Payoneer turns to B2B to reach an emerging gig economy niche

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Payoneer found its niche providing technology for the likes of Amazon, Google and Facebook to deliver mass payouts to independent contractors, but the company has added options for small U.S. businesses to send payments to vendors and suppliers globally.

The New York City-based company is selling a B2B payment service through its rails that is designed to provide the user experience of paying locally via credit card, local bank transfer or e-check, but faster and less expensive.

Payoneer has spent much of the past two years building technology to address the fast-growing gig, or freelance, economy, while examining the needs for a system that aided both the sender and receiver.
"The gig economy space is exploding, and it is becoming more and more common to have outsourced employees and we are just riding that wave," said Iain McNicoll, vice president and regional head of small businesses, Americas for Payoneer. "We have traditionally focused on the freelancer side on the receiver end, and we consider ourselves to be a receiver's preferred option for payments."

With the new B2B service, which Payoneer revealed Thursday, an e-commerce merchant who hires a virtual assistant in the Philippines to take phone calls, for example, can make payments to that employee, but also sell on a marketplace through the Payoneer receiver accounts — made possible by payments for vendors, suppliers and contractors as needed.

The payments are made from one Payoneer account to another and the receiver obtains a debit card to use as needed to make payments, get money from an ATM or keep the money in a Payoneer account in U.S. dollars to withdraw to a local bank in local currency, McNicoll added.

Payoneer's entry into B2B payments also signals most payments technology companies continue to expand services to stay competitive.

"Five years ago, if you were a small business doing international transfers and payments, you had two choices — wire transfer, which was expensive, and PayPal," said Steve Mott, principal of the BetterBuyDesign consulting firm. "Then the remittance market converged into the cross-border and funds-transfer worlds and companies like Zoom and Transferwise and Payoneer emerged."

Those companies got traction by targeting certain niches, but in the next couple of years hundreds of startups emerged with cross-border and funds-transfer revenue models as part of their business plans, Mott said.

In the past couple of years, even Visa and Mastercard have jumped in with services both for cross-border and gig worker payments.

"So everybody's in the pool and all the niches are being targeted, and roll-ups and consolidation are inevitable," Mott added. "Competition is a beautiful thing. It will be fun watching who gains the most ground as small enterprises discover in a big way that they don't have to pay big money to move it across borders."

For its part, Payoneer has known where this is all headed. Two years ago, the company worked with UPS Capital to power its online B2B payments service for delivery of transactions licensed by escrow in minutes — a process that could normally take up to two weeks to complete through a letter of credit.

"The new payer product reaches a much wider audience than our traditional e-commerce product, which is mostly about receiving payments from Amazon, Walmart and other marketplaces," Payoneer's McNicoll said, adding B2B is a natural evolution given Payoneer's four million users.

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