Payoneer buying Optile to add consumer payments to its B2B mix
B2B global payments provider Payoneer is acquiring German fintech Optile to expand its services to include consumer-to-business payments acceptance.
Based in Munich, Optile provides a cloud-based payments orchestration platform (POP) to merchants that allows them to add different vendors for consumer payments acceptance, B2B bill payments, tax remittance, risk management and more. The acquisition enables New York-based Payoneer to accept consumer payments, something it has not been able to offer to its clients.
The 75-member Optile team will continue to be led by Daniel Smeds, founder and CEO of Optile and former CTO at Wirecard. No financial terms were disclosed, but the deal is expected to close in the next two months, pending German regulatory approvals.
“Optile not only gives us the capability to accept consumer payments, it gives us a leading edge in payments technology," said Scot Galit, CEO of Payoneer. "In adding their payment orchestration platform, it is the first time merchants are put in control of the payment flow, since its platform is designed to allow the owners to choose which providers they want to work with, instead of being told by their merchant bank.”
Payoneer has traditionally focused on the business side of the payments flow in a transaction by offering domestic and cross-border B2B services, such as its recent deal to power the B2B payments platform for UPS Capital, a division of the United Parcel Service. For example, when a consumer rents a room through an e-marketplace such as Airbnb, Payoneer’s role has been to enable the marketplace to pay the hotel owner or room supplier.
The other major element of the Optile acquisition is that Payoneer intends to sell the POP service to its clientele of businesses, ranging from small shops to large enterprises. Optile had been primarily focused on enterprises.
“New entrants into the Payments as a Service market has been exploding," said Tim Sloane, vice president or payments innovation at Mercator Advisory Group. "Initially most of these platforms have a focus on a specific vertical market. For example, early on Payoneer was focused on payouts to part-time or gig workers. This vertical focus is sometimes driven by a go-to-market model and other times driven by the platform’s available payment networks and technology. Regardless, over time these platforms tend to expand to address additional market needs.”
The Optile acquisition is likely to be the first of many expansion efforts by Payoneer since it hired FT Partners in July to explore options for its expansion. Fueled by more the $270 million in capital raised in 13 funding rounds, according to Crunchbase, a website that tracks investments in private companies, Payoneer has a deep war chest for expansion.
“We work with a number of marketplaces including Airbnb, Rakuten, Mercado Libre and help them pay the supplier side through a single API handling multiple currencies, tax remittances and more," Galit said. "However, all of these businesses are struggling to take advantage of selling to consumers and now with this acquisition it gives us an opportunity to help them manage the buyer side of the transaction."
Galit noted that traditionally, smaller and midsized merchants are told by their acquiring bank or payments provider which services they need to use for services such as bill payments or risk management. Using the cloud-based POP service will allow the small business to add services from different vendors as it chooses.