell us a bit about the nature and duration of your partnerships.
Most of our partnerships last for a very long time. We’ve got different kinds of partners. One of the biggest groups of partners that we have is the large digital marketplaces. In many cases as a marketplace, they not only have buyers that they need to figure out how to deal with, but sellers that come from countries around the world, which creates all kinds of challenges including onboarding, risk management, communication and payment. The history of Payoneer was actually working with the marketplaces and saying — hey, focus on what you know. Let us take care of all of the hard stuff such as onboarding, compliance, money movement etc.
We work with great companies like Upwork and Fiverr, and Amazon and Airbnb, etc. This year, we announced partnerships with companies like eBay and Coupang in Korea.
Another really exciting group of partnerships for us is our bank partnerships. One of the most significant themes of our banks is they want to focus on digital commerce and have digital offerings. They want to focus on small businesses and help grow exports.
In most countries, banks are going to have a very hard time offering global payment capabilities. So the bank integrates Payoneer into their mobile and online banking platforms. And now their small business customers have access to the amazing global payment capabilities that we have through their relationship with their local bank. And they get real-time access to their money so they can see their US Dollar balance, Pound balance, Euro balance, and all the other currencies.
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Many of your peers are getting into the crypto business. How are you playing this space?
We’re certainly looking at it and I would say what we have seen is an evolving regulatory comfort and appetite for crypto around the world. And so we spent a lot of time focusing on our compliance program in regulated markets around the world.
We also communicated this quarter that we collaborated with some big banks on a really interesting new kind of crypto platform. It’s called the regulated liability network. And it’s this idea of having a shared infrastructure that brings Central Bank, digital currencies, and also digital money from the likes of companies Payoneer all onto a common platform. And so we’re working with some big companies like Citibank on some super interesting and very kind of exploratory and innovative initiatives there.
You reported your quarterly results recently when you raised your guidance. What’s the rationale behind this optimism?
What we’ve been seeing is that we’ve got really strong growth in a lot of regions around the world including Latin America, Southeast Asia, parts of South Asia, Eastern Europe, etc. Some of the newer banking partnerships that we have been pursuing and some of the marketplace partners are contributing.
And then, we’re really driving meaningful growth of some newer higher-value services that we have.
What the fastest-growing part of our business right now is the B2B APAR offering, where we help businesses that are just trading with other businesses around the world across borders. That’s growing much faster than the business overall. The business has gone from being 7% last year to 10% of our business.
Fintech is evolving so fast that people are actually struggling to keep up. As the CEO of a payments solutions company, how do you see payments happening 10 years down the road?
We always try to start with our customers. We feel that if we continue to focus on our customers and listen to them, we will continue to succeed. But ultimately what you’re seeing in payments is that the infrastructure under point-to-point connectivity is all getting essentially rebuilt. The way banks are managed, the way payments have been managed, there’s investment in completely new infrastructure.
I think where the value starts to shift in a world where there’s more and more of that kind of infrastructure layer being built, part of it shifts to the customers, but a part of it shifts to the companies that are actually really able to package up value around that and create great experiences for those customers.
And those great experiences are things around the increased complexity and scrutiny on regulation and compliance, increased scrutiny around taxes, increased connectivity with software and partners around the world. All of those things are reducing the friction that stands between customers and what they’re trying to do.
So companies that are able to think not just about the infra, but actually about the context where businesses are getting done and where payments are embedded, I think is where the real value gets created over time.
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