Inside Payoneer's Stablecoin Stack: SMB Payouts, Off-Ramps and Choosing a Partner

Roland, how's it going?

Hey, guys. Kids. Kids. How are you guys?

Doing great. We're happy to have you Thanks

for having me.

Well, we're we're both Zach. I'm Zach. You can call him Z, though, but we're double Zach today. Or my other Zach hosts certain segments of the show. Other partner, Drew, he just had a baby. So we'll give him give him a little bit of a break. But thanks for coming on today. We're excited to to dive into the the world of Payoneer, and it seems like you've you've only been there for for a short little stint. I think it looks like seven years. Oh, okay.

So definitely give us a introduction, maybe where you started with the company, and give us a little peek into, like, how you've kinda seen the company evolve in the in the past seven years.

Yeah. I'd love to. So, yeah, seven years does does seem like a little while now. I think I joined the business. I'm so you're not so familiar with Payoneer. Obviously, we're we're a cross border fintech platform. I actually joined very much inside our marketplace segment. So we help a lot of the large platforms payout to suppliers and sellers, mainly into emerging markets. That was always the differentiator in the network that we built.

And over the years, of evolved into roles across strategy, products, product partnerships, and then into digital assets through those. And so today, I spend a lot of time looking at what is it that we build and create for the small businesses that are on our platform, and Payoneer has a very strong kind of presence in b to b payments. And and continue to look at how do we keep supporting those large marketplace platforms as they pay their suppliers. So it's been a journey.

Yeah. What was it let's go into the kind of the more stable coin digital asset focus of this conversation because we've, you know, we've talked with Malcolm Clark, VP of digital assets at Western Union, in a very kind of different journey. His mandate was to come into Western Union and to stand up this whole business line. It sounds like this kind of crossed your desk, you know, in in the middle of a career in your career.

So when did you start kind of hearing whisperings of of Stablecoins, and what was maybe more of your journey into going zero to one and to eventually, you know, launching Stablecoin products and maybe even what was it what were you seeing with some of your customer base that really said, hey. We we need to go deeper into this product line.

Yeah. So I think we started seeing let to give you some context, Payoneer, large marketplaces, a lot of b to b SMBs, I think marketing agencies, think ecom, sellers, think contractors, etcetera, and a lot of freelancers on the platform. So given that we're in a lot of different markets, we kind of get to see, like, these things evolving in in many different ways. I think, obviously, like, a lot in this space, we saw a lot of it on the contractor freelancer side of the platform first.

And this was a few years ago, sort of came across it as we were looking at how do we deepen the financial offering for for our customers. And so we had a lot of conversations around, like, hey. Hey. I've got customers wanting Bitcoin. How do I put trading capabilities into the platform? And we kind of explored those two different kind of guises at the time.

I think we saw them at, like, that maturing into actual, like, business payment needs increasingly and moving more upscale in terms of the size of the users that were requesting it. So it might have started with people, like, really hedging and and getting access to dollar. Then we saw people using the card to actually pay people with stablecoin or even buy stablecoin on exchanges.

I would say, though, the real, like, turning point in the last kind of twelve to eighteen months is I actually now have a lot of businesses that want it for, like, real business purpose. They need to pay a supplier, whether that's a contractor, whether that's a good supplier. They need to receive stable coins for things that and services rendered, etcetera. These are businesses now that are using it as their transaction currency.

And then we have a set of people that have some very unique problems that they want to solve with stablecoin. They don't really care that it's stablecoin. They need to have something that if you had an ad campaign running at the weekend and it's gone viral, I need to keep funding that ad campaign for my clients. So they're looking at how to use stablecoin on card or they're looking at how to access these rails twenty four seven.

Where do you think about like Oh, go ahead, Sam.

See, you take it. I took the last one. I was just gonna say you you talked about some of these big marketplace partners. I see some of the biggest marketplace names in the game up here, eBay, Airbnb, Amazon, so on and so forth. Huge marketplaces, but you also mentioned a lot about these smaller businesses. When you're hearing about demand for all those functionalities, you just kind of rattled off in the evolution of how do we move money globally.

