Payoneer: Leading the Next Frontier in Cross-Border Payments (Rowland Berry, Director of Business Development)
Payoneer: Leading the Next Frontier in Cross-Border Payments (Rowland Berry, Director of Business Development)
In this episode of the Storesome podcast, I spoke to Rowland Berry, Director of Business Development at Payoneer.
Payoneer is the leading cross-border payments platform for businesses. In this episode, we spoke about Payoneer’s origins and evolution, how their services have been impacted during the shift to digital, and future plans. We also spoke about Rowland’s views on marketplaces, regulation, and what trends and shifts Payoneer sees taking place in the next year.
Use this link if you’d prefer to listen to the podcast live:
Graham: Hello to our listeners and welcome to the podcast with Storesome. This season’s focused on the Fintech sector and today I’m joined by Rowland Berry, Director of Business Development at Payoneer. Rowland, welcome. How are things at the moment with this second week of lockdown?
Rowland: Thanks Graham and it’s a pleasure to be here. Well, it’s certainly less strict than last time round, but I’m easing back into spending a lot of time sitting in my front room remotely working.
Graham: Yeah much shorter commute, right?
Rowland: Well yeah, to the coffee machine.
Graham: Excellent. So it’d be great for our listeners to hear a bit more about you, your personal background, and also Payoneer as a business. So if you could just share a bit more information about you and then Payoneer’s history, where it originated and how it’s progressed over the past few years.
Rowland: Of course. Well, I’ll start with me but I’ll keep it short because it’s the less interesting bit. So personally I grew up in consulting, I worked cost financial services, I made the move into Payoneer and I sit within our enterprise team. So this is the area of focus on the marketplaces specifically. My real key area of interest is actually looking at bringing new strategic initiatives to market within Europe, and a lot of that is now around developing our partner ecosystem.
And we can talk about this a little bit and our views on the marketplace future, but Payoneer – for those of you that haven’t come across us – we’re a Fintech provider specializing in the marketplace space. We were founded back in 2005 and we’ve varied. So now we are a payments platform predominantly focused on the marketplace vertical, and I can touch on a few other areas.
And for us, we really look at this from two sides, so one is that we’ve built an ecosystem of sellers. These are the shop funds and individuals all over the world that are selling on marketplaces globally. I think at last count that’s somewhere around the 4 million mark. So there’s quite a few now that have been stacking up within there, and we’re able to offer them a whole host of products and services to allow them to receive and send money right around the world.
The other side of our business is actually working with those marketplaces that the sellers are operating on. So everything from the large global names that we love and hate, from Amazon and the rest, right down to some of those that are perhaps more vertically aligned or regionally aligned, as well as the high level on the product offering that we’ve then built up around this ecosystem.
Clearly a lot of this is around enabling people, wherever in the world, to send money. But I would say as we’ve evolved and grown over time – through this deep expertise – the marketplace has been able to bring other value propositions around risk and regulation and innovation, which we can come to.
Graham: Awesome. In terms of, again, touching on what’s happened in the past six months, the kind of conversations I’ve been having have all been about acceleration and growth and scale, because it’s very difficult to talk about capitalizing as part of this pandemic. I don’t think anyone wants to capitalize on it, but we’ve seen natural growth and also a push by governments to drive online trade. How has that affected your existing customers and has there been a surge in demand for people to say “hey, can you tell me about marketplaces and what I should be doing internationally and cross-border”?
Rowland: Yeah, it’s been a really interesting time. I would say that across the portfolio, there have clearly been ups and downs over the past 6-9 months, but there’s been some really interesting flexibility shown by customers looking at marketplaces. What I mean by this is clearly a lot of the requirements of building a marketplace, reducing working capital and capital expenditure is tied up in your supply chain. Having the flexibility to source products internationally has been a real asset.
We’ve certainly been able to support European marketplaces. At the very beginning of the COVID-19 pandemic with facemasks in Germany, bringing new sellers onto these platforms. We’ve seen the growth of businesses that perhaps don’t traditionally use the marketplace model become a lot more interested. I think certainly in the B2B space, we’re starting to see supply chains move to marketplaces and we’re seeing omni-channel and businesses utilizing both physical and digital business models.
So it’s certainly been a very interesting time. I would say that there’s still a big question that this brings around risk and regulation. And actually, this is something that we’ve focused on quite a lot around ensuring in these ecosystems that fraud is minimized, and that sellers are who they say they are. And actually when you build a marketplace, how do you ensure that you can really operate internationally? Whether this is from the licensing requirements in Europe with PSD2, to money transmission in the US.
