The digital age has knocked down borders and allowed companies to go global, but these same companies still lack affordable cross-border payment solutions.
“We see technology as leveling the playing field, allowing remote businesses to get involved in the global economy,” said Scott Galit, CEO of Payoneer. “Tools and infrastructures that used to be open to only large enterprises are being opened up for SMBs. Payment infrastructures were created for bigger banks and financial institutions, but they suck at working with small businesses.”
Galit has some experience in digitizing new markets as a member of the investment banking team that took eBay public. The idea of creating a global digital garage sale was a game changing idea, but, at the time, there wasn’t a good payment method to facilitate transactions. He recalls how big of a mess it was: In the beginning, the eBay founders used to receive checks in the mail from buyers with a request to forward the money to the sellers. The need for a payment infrastructure led to the acquisition of PayPal, and the rest is history.
Galit believes that B2B marketplaces are in the same situation as eBay was in before its PayPal acquisition.
“Broadly speaking, the pace of tech for businesses finding each other is changing faster than the payments infrastructure,” he said. “Marketplaces all over the world, from used medical equipment to pallets of electronics, don’t have payment capabilities. We’re trying to build an infrastructure to make those markets transactional.”
Payoneer’s technology enables SMBs to accept and send payments. Using banking APIs, Payoneer is able to directly connect companies in two different countries and facilitate payments between the two.
The New York-based company claims 3 million users and has raised hundreds of millions of dollars in venture backing since its inception in 2005.
Payoneer’s cross border mass payout service allows SMBs to pay suppliers in 200 countries in over 150 currencies. The platform also enables marketplaces, like Amazon, Airbnb, and Getty Images, to make automatic distributions to the vendors who sell on them.
Payments are moving faster every day. Payoneer has the ability to do free instant payments if both parties are registered on its platform. But technology can only speed things up so much. To Galit, the breakthrough isn’t creating a faster method of payments or forcing everyone to move onto distributed ledgers and blockchains. It’s about regulation.
“There is a systematic overestimation of the value of technology in financial services. The last mile of digital payments is regulation. Banks don’t get fined because of technology — they get fined because of compliance,” he concluded.