Is that more on the SMB side, or is that more of this enterprise marketplace

side, or is it a little bit of both? Yeah. I I think it's an intersection. I would say the SMBs are driving it today. Right? We had the freelancers, the contractors, the individuals. Now we're seeing those small businesses that pay a lot of them, that receive payments from them really kind of leaning into perhaps stablecoin as the form factor. I need to do something in USDT or USDC primarily. I think the marketplaces and the other platforms or the larger enterprises are interesting.

I think I mean, they come to us already to be able to pay out in a lot of currencies and fiat around the world. We have that last mile connectivity. A lot of the conversations that we have with them are, hey. Like, we hear about stablecoin. We hear about this technology shift. Like, will that help us drive faster, cheaper payments? Will that help me manage, like, better prefunding models?

Some of those platforms come with a very, like, specific need, which is, again, I need to pay a subset of my suppliers in stablecoin. And so we see this differentiation between those that obviously wanted to have access to the technology kind of upgrade, but need to operate in fit versus those that need to intersect with the the suppliers that want to manage stablecoin.

Interestingly, we are seeing some of the platforms looking at their longer term financial strategy and look at how they build these other fiat products around yield or cards and is stablecoin a better form factor for creating it. But I would say the maturity curve is still a lot earlier than you see with SMBs.

Yeah. And as you alluded to, sometimes people are going to ask for something like this or they're gonna say something like USDT. But other times, you're solving a problem. Right? You're you're solving a problem, and it's like, they don't even need to necessarily know under the hood. And it seems like you could do that at your discretion in the sense of, hey. How do we help you actually move the money in the way you need to? How do we help help help you actually scale this global business?

This might be the best pathway. And whether or not it's visible, we'll see.

Yeah. Yeah. Thank god.

No. I was gonna say, Roland, we've kind of seen this this trend of conversations. It's like stablecoins. Now what? We've seen Circle make some acquisitions with Tazepay. Kind of this trend about building out payment networks and that the last mile is still the biggest unsolved problems. There's some different you know, differences in opinion on how that problem gets solved. Rain's also trying to tackle this problem with a recent product announcement today, with Global Payout Rails.

I think when you were on talking with MoneyCode on Chuck, you were talking about how off ramps remain the primary hurdle here. How how do you think about solving this problem? Is this a, you know, stablecoin and then, local, you know, non USD stablecoins? Is that the way to solve this problem? Is it working with institutions on the ground? And maybe how has this conversation evolved maybe even since you were talking with Chuck since six months ago and how you think about the last mile delivery?

Yeah. Because I think our North Star is and like everyone, right, like, need to make sure that it's as interoperable as possible, like the on ramp or the off ramp. And specifically for for paying in our customers is looking at it for the use cases we support. So those b two b payments, paying third parties, or drawing to potentially my own wallet or bank account somewhere.

We started down looking at Payne has built essentially a a large payout network over twenty years that is part of our core proposition to platforms and SMBs today. And really at the start of this, we looked through, like, how do we make sure that we can leverage that asset, like leverage those rails, those relationships. But really the unlock for us is understanding the compliance, the operations. The happy path is great, but what happens when payments are rejected?

How do we manage source of funds across the bank network that supplies those off ramps? And so a lot of the work that we've been working on for for this year and last was looking at how that becomes reality. I think we're we're fortunate on two lenses. Right? Like, Payoneer has built institutional trust with a lot of that network to help us essentially manage those relationships, unlock those off ramps.

And the second one is, I guess, with the scale that we work at, we have the ability to kinda manage liquidity in the network to make sure that in in the markets that the money needs to be, it can be there as quickly and as cost effectively as possible. We do see that, like, for adoption to be real, this has to be solved.