Graham: So that’s a really good point, because again, we’ve talked a lot about things like PSD2 and then supplier and product verification. Do you guys offer services to solve that issue, or do you partner with other people to solve that issue?
Rowland: So I think we can cut it into a couple of different categories. So on the PSD2 side, there are some regulations that specifically apply to a marketplace model, and this is something that we help quite a lot of the businesses with, in enabling them to operate the marketplace. And we are leveraging our money licenses. This means that these businesses do not have to go through a very long and costly process of obtaining a license.
I would say from the sort of risk forward perspective, we’ve actually found over the years of doing KYC checks and due diligence on sellers when we’re sending money (as we own both sides of the equation here) we’ve been able to actually develop a whole host of products around fraud, and we call it trust.
So I think we were seeing that around 60% of fraud happening on marketplaces is actually from repeat characters within these ecosystems. And we’ve been able to now leverage this as a service; we provide a marketplace.
Graham: Okay. So it sounds as though over the past six to nine months – and part of your pain is evolution – is that you’ve then started building on your stack of solutions. So the PSD2 is obviously something that’s been driven via legislative change, and the fraud piece is around what you’ve experienced in the market. How do you develop your products and your solutions?
Rowland: Yeah. So again, we think the marketplace is sort of one side of the equation and the sellers are on the other and how we drive for product innovation on both is varying. Clearly regulation is driving a large chunk of it; our focus on really being a global platform is core to this. So I think our marketplaces are seeing such a change in consumer behaviour right now, and they have to respond to this fairly quickly and they need the payments infrastructure to be able to do so. I think one example of this would be payment acceptance. I think large parts of the globe that have not necessarily been as advanced in digital payments, are rapidly adopting new wallet solutions or local payment methods, or even buy now pay later products.
Marketplaces have had to have been able to adapt and utilize these. So we’ve done a lot of work in our merchant services space looking at payment orchestration to allow marketplaces to be able to connect to new payment methods. So thinking back to your point, yes, certainly risk is driving it. Globalization is driving it; technology is driving it, as well as competition.
Graham: Awesome. It sounds as though there are roadblocks and challenges and you’re creating solutions for those. What are the big call outs, apart from the risk and the PSD2 that you think is relevant right now during 2020, and what you might foresee over the next six to twelve months?
Rowland: We still see such complications in just operating internationally. I know this is kind of stating the obvious, but these marketplaces aggregating services right around the world, does create such a layer of complexity. Certainly when you’re dealing with parts of the world that are less catered or structured with banking infrastructure, and with consumer behaviour being very different.
So I still feel that this is a large proposition that we’re working to drive efficiencies through. Clearly the adoption of technology and digitalization is still one which is driving a huge part of this business model for clients. It’s being able to say that that our clients are still customer-centric and I think this becomes a key issue here. If you look at marketplaces now, I think that stems back to the partnership perspective: how do they drive value through embedding financial services or anything else within their ecosystems? Marketplaces are moving to create a lot of other opportunities to provide services to those sellers and buyers that are offering that. And that’s a lot of what we’re looking at, which is through innovative collaborations and partnerships. How can other things be brought to add value and stickiness to these ecosystems?
Graham: Awesome. So some of our listeners won’t necessarily be as familiar with Payoneer and the solutions it provides. You talked about having 4 million SMBs, or 4 million people within your customer network. But I presume that there’s a tiered approach in terms of the people that you work with, so it’s a two-fold question. It’d be great to understand where Payoneer sits for operators who are sellers effectively, and then also how you then work with marketplaces themselves. Because I know you work on cross-border transactional pieces and the payment processes, but it’d be good to understand both sets of user cases.
Rowland: Of course. I think on the seller side – so those that are selling on these platforms – we’re able to offer an account to these businesses that has the availability to receive funds wherever around the world and a whole host of different currencies. We actually now support 200 countries and territories, and I think I lost count at around 150 currencies. So we’ve really made it our business to ensure out of our competitors, that we go for the very global approach in coverage. And then with these accounts sellers, we’re able to do supplier payments. They’re able to withdraw these funds either to their bank accounts or use prepaid cards and a whole host of other solutions around this to help with tax and working capital solutions.
On the other side of the equation on the marketplace – the operator side – we came from the pay-out world. So obviously we were facilitating the pay-out capabilities for these platforms, again with the ability for them to do the currency, local pay-outs where possible. So we provide an orchestration layer to allow our marketplace to connect to well over 100 different PSPs and APMs. We then are able to offer settlement solutions around the world in a whole host of different currencies. We’re then allowing them to do bulk pay-outs and then at that point, leverage our other capabilities. As we say, whether that’s around things like KYC or FX capabilities, there’s a whole host of other value to add.
