Payoneer: Cross-Border Payments Should Be Just Like Sending Email

As small- to medium-sized businesses (SMBs) and freelancers extend their global eCommerce reach, making payments should be as easy as sending an email.

“Everyone wants to get paid or be paid by someone else,” Anand Bindumadhavan, vice president of global banking at Payoneer, told PYMNTS — but in international settings, “this poses a big challenge,” especially for SMBs.

Banks might conceivably be the go-to providers for international payments, said Bindumadhavan, and indeed, banks have been the traditional pillar of the financial ecosystem.

“But there are only a few truly global banks,” said Bindumadhavan. “Most banks tend to serve their local markets — or maybe they extend, a little bit, to regional markets.

The relative absence of truly global players, said Bindumadhavan, has created “significant space” for FinTechs, including Payoneer, to help underserved SMBs gain access to working capital and cross-border payments functionality and grow their businesses internationally.

The greenfield opportunity is there, but the challenges are considerable. Joint research from PYMNTS and Payoneer has found that even while SMBs represent 50% of employment worldwide and have an interest in expanding, 27% of SMBs see the complexity of cross-border payments as a hindrance to their ability to grow. Just 23% of SMBs found their current cross-border payment solutions to be very or extremely satisfactory.

Forging Strong Partnerships

Forging strong partnerships between banks and FinTechs can extend these smaller firms’ reach, he said.

The strongest partnerships have several components in place. They address the risk and compliance components of entering those new markets, as each new country or territory also has its own know your customer (KYC), tax and data mandates. The partnerships also can add resilience to the eCommerce “routes” that are being served by Payoneer at present and in the future, he said. And partnerships make sense only if there’s long-term commercial value in the mix.

“We value those partnerships,” he said, likening them to a “long-term marriage that starts with smaller steps and extends into bigger partnerships over time.”

The advantages that accrue to client firms as banks and FinTechs work together disproves the conventional wisdom that FinTechs are, or should be, gunning to replace banks.

“There’s a reason why the banks exist and why they are trusted — and have been so longstanding,” maintained Bindumadhavan.

For the FinTechs, the approach should be how to better collaborate with the banks rather than thinking about how to displace them.

All of this requires the proper IT and infrastructure as banks and FinTechs come together to expand client firms’ business opportunities.

As a regulated financial institution, Payoneer sees regulation not as a barrier to growth but as an opportunity to enter new terrain, said Bindumadhavan. He gave the example of the recent announcement that Payoneer will soon be able to offer additional payment services to companies located in Singapore. In December, the company received in-principle approval as a major payment institution license holder from the Monetary Authority of Singapore (MAS).

“The markets that we prefer, generally, are the markets where the regulator has full clarity of what it means for FinTech to be there, to provide payments or any other type of financial service,” he told PYMNTS. “You need to be able to comprehend what the regulations are and to implement procedures to adhere to the regulations.”

As he told PYMNTS, “building this financial highway is important for us to be able to enable customers to receive and send money across the globe.”