And one of the challenges we've seen is that, obviously, the the regulation is changing market by market, requirements are changing kind of day by day, and really staying on top of a lot of the ambiguity that also comes with that is is a a challenge. Right? And we're eyes open to that. Yeah. But for us to have a global solution to be able to sort of power this, like, is a prerequisite. I would only add, I think, when we start talking about other coins, and and you mentioned this a little bit. Right?

Everything today, we see most of the flows being of the USD backed coin needing to off ramp into a local fiat currency. Increasingly, over time, we're we're interested and kind of started exploring what it would look like for other on ramping and off ramping tokens. Does this help us drive, like, better liquidity management? Does it unlock other benefits in cost and speed? But I think it's still very early to understand what that looks like and obviously for the regulatory environment to support it.

What thinking about some of these challenges you're referencing, this is obviously there are huge opportunities in this. We're talking about across the scales of businesses and across all the borders of the world, many growing economies and sort of the interaction between the more developed and the more upcoming economies. Like, I assume Payoneer's a major player in this space. I'm sure you're winning in so many ways, but what are some of those challenges that it's like, oh, this is the really hard stuff.

Like, it's barriers that stand in your way, but it also potentially makes it defensible if you can figure it out.

Yeah. There there's a list that we're working through. It depends on the day. And I think, look, let starting from perhaps, like, the top of the stack going down. Right? So the customers, even just something simple as that. I think there's a lot of education. We're fortunate in that we have a lot of SMBs that are already kind of operating in the space. They'll understand, I don't know, chains and assets, and they have an understanding of the expectation.

But making that workflow feel seamless, making that experience kind of native to a business is critical. We're trying to make it as, like, kind of intuitive as possible in the platform for them to be able to access the services much in the way they do with with Fiat. I think there's obviously a subset of customers that are not as native to the space, but need to address the same pain points. So how do we help new businesses get comfortable with the form factor?

Getting a bit of deeper into the stack, think, like, really to get global to get interoperability, managing all of those operational flows, managing all of those kind of unhappy flows is a real challenge, Not only from systems, getting different systems to talk, getting it sort of twenty four seven, getting ops teams or systems and workflows comfortable with, I don't know, managing returns on chain, such like that, in a way in which doesn't create huge blockages to the customer experience is really kind of front and center to be able to deliver this.

I wanna ask about we we've kinda had this idea of, you know, it's very familiar to everybody in the space of the changing of the infrastructure, changing, you know, ACH, Swift to Sablecoins. What about the internal changes kinda like you happen with, like, you mentioned the operations, the payment flows. You know, Payoneer's organization with hundreds of thousands of people. What does it take to you know, you may be a 100% on board with stablecoins. Your CEO may be on board with stablecoins.

But what does it take to actually educate the the organization and say, like, hey. This this is where we're going. What you see maybe sometimes in the media isn't what we're doing. Right? This is this is just money moving better. What has it been like internally helping, you know, the people you work with, your coworkers, get up to speed on this technology and say, okay. This is how it's actually making our product better. Like, the mission the goal hasn't changed. The mission is the same.

Make the best payment product. We're just using different tools.

Yeah. I think it's it's definitely a journey. Right? And I think it's also like a story of innovation and getting people comfortable with with innovation and the ambiguity that's still coming with a space that's maturing. I think at the beginning, a lot of people were kind of trying to understand how is it different from Fiat. And I think the point that we've spent a lot of time early on is that it doesn't have to be better than Fiat everywhere.

Actually, Fiat is still very good in certain corridors, certain use cases. But that this is something that customers are asking for. This is something that is not going away, and that it does deliver kind of foundational benefits to how we move money in certain use cases and corridors. I think for us, it was kind of like educating the customer facing teams. They were obviously closer to the people demanding it, the people that are kind of exploring it. I think there was a lot of support there.

