Cross-border payments firm Payoneer is seeing growth in Asia from local marketplaces, digital platforms and merchants selling internationally. It is also benefiting from a rise in payments from India to foreign marketplaces and contractors.
Asian sellers have become the main exporters to consumer e-marketplaces all around the world, inspired by the success of China’s Alibaba, which prompted huge growth in e-marketplaces, digital platforms and international sellers across the Asian region.
According to research by Payoneer, in 2017 the number of Asian sellers that supply multiple marketplaces in the Asia-Pacific region and the U.S. grew threefold, while between 2012 and 2018 overall sales volumes in the Asia-Pacific e-commerce market grew by triple-digit percentages.
Founded in 2005, New York-based Payoneer recently expanded its offerings to U.S. businesses to make it easier for them to sell overseas, and entered the U.K. market in 2017 to take advantage of post-Brexit opportunities.
While Payoneer is capitalizing on cross-border payments growth in Asia, with BCG predicting 11% CAGR in volume and 7% CAGR in total revenues from 2016 to 2026 for the region, there will also be margin compression in the Asian payments market, according to the
In Asia, Payoneer works with marketplaces such as Lazada, C-Discount and Shopee. Its other enterprise clients include Amazon, Google, Waze Carpool, Facebook, Newegg and AirBnB.
“A significant portion of Amazon’s merchants are located in China,” said Yair Tal, senior vice president at Payoneer. “Our platform handles the payments collection and disbursement for the marketplace as well as tools to deal with sales taxes, risk and KYC compliance issues.”
Currently, Payoneer has about 4 million users from 200 countries on its platform, which enables them to make and accept payments to and from customers around the world in over 150 different currencies.
In August 2017,
Last year, Payoneer launched an
India has become a key focus for Payoneer.
“We’re now seeing net outflows of funds on our platform from India to China to pay suppliers in other countries who are selling to Indian e-marketplace and foreign freelancers selling services to Indian firms,” Tal said. “This is why we invested in acquiring a business license in India.”
Previously, Payoneer saw a trend of net inflows to India, for example U.S. companies paying Indian freelancers. “Payment flows to India are still very important for Payoneer,” Tal said.
In 2017, Payoneer opened a U.K. office to leverage the opportunity to provide U.K. firms with access to non-EU markets such as the U.S., Asia and Latin America. The U.K’s exit from the EU may lead to diminished trading between the U.K. and continental Europe, forcing British exporters to look to other markets.
“We needed to be proactive with Brexit, as the U.K. is such an important market for us, with large volumes of foreign marketplace payments to U.K. suppliers,” Tal said.
In addition to non-EU trade, Payoneer could help U.K. firms with low-cost payment flows to Europe post-Brexit.
“With the EU seemingly committed to a ‘hard’ Brexit, firms in the U.K. would need to shift from using Pan-European SEPA payments to using cross-border payments,” said Patricia Hines, a senior corporate banking analyst at Celent.Hines. “Having said that, if U.K. banks set up operations within the EU, those banks could conceivably process SEPA payments for their U.K. clients.”
Although it was an early player in cross-border B2B payments, Payoneer faces significant competition.
“While Payoneer does appear to be growing rapidly, the cross-border payments market is very crowded, with other players including Hyperwallet, TransferWise, PayPal, Transpay, TransferTo and Tipalti,” said Hines. “There are few barriers for firms in the space launching mass payout or marketplace payment services, as evidenced by TransferWise’s relatively recent entry. Payoneer needs to watch out for competitors, with TransferWise being a particularly well-funded firm.”
Hines compares TransferWise’s funding of $396.4 million with Payoneer’s $270.0 million and Tipalti’s $60 million.
In May 2018, Payoneer announced new functionalities to make it easier for U.S. sellers and small and medium-sized businesses (SMBs) to trade globally. According to Ipsos, only 36% of U.S. online merchants were selling cross-border in 2016.
