As we roll out the new LTP, we are pleased to present this conversation between Scott Galit, CEO of Payoneer and Aditya Khurjekar of LTP.
LTP) How would you explain Payoneer in your own words to those who may not be familiar with the company?
Scott Galit) “We have a thesis on why we exist and why there’s a need for Payoneer. Our goal is to simply transform the way businesses pay each other for cross-border sales, goods, and services. Simply put, we’re looking to transform cross-border business payments.
There is a three-part underlying thesis:
- Small businesses of all sizes, all over the world, are increasingly technology enabled, connected and global. We think this is a permanent shift in change of how the world works; it’s a very disruptive force.
- There’s a last mile for money, it’s local, regulated, controlled by financial institutions and we don’t believe that that’s going to change.
- The gap between what businesses in this modern, digital world that is hyper-connected, what their businesses need in order to operate and what the financial institutions are able to provide widens by the day. There needs to be a bridge between regulated financial institutions on side and silicon valley technology companies on the other and we think it’s a very hard thing to do.
We’re very excited, as one of the winners who are building a bridge between those two worlds.
LTP) Did you choose to get into the business (B2B) side of payments & remittances as opposed to consumer( P2P) or was this something that evolved over time?
SG) “It’s really both; the business has certainly evolved over time. Some statistics, to put some numbers around it: Boston Consulting Group (BCG) estimates that there will be more than 50 trillion dollars in cross-border business volume by 2020 globally. That’s 20 times larger than cross-border retail P2P volume. We have an infrastructure and set of capabilities that would allow us to be in P2P if we chose to, but we really believe that there’s many fewer quality options for businesses globally and we think that there is a lot of exciting opportunity for a very technology driven, compliant regulated company to fill what we think is huge void.
Multiple forces are working together to change where businesses are buying and selling to and from the trading partners that they’re working with. There is very little infrastructure and connectivity that is built up to help facilitate those kinds of connections. So that’s what we do, we really look at our job as connecting businesses, professionals, countries, and currencies and re-wiring payment infrastructure in a way that makes cross-border trade as easy and seamless as domestic trade is.
LTP) When you say ‘businesses,’ is there a sweet spot for you? What is the target business that would benefit most from your services?
SG) “We offer tremendous value to internet platforms that need to make payments all over the world. So we work with Airbnb, Google, Getty Images and thousands of others that are sending billions of dollars around the world through us, but the most compelling set of capabilities that we offer is for small businesses and professionals in the developing world.. For example, we can enable a small business owner, say from Vietnam, that’s selling in the United States by giving them a US bank account they can use as if they have a local bank account and therefore they can collect locally in the US.We put them in more control of their money and do it faster, cheaper and better than any alternative would enable. Again, we can provide value in a lot of directions whether it is the internet platform or professionals.
LTP) With one of the couple of hundred thousand applicants that you get each month, typically how long does it take to set up the account? Say, a freelancer in one country and a small business in another, what is the typical process for how things are set up?
SG) “So, the freelancer comes to Payoneer.com and there are several different ways it could go. They have multiple options available for how they want to receive their money; they can connect their bank accounts, sign up for a prepaid debit card or they can use our other products. So once they’re signed up, we will approve the application or check it out for additional review and information collection. About half of the applications are automatically approved, and overall we get an approval rate that is upwards of 80%. The approval can be instant or take a couple days depending on a variety of factors and additional information. After we have an active customer, they can instantly receive payments 24 hours a day, 7 days a week from any of the companies that are connected into the Payoneer network. Our biggest players can send payments and receive confirmation that those payments have been received in real time.
LTP) Dealing with all the different regulations in different countries across the world must be a daunting task. Is this something that’s best to do in house or lean on your partners for?
SG) “This area is truly one of our greatest assets and one of the most significant investments that we’ve made, and it’s one of the things that is most underestimated by companies that are thinking about being involved in payments, especially in global payments. For us it had to be in house, we have to have ownership and control. With that said, there’s nothing or very little that happens in the world of payments that doesn’t involve partners. There’s no question that we surround ourselves with leading experts. We have to work closely with our partners and they have to trust us and understand what we do. The third party testing helps us to further strengthen and demonstrate the controls.
LTP) Are you looking to become the next Western Union and do it better? Or are you looking to solve what PayPal could not solve on the internet across borders? What is your aspiration as a company?
SG) “I definitely do not think of us as Western Union, as it is more of a very legacy distributed infrastructure that is point to point. PayPal gets closer in some respects as an approach to the problem, meaning a centralized infrastructure that localizes in different places and also has the ability to transact in a much lower friction way. We do that part tremendously well yet we’re very different in terms of what we’re trying to accomplish. At the end of the day, our job is to create a uniform platform and approach that allows a buyer or seller anywhere in the world to improve the way that they send and receive cross border business payments, and both sides are working with Payoneer to make magic happen. So we look at connecting into all of the existing infrastructure on the back and creating an application layer above it where we can actually provide compelling and unique capabilities. There are incredible opportunities for us to claim value for our customers and to build something really unique. We’re at this point now where we are getting closer and closer to being able to fulfill the vision.
LTP) So, would you say Payoneer is a technology company first?
SG) “I would say we think of ourselves as problem solvers. We look at compliance, technology, regulation and all of that as the different pieces and parts. We couldn’t do what we do without those and we see the importance of each part. I think the unique thing about us is how we’ve managed to bring all of those things together in one place. I talk a lot internally about how everyone’s job is growth and everyone’s job is compliance. .
What we really try and do is wake up in the morning and think about the problems that we can solve in the world and the opportunities that we can create for our customers.”