Payment Methods

Broadening The Online Market’s Reach, Shrinking Complexity


In the world of on-demand, penetrating new markets is a key strategy for acquiring new customers and opening new revenue opportunities. But even with technology as an aid, branching out into unfamiliar territories can be a complex undertaking, and complexity means costs, which eat into profit margins.

In the continuing series on traits that make an on-demand marketplace great, Tomas Likar, VP of Strategy and Business Development at Hyperwallet, described to PYMNTS’ Karen Webster how marketplaces and platforms are often “[held] back from serving more markets” by the complexity of outbound payments. Likar explained that delivering earnings to an independent workforce is a tough task at the best of times, and the difficulty is only amplified when a marketplace goes global.

“Each country is a separate case, really,” Likar noted, referencing payouts to gig or freelance workers in far-flung locales. Marketplaces looking to make a mark in a new country need to “look at regulation and compliance requirements that are different [in each] country. You may have to open a legal entity, and this may not be easy.” As the worldwide dominance of large, multinational banks begins to wane, it’s often necessary for a platform company “to open a local bank account in [specific countries],” which can present additional difficulty.

Once payment mechanisms are established, the actual process of scaling up operations begins. As Likar explained, workers need to be onboarded to “different and bigger platforms. [Those platforms] need to have customer support and help workers get onboarded, and there are new languages and new locations.” Against this backdrop, said Likar, “the overhead keeps scaling up. It’s a big decision when a marketplace wants to go cross-border … They go forward with a plan without realizing all the operational complexities they will face. And then, they go to do payouts, and they see that they have a bunch of manual processes to scale up.” As we all know, in the payments arena, manual processes can lead to inefficiencies, high costs and even unhappy freelancers. “You can send checks abroad,” said Likar, “but people may not like that. You can tell them to use PayPal, but there are also countries where PayPal has not yet penetrated.”

In Likar’s experience working with Hyperwallet to tackle payouts for on-demand platforms, the key to expanding reach, while dialing down complexity, is to have payout processes that shift “the administrative burden onto” Hyperwallet, rather than leaving them to the marketplaces themselves. That’s made easier by Hyperwallet’s single point of integration. “We are a network of networks, and we are the API layer that is in between the banks and the nonbank partners and the marketplace,” Likar explained. “[The clients] say who and how much to pay, and we collect and verify the financial information.” As we have discussed in past sessions of this PYMNTS series, this layered approach enables additional flexibility for the freelancers, giving them the freedom to choose how they’ll receive their payments — whether direct to a bank account or through a prepaid card.

As for Webster’s query about new marketplaces as yet untapped or even demand for physical payments (a humorous example used in the discussion involved seashells), Likar noted that new payment methods can be considered on a case-by-case or country-by-country basis. If there’s sufficient demand — say, with a few hundred workers in a yet-uncovered market — Hyperwallet would elect to open local bank accounts for payment purposes.


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