It made a lot of sense. You don't always have to be right if the customer kind of wants it. So we need to find a way, obviously, in a compliant and sensible way to to provide it. I think as we look deeper into the organization, right, so look at some of the product teams, some of the engineering compliance teams. There are big kind of learning gaps there. We've been fortunate to work with partners, obviously, in the industry. We've been working on upskilling through a lot of training and things.

But, generally, I would say, look, that people are excited about it. It is new technology. Some of it has a lot of promise, and people are really leaning in to understanding where, as you kind of alluded to, like, the hype is is real or it's coming. And the others are kind of taking a very pragmatic view on, well, what is possible today and what do we need to manage today. That's kind of how we entered the space with the partnership with Bridge Yeah.

Making sure that we had the ability to start learning as quickly as possible. We got a product up and in market through the partnership using a lot of their pet licenses, their infrastructure. And then as we choose how to integrate it deeper into Payoneer's core workflows and operations, we're able to make sure that we're upskilling colleagues, we're we're learning kind of where we need to to make sure that that interoperability is achieved Yeah. In a kind of responsible way.

You said fiat in some areas is still very good, if not better. Break some of those areas down where it's like, hey. Feals good. Guys, we don't need to change anything here.

Yeah. I it's an interesting kind of debate that we have. Right? A lot of our customers are large b two b customers that are are trading with other suppliers. We offer today USD virtual accounts to allow them to collect funds, hold funds, depending wherever they are. That is still the currency that they need to operate in and to face off to their buyers in, for example. Others choose to have USD fiat USD as the the balance from a personal preference perspective. That is obviously something that's not gonna go away.

But I think when we actually talk about a lot of the promise around the cross border flows, obviously, we sit on flows going from developed to developed countries, developed to emerging, and emerging to developed. Obviously, in the major corridors, liquidity is pretty good and, like, rates are pretty competitive when you go through fear. We've also built a network over the years that has become pretty effective with the volumes that we're pushing through it.

When we look at long tail markets, access to off ramping is in the in the market more generally is still pretty tight. Right? And so for some of the scale that we need, actually, like having the ability to use some of the fiat flows is an advantage. We do see that gap kind of changing over time. I guess if you were building a fintech today from scratch, it would be a very different conversation.

But, obviously, we're in the luxury that we've been in a business that's been in this space for some time and has some of that infrastructure already there, and we had the pain of putting it there over the years.

Yeah. It's always interesting hearing this kind of this this contract int intention, and we've actually heard this with some, you know, legacy I I won't say legacy institutions, but, again, institutions that have been operating for ten, fifteen years and are entering the digital asset space where one, they actually move as fast as a start up. There's kind of this misnomer that like some institutions move slow, maybe some on the, you know, more financial trading side do from the payment space.

We've actually seen a lot of companies, kind of like you said in the Payoneer, once you find the right partner, product's live in six months. The other side is if you were starting from zero, from zero to one, the product, the path probably would've looked very different than the path you're taking just because of all of that that nuance. Maybe macro, and and if you don't wanna comment on this, feel free not to, but what what's your kind of take as somebody who's evaluating strategic partnerships?

You know, it's really we see a lot of payment network on and off ramp companies kind of popping up. How do you start to evaluate them? What do you look for in a partner, from a licensing perspective? And and maybe generally, like I said, I mentioned earlier, the Circle and Tazepay acquisition, you know, are we just gonna see more and more of an acquisition fee?

Are some of these companies actually building in a really solid lane, or is there gonna be massive consultation because most people are kind of building the same thing to some degree?

Yeah. I it's definitely gonna be interesting, I think. And by the way, this is not something new. Right? Like in FIAT, there was also, like, a whole range of different providers and aggregators and aggregators on aggregators that that created this landscape. But typically, when we look at partners to work with, there's some kind of hygiene factors. Right? Like, can they serve the flows that I need to to serve?

And then just saying that you can send money into a certain market, can you actually send it for the type of use case that I want? Third party assessment very different from first party where those funds actually started from on the other side of my platform may cause issue for some, not others. Some of the KYC and compliance kind of requirements are are very specific. Obviously, the way in which they then support that flow, as you alluded to, the licensing, are they wrapping someone else?

