Scott Reynolds spent a number of years employed in the payment space, working for firms like Mastercard and PayPal. He watched as B2B companies began to look internationally for new business and how poorly existing payment solutions suited this endeavor. As businesses get more comfortable working globally, both high end and low end solutions have generally missed the mark on providing optimized, cost-effective payments that serve to reduce the risk of these larger transactions.
Because both parties of a global transaction lack full information about each other, companies typically resort to inspections, background reports, incremental purchases and third party approbations to build added trust. But all of these layer on overhead measurable in time and money.
"Annually, banks provide $3 trillion in letters of credit -- a very manual payment method suited for transactions above $1 million," he said. "On the other end, credit cards and tools like PayPal facilitate online transactions but they're typically optimized for smaller transactions."
This gap led Reynolds to found Armor Payments in 2013. While his firm initially focused on domestic payments, it wasn't long before Armor started to get pulled into international payments. Armor offers online escrow. Buyers pay in and sellers can deliver goods with confidence that they'll get paid when Armor releases payment. If there's a problem, either party can quickly enter a dispute resolution mechanism on Armor's platform.
Armor's growth mimics the continued emergence of B2B marketplaces in narrow verticals. Marketplaces in fields like beauty products, film rights distributions, and consulting services understand well the idiosyncrasies of their markets, but they're not generally payment experts. They turn to Armor's API which enables them to build and conduct secure escrow transactions within their marketplaces.
Payoneer acquired Armor Payments in March of 2016 and Armor now functions as Payoneer Escrow, a division within the global payments firm.
"Fortune 100 companies use our company to hire independent local agents across Africa and the Middle East for compliance and regulatory consultancy," said Amine Rachdi, CEO of Local Applicant and an Armor client. "With its escrow payments service Payoneer is the only company that could help us build trust between our Fortune 100 customers and agents, while processing our global payments at scale."
The firm plans to roll out additional services to buyers and sellers that build on that fact that it touches both sides of B2B transactions. Armor is looking intently at developing other trade-related services that could include things like financing, hedging, and inspection.
Payoneer's strong payment foothold with marketplaces should bode well for Armor. "Like PayPal was to eBay, we believe Armor's escrow is to marketplaces," explained Reynolds.