Graham: Perfect. In terms of the cross border and the supply chain piece, what you said about all the value add that you’ve done in the platform that you’ve operated and built. Have you seen an influx of people adopting digital payment in terms of what’s happened recently, so they can process quicker and move those products across quicker, or is it similar to what you saw in 2019/2018?
Rowland: We’ve certainly seen an uptake, and I think that when you take the global perspective, it’s really interesting to look at this as different behaviours by region. There’s certainly been a rapid acceleration to using digital methods and digital payments and those exploring the digital route, but Payoneer are not solely operating the e-commerce vertical.
We started within e-commerce and built our expertise around this, and then the marketplace model was adapted to other verticals. Think, for example, about freelancers and the gig economy, or even then looking into travel and vacation rentals. We’ve certainly seen no surprises here; a bit of an interesting divergence in uptake.
So everything within vacation rentals and travel has been a particularly unpleasant year, and those with any kind of commerce has certainly been a lot more interesting, but again, this is still within certain sub-verticals within e-commerce. We’ve been seeing a bounce back now, but during the last six months, a lot of the entertainment space took a massive dive, and we’ve seen that DIY services and home exercise equipment has been booming.
I would say a lot of this is now quite comfortable in the digital medium and I would say that a lot of these trends are here to stay. I think any kind of research that you read on the subject will say that this generation of people that weren’t necessarily comfortable operating through this medium, have now found that this is actually something that’s safe, secure, and very practical.
Graham: Understood, understood. So in terms of Payoneer and how over the past 6-12 months you’ve been growing as a business, am I correct in thinking that you acquired a platform called Optile last year? What was the understanding and the value add for acquiring such a platform?
Rowland: So this was our move into merchant services, and we published a few articles at the time. So for those that are not from the payment world, we’d always sat on the pay-out side, working with the disbursements and providing a whole load of treasury and services to the marketplace. We didn’t do acquiring and payments exceptions, per se.
However, with the acquisition of Optile, this is a technical layer that sits in front of your acquirer, or your PSP. This is kind of a smart data layer that allows you a whole load of flexibility to connect to different providers. But then on top of that, it allows you to one API, to manage and smart route based on a whole load of different rules that you want to program into your console or dashboard.
I think one of the rationales and certainly really interesting adaptations of this is a couple of use cases. One is: think of a marketplace that’s operating in a couple of regions and is looking to expand to a new territory or geography. They would, through one API, be able to connect to a whole host of other local PSPs that would specialize with higher acceptance rates in that region. This really helps the business scale a lot quicker, certainly given the competitive nature of the market at the moment.
The other use case is around some of these larger businesses that have a whole host of different acquirers and PSPs already. This allows them to optimize who they’re using, so based on whichever of these rules and functionalities that they build into their routing, they’re able to choose by rates or by bins, which provider they’d like to use and in which environments. So back to our original point, this is part of facilitating an open payments platform end-to-end now across the marketplace business model.
Graham: Understood. So effectively, what you’re trying to do there is you’re making global, local. You’re effectively saying: these are the most trusted and used payment conversion sites, then effectively you’re enabling those on a territory by territory basis. Is that correct?
Rowland: Yeah. So through our knowledge and the team at Optile’s knowledge of the payment acceptance world, they clearly have a depth of information around different providers and making sure that they’re connected to the best in each region for you to then utilize the payments that you’re using in that space, as your customers demand.
Graham: Excellent. Okay. So in terms of how Payoneer sits in the space, you’ve obviously been busy.
Rowland: Yeah, it’s certainly been an interesting time. If you check out the news on our website, we’re now around 1500 people. We have 20, 22, maybe 23 offices now. We process quite a sizable chunk of volume each year for our customers. It’s certainly a really interesting time; we keep going from strength to strength. But I think also if you look at the market that we both operate in, marketplaces are really going through a very interesting and exciting time now, and it’s certainly interesting to look at all the new use cases and innovation that’s happening within the space.
So COVID-19 has been a challenge for everyone. I would say it still proves to do so, but it’s been great to be able to help our customers respond and really give them the flexibility that they need to keep on operating.
Graham: Completely agree. And I think providers like yourself are seeing the future there. I was reading the other week that effectively the past 6-9 months has compressed digital acceptance engagement and acceleration by 10 years. I don’t know, 10 years is a bit long, but effectively people who weren’t doing anything digitally – with the closing of bricks and mortar – it’s made them stand up and think about what they’re doing in terms of their omni-channel solution. I think service providers and businesses like yourselves have already invested in that platform to add scale, because from the amount of customers and the tools and functionalities you’re offering, it’s already there, it’s already in place.
