Yuval Tal Drives Democratization of Global Payments With Payoneer

While political uprisings all over the world are making headlines, another less visible revolution is also underway. This upheaval crosses national boarders and comes at the intersection of payments and e-commerce. The old regime was typified by a relatively small number of large merchants processing large numbers of in-country transactions. The "insurgency" is being driven by an increasingly large number of small merchants located all over the world. And the volume is increasing at a startling rate. Unfortunately, legacy payment infrastructures are not capable of efficiently managing the global aspects of these changing economies. With the help of Yuval Tal and his company, Payoneer, this is quickly changing.

This new world order is driven by industries including, mobile applications, freelance outsourcing, gaming and outlets like the iTunes® store. Comprised mostly of individuals and small teams, these smaller merchants and developers represent the "democratization" of modern day e-commerce. Were this revolution limited to one country, the transition to the new model would be relatively smooth, as payment infrastructures within developed countries tend to be robust. When we start looking at underdeveloped nations -- and cross-border transactions in general -- the efficiencies quickly break down.
Let's take the US as an example. There are three robust payment platforms in this nation: i) the credit card companies (namely Visa®, MasterCard® and American Express®), ii) the Federal banking system with paper and electronic checks (ACH), and iii) PayPal - the predominant alternative payment network. Keep in mind that only the latter two have historically been used to pay merchants. We will see momentarily how Yuval Tal, Payoneer and the branded prepaid debit card are changing this. Now, consider a native US application developer selling its wares on platforms like iTunes. For this developer, getting paid is easy. Most application stores will tend to remit payment by ACH because it is exceedingly inexpensive.
Most developed nations enjoy the same basic infrastructure with some subtle differences. Getting paid in-country is relatively simple, with multiple choices at varying costs. In developed countries, like the "G7" nations, vendors may get paid via direct debit or via wire transfer. PayPal and more localized alternative payments also exist in most of these countries. Vendors and sales platforms usually arrive at a payment choice based on cost and convenience.
Now, let's take the case where the developer and the sales platform are in different countries. All of a sudden, payment options become a lot more limited, and have a lot to do with sophistication of the banking systems within the respective countries. Generally speaking, it has always been possible to remit payments via wire transfer. Unfortunately, this method can be time consuming and expensive. Usually, both payer and payee incur a fee, and these fees tend to be a lot more expensive than ACH (in US) and direct deposit elsewhere. What's more, in some countries it can take up to 10 days for a wire transfer to clear. But, what about remitting payments to vendors in countries with less developed or more restrictive banking systems?
"When you discuss the democratization of e-commerce, the last places you probably think of are China and Russia - former bastions of anti-capitalism," says Payoneer CEO, Yuval Tal. "Interestingly enough, both areas are becoming major players in the digital world." It is widely accepted that Russia and China have developed a reputation for producing some of the world's best educated software engineers. Many of these engineers are writing apps for mobile devices and freelancing their skills to companies across the globe.
Getting paid in these countries has not necessarily been that straightforward. Of course, making in-country payments has always been the easiest. While not as developed as the US or EC, these banking systems are capable of processing paper checks and various types of electronic interbank payments within the country. But, what about cross-border transactions? It is said that nature abhors a vacuum, and this can be seen in both China and Russia. Alternative payment systems like Alipay in China and to some extent, WebMoney in Russia are trying to fill the void. Both are leading "third party" payment companies within their respective countries, and both are trying to augment their cross-border functionality.
Competition for international remittance is heating up, and the credit card associations like Visa and MasterCard may very well have the greatest advantage. "Why should vendors and digital merchants spend money to develop a robust international remittance solution when an existing network can easily do the job." asks Tal? "Why string up 15 square miles of copper phone lines when you can put up one cell tower?" The card brands offer a sophisticated, well developed financial network. People like Yuval Tal have leveraged this network to create reloadable pre-paid debit card programs that make it possible and economically feasible for vendors to get paid on their own debit cards regardless of where they live. These cards can be used to withdraw cash in local currency at millions of ATMs worldwide. They can also be used to buy goods and services from merchants accepting the brands.
The democratization of e-commerce is well underway, and the international payment infrastructure to support it is following quickly behind. Traditional bank payments are giving way to third party alternatives. It should be no surprise then, that people like Yuval Tal, his company, Payoneer, and the ubiquitous debit card card may offer the cheapest, most expedient solution of all.