Fiverr’s Payments Chief on Why Payment Complexities Best Left to Experts

To thrive in the age of eCommerce, online marketplaces that match up supply and demand need to inspire confidence that they can move money across borders seamlessly.

Each market has its own payment preferences and its own compliance hurdles to clear in order to ensure that platforms can do business in new markets, unimpeded and uninterrupted.

Shany Koubi-Malbin, general manager and head of payment strategy at Fiverr, and USEND Chief Operating Officer/Chief Technology Officer Ran Grushkowsky told PYMNTS that in the drive to mitigate risk in international money movement, expand opportunities for third-party sellers and attract capital, platforms and other firms that enable eCommerce are best served when they partner with payment service providers.

As Grushkowsky said: “Tech companies don’t need to become payment companies.” Instead, they need to focus on the development of products and services.

The two panelists are particularly fond of solutions based on application programming interfaces (APIs) that can boost eCommerce growth by allowing for quick onboarding and secure transaction management. And, they added, choosing the right payment service provider allows eCommerce companies and marketplaces to easily send and receive payments to and from customers and merchants in developing countries.

Grushkowksy noted that firms like Fiverr (which helps freelancers sell goods and services across 190 markets) have to deal with the challenges of localization. “The main issues we see with localization have to do with complexity, which means processing payments and being compliant, locally, with regulations as they seek to move funds in and out of those countries.”

Without local processing capabilities in countries stretching from India to Brazil and beyond, marketplaces lack a deep understanding of the technicalities tied to preferred payment methods. This is why card authorization rates, for example, are lower than they could be in many markets.

“If you’re global, you may have higher chargeback rates, too,” Grushkowksy added, noting that an ad-hoc approach to security — in which enterprises go it alone, trying to satisfy regulations on a market-by-market basis — can be particularly problematic.

One key problem is sustainability: It’s impossible to have a deep-rooted understanding of each and every market as firms scale. “There are plenty of examples of firms that were new to markets and have been forced to shut down” as they fell short of compliance mandates in a given country, Grushkowsky said.

To address those pain points, said Koubi-Malbin, firms like Fiverr, in tandem with local payment service providers, allow freelancers to get paid in the ways they choose. As she cautioned, “not everybody has a card to pay with, or even has an account with a bank.”

In Fiverr’s case, it’s clear in those partnerships “who takes the liability of pushing funds to our freelancers,” said Koubi-Malbin. Fiverr builds relationships with the freelancers and the rails into the countries, but providers do the heavy lifting.

The Technical Aspects

APIs are critical to connecting eCommerce firms to that market-by-market functionality speedily and easily, APIs are critical, said Koubi-Malbin and Grushkowksy, because they make gateways and payments options easier to integrate with.

“When you process payments, you need redundancy,” said Grushkowksy.” APIs enable USEND to vet vendors and approve them, while ensuring compliance across various markets.

Moving Toward a Payment-as-a-Service Model — Eventually

It’s relatively early days yet for those outsourced relationships, said Grushkowsky. The landscape is relatively fragmented, marked by dozens of PSPs.

In contrast, the web infrastructure business has largely consolidated into the hands of a few dominant providers, such as AWS, Google and Microsoft — complete with a range of services, ensuring that firms enlisting the aid of these providers don’t have to fret about renting data centers or building infrastructure. Grushkowsky predicts that PSPs would move in a similar direction.

“Payments should come to a level of services where you onboard [onto a platform or service] and there are a number of global players who will take care of your payment and payout needs,” he said. With a nod to USEND’s own efforts, he noted that the strategy has been to gain a deep understanding of local regulatory compliance to provide an extensive range of services, connecting on a channel-by-channel basis to optimize payments and authorization that matches with local preferences.

It may come as no surprise that limiting currency risk is a key challenge. Koubi-Malbin said that on Fiverr, buyers (contracting with the freelancers) pay in their currencies of choice, and freelancers get paid in their preferred payment options. Fiverr deals with the fluctuations of the currencies in the “middle” of the transaction, through hedging.

Both panelists noted that crypto acceptance is not part of the equation as a payment option, and both firms are opting to remain on the sidelines, due in part to regulatory and compliance complexities.

Looking ahead, said Grushkowsky, more companies in the U.S. and beyond will offer payment services and fulfillment as eCommerce continues to gain ground. Koubi-Malbin noted that payment processors will look to tackle interchange costs, and a greater number of alternative payment methods will come to the forefront as smaller merchants cement a global presence.