When Paypal competitor Payoneer has raised $8 million in a Series B financing from Greylock and Carmel ventures. That brings the total the company has raised to $14 million. (Greylock led the Series A).
Payoneer’s advantage over Paypal in the micro-payments arena is that it makes international payments easier by not requiring a bank account for verification. Websites like iStockPhoto or Metacafe can issue pre-paid Mastercard debit cards to their customers and transfer funds electronically to the credit card account. The account can be used as a regular electronic payment transfer system as well similar to Paypal.
The Israeli startup (whose headquarters are in New York City), will use the new cash to fund expansion into more markets and invest in technologies to detect and prevent fraud and abuse by criminals and terrorists.
If you are going to go after a niche in the payments industry, international payments is about as big a niche as you can get. But it can also be a dangerous game in the post-9/11 world.
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I don’t see Paypal suffering from this competition anytime soon. I think its Paypal vs. Visa, although they do work together on some occasions (ie they are not direct competitiors).
Hmmmm…prepaid credit cards seem to have an upfront charge of $5-10 to even activate them before you can add a balance to them. (So paying $15 for a card will actually only give you $5 of spending money).
Who’s gonna eat the cost of doing this for all those 13 yr. olds???
Also, Paypal’s reasoning for verifying bank info is to make sure people aren’t setting up a bunch of random accounts in case they need to reverse charge something or whatnot. I’d never use this service to buy good or accept money online - there doesn’t seem to be any protection. (And debit cards lack the protection that credit cards get).
Hmm.. i don’t see much value here.. or
i don’t understand this..
May be since it’s worldwide, something useful here?
From a compliance perspective, this seems like a tougher road to hoe than for most money transfer companies. Since Payoneer is doing this through a U.S. bank, it will be subject to bank-level “know your customer” (KYC) requirements rather than money-transfer level requirements. This holds true even though Payoneer is creating a sub-account system. So I’m curious how Payoneer is doing online KYC for these international customers. I’m even more curious which bank they use, since most would shy away from this sort of business model.
I do like that they’re leveraging the ACH system in the U.S. to handle payments. That’s great. But to this observer, the future of global payments rests with he who can stitch together some version of a global ACH system. My money is with VISA, and even they have a long way to go.
Since I live in South Africa, I was quite interested in Payoneer’s offering, and decided to apply a few weeks ago. But they have a strange business model! They don’t offer the cards directly, but through selected “partners” across the world (perhaps to circumvent the KYC requirements?). When I contacted their customer support for names of local partners, they flatly refused to disclose such information. I expressed my surprise at this in a reply (perhaps a bit strongly, in retrospect).
A while later, I happened to come across a “partner” that ships the cards to South Africa. Transferred my $30 deposit, entered my info for the application, and shortly thereafter received a response to my earlier support query that they notice I did after all manage to apply for a card. A few days later the application was refused without reason (for a debit card?). I hope I can get that deposit back!
All in all, I find their business model opaque, and am sceptical about how well they will be able to gain traction in their target markets.
If parents or grandparents were to buy this for teens with an additional cost of $10, I bet they would rather buy a gift card to some store and put an extra 10 on the gift card. http://blabtech.blogspot.com
We have partnered with Payoneer and are now able to pay vendors that live in countries where the banking systems can’t quite keep up with todays market. Vendors around the world are no longer having to wait for checks to arrive, Their funds are simply uploaded to their 2CO branded re-loadable MasterCard powered by Payoneer.
Payoneer: Thrive or Fail? http://snurl.com/34f0l [www_thriveorfail_com]
I love it! Prepaid really is a sweetspot for innovation in the card business. In the cleverest of ways, program managers, such as Payoneer, are opening up new opportunities for converting cash and check to card. That being said, I do wonder how sustainable the life of a program manager is. As the prepaid card landscape (legal, regulatory and pricing) continues to become more defined and established, card issuers (the banks) and processors (TSYS, First Data, Metavante) will close ranks and eventually phase out program managers. If I was advising Payoneer, I would suggest that they have a really unique opportunity to master global KYC rules and establish global best practices - that will make them an extremely valuable property.
Philip J. Philliou
Partner
Philliou Selwanes Partners, LLC (PSP)
philip@philliouselwanes.com
I find this system great in order to transfer funds from my paypal accounts to a payoneer card but which one is the best to use?