So I think it’s very interesting to see over the next 6, 12 and 24 months what’s on the horizon. Is there anything specific on the horizon in terms of functionality or product that you’d like to talk about that’s due to land in the next year or towards the end of this year?
Rowland: I think for us, it’s like a constant iteration of what we’re doing. We look to keep on broadening our partnerships to ensure that we have the global scale, which includes new technologies that are coming to market that are useful. I think you’ll see recent things that we’ve been in the press launching, one of which we call green channel.
This is actually like a seller recruitment product. So the idea is that we have all these sellers within our universe that we have already performed due diligence and checks and KYC on. And we’re actually now able to make recommendations to our other marketplaces, other operators, to be able to recruit some of these sellers and then on-board them in a very quick and seamless way.
I think looking to the future, clearly partnerships are driving a lot of this, right? And I don’t only mean within Payoneer’s product portfolio, but there’s also looking at how we can embed some of our services and features within our marketplaces. Increasingly you see marketplaces moving to offering financial services products themselves, but clearly a lot of these are not necessarily built in-house. A lot of these are done through partnership and white labelling or anything of the sorts. And this is just an interesting space that you see a lot of our competitors and ourselves looking at, which is something I’d say to certainly keep an eye on. And I think for us, it’s just constantly building now our merchant services business and everything that we’re doing now globally with the larger operators.
Graham: Yeah, I completely agree with you there in terms of things like pay later, recurring payments, those kinds of solutions sitting on marketplaces have surfaced a lot quicker now. You can see again with just how people are trying to budget and finance themselves over Christmas. You know, buying Christmas presents or going through black Friday, people are looking to spread those payments over a longer term. So I see that’s that really thinking about how you can convert people, but offer the right solutions where they normally offer them on normal ‘.com’ propositions rather than on a marketplace proposition.
Rowland: Yeah, I think one of the biggest changes that’s come out of this is clearly the consumer behaviour, where you see some interesting partnerships. I mean, looking at the likes of these buy now pay later products, it’s how the consumers are becoming more comfortable with utilizing these, and then how businesses are able to incorporate this into their standard checkout options. I would say some businesses are probably more advanced than others in understanding the risks that it presents. And there is another ethical question on how comfortable consumers feel in taking on this sort of longer term debt. But yeah, we’re certainly seeing adoption right across the space.
Graham: Yeah, completely agree. So just to wrap everything up, what we like to do is just to have one final piece from you, ultimately in terms of one key takeaway. What would you give as one piece of advice to the people listening today?
Rowland: That’s a tricky one. Looking at the experience that we’ve had over the last 6 months, there is positive stuff around us, but I would still say we’re in for a bit of a bumpy ride and a lot of uncertainties. I think it’s really about understanding this kind of flexibility, adaptability, and priority in what goes forward. What I mean by this, is businesses that were investing in a whole host of additional initiatives, are now pulling back and focusing investment on their core, and therefore leveraging third parties a lot more to ensure that they are taking some of the burden and risk of operating new spaces.
From Payoneer’s perspective, that means we would view ourselves as probably one of the more flexible solutions that you can have as a marketplace payment platform. We are allowing our customers to make a lot of choices and adapt region by region and vertical by vertical. And this I think is the core of it, certainly as we go through the uncertainty over the coming months, is to ensure that this is built into your core model and you have a piece in something which should not necessarily be core.
That your payments function is secure, that it’s regulatory compliant, that the risks have been managed, and that you have the kind of tools and products that your customer wants, I think is paramount. And this is where we are really doubling down for now.
Graham: Awesome. That’s great. So thank you so much for your time this afternoon, I really appreciate it. If our listeners want to find out more about Payoneer, what’s the best way to find out more?
Rowland: I would send them to our website, and if they have any burning questions, I’m more than happy to take them. Contact me via email or LinkedIn, I’ll be more than happy to talk.
Graham: Fantastic. What we’ll do as we share this on social is that we’ll be tagging you and sharing some of your details there. So if people do want to get in touch, they can do so directly. So I’d just like to, again, thank you for your time this afternoon. It’s been really interesting to find out more about Payoneer, the solution providers, how you’re enabling brands, retailers, and businesses to both trade and build their own marketplaces domestically and internationally. Thanks and have a good rest of the day!
Rowland: Thank you so much Graham, it has been a pleasure.
Graham: Thanks Rowland.
I hope you enjoyed this piece and many thanks to Rowland for contributing his insight.
If you’d like to learn more about Payoneer, you can learn more on their website http://payoneer.com.
If you’d like to learn more about the future of marketplaces, we’d be glad to help you. Get in touch today and book your free 90-minute discovery session.