Are they actually owning that kind of rail themselves? It comes probably the second tier of questions. Commercials inevitably are there. And in some phrase, yes, the the corridor could be very commoditized. I think that's really kind of a case by case.

Yeah. And and there seems like there's a lot of tension right too from the you know, we've talked to where it's like there's frenemies, coopetition. And again, to your point, they've probably it's probably always been like that to some degree, but it feels, at least from our vantage point, a bit intensified in the past two or three years.

And we agree and you get a lot of, like, conversations of people offering off ramps and often when you get to the bottom of it, it's actually the same provider underneath the the, like, three different people that emailed you that week. Right? And so and actually understanding kind of what is the differentiation, what is the value. Yeah. Like, I think it's an interesting conversation. I don't know where we will see this all end up. Right?

Like, how many of them have fundamentally robust models that can stand and generate, like, revenue or positive margins over time, like, will be an interesting kind of conversation to have.

You Roland, you mentioned Bridge earlier. I know we got introduced through defense. With all these partners, are there any sort of case studies or partnership examples that you're like, oh, this one's really cool. You have stories about?

Yeah. I mean, it's been a as you say, and and you guys know better than I, super exciting space. Lots of great companies out there. It's almost too hard to choose between them. Right? And so as we went through the process of choosing Bridge and as we continue to evaluate these partners, kind of, it is super exciting to see the technology and what's there. And, like, digging into some of these use cases, I get really excited about, like, what we can do, where this is going. And then you kind of roll it back to, okay.

But I I need to solve for what I have today, and that is I need to get to a base level in, I don't know, most of the markets that I'm in. And then you start finding challenge on coverage. Right? And so it that that's probably where we're spending a lot of our time now. Once we look at new partners, it's just how do I get a global solution in place for the business customers on my platform? And then looking at those kind of partners that we wanna, like, bring into the the ecosystem, is a challenge.

Last question here, and then we're gonna go to a quick break for our next guest. Like, I think about just, the seven year journey. Right? And let's say you say Pan year another seven years. What do you hope to accomplish in that time?

Well, no question. Well, you're

stuck. No.

No. Well, I guess, on two levels. Right? So, like, one of the reasons I joined Payoneer, say, one of them was that actually that it is a very global business. Like, our business is cross border payments. We have customers and and colleagues in so many markets. I was privileged. I I started the company in the company in The UK. I moved to California, to New York. I'd love to move probably into Asia or to couple of other markets and really understand the flows, the customers, what's going on.

I think that's actually one of the reasons that I'm really excited about the business in that global nature. I enjoy the challenges. Right? Like, we've we've come up through how marketplaces built their financial stacks. We had to bring, like, kind of products and solutions to market to solve these cross border pain points. We're now continuing to do that in stablecoin. I'd be excited to see how the velocity increases and the the complexity of the products keep scaling. Right? And what is it we do beyond payments?

How do we build the next generation of infrastructure and capabilities for those small businesses or those platforms? Seven years is a long time, so, like, who knows where I'll where I'll end up geographically, but excited to see what we can do.

Well, that's awesome. We're all enjoying this conversation. We'd love to just follow along those next seven years. Hopefully hopefully, stable to have something strong seven years into the future. You know, we're a solid seven months in. But, please, we'd love to have you on in the next, you know, six months or so, check-in, see how things going, and really dive into some of those use cases, I think, with this and this is kind of a just a general call to action, I think, our show. We try to think, k.

But who's actually using them? What are what are those companies that you would never think would touch stablecoins in a million years? And they're like, hey. This is actually where most of our money is moving through now. So, something to bookmark for our next conversation, but appreciate you coming on today.

No. No. Thank you for having me. Love to keep the conversation going.

Awesome. Thanks, Roland. Appreciate See next time. Thanks, guys. Bye.