India a focus market for us; e-commerce, B2B services propelling growth, says Payoneer’s Gaurav Shisodia

Cross-border transactions can be tricky, especially if you are a small business. Due to various regulatory compliances and procedures, small businesses often struggle with payments from overseas.

Gaurav Shisodia, Payoneer’s Vice President for India, says this is where his company can play an important role. With 2 million active customers (as of Q3 2023), 20% market share of marketplaces and $5.5 billion in customer balances worldwide (as of Q3 2023), Payoneer says it can help Indian businesses in their export ambitions.

In a conversation with ET Digital, Shisodia talks about how small businesses can leverage the company’s solutions, the business growth for Payoneer and why it is better than banks in handling cross-border transactions. Edited excerpts:

Economic Times (ET): What does Payoneer provide and how many businesses do you reach out to with your solutions?
Gaurav Shisodia (GS): In short, we are a cross-border solution provider. What we provide is a compliant and secure way any business across the world can receive funds and conduct transactions outside India. We also have customer balances, which are customer funds in our accounts. And we support close to 190 countries plus 10 currencies. In layman’s terms, we are a multi-currency platform. What we do is provide an all-in-one virtual account, like a bank account. We provide a virtual account for the world’s 10 most widely traded currencies.

What it does is it gives SMBs an opportunity to conduct and grow their business globally, with no hassle. Imagine an Indian seller based out of Jalandhar selling in the US. The only way to collect is through a wire transfer, which is very expensive, translucent in some shape and form, and takes time. With this virtual collection account, we help them receive payments seamlessly. We are regulated in the key markets we operate. We work with over 100 banking partners and that’s our core strength. So, globally, we have over 2 million active customers and we have balances of $5.5 billion dollars of our customers, which is a testament to the fact that we are one of the most trusted cross-border payment solutions. In India, we started in 2016 and till the second quarter of 2023, we were growing at a CAGR of 50% for the number of customers we acquired over a period.ET: How has business grown for you and what are the solutions available for businesses?
GS: Our volumes have grown at a CAGR of 86% and our revenues have grown at a CAGR of 82%. India is clearly a very strong or focus market for us. Even if I look at segment split, my e-commerce business is growing at a CAGR of 72%, the B2B is growing faster. We are clocking a CAGR of 106% in the B2B segment and all these numbers are 2016 to the second quarter of 2023.

Customers who make $1 million a year or more are growing at 96%, which is phenomenal. People who are doing business for over $10 million annually are growing at close to 71% and $100 million-plus are growing at 50% plus.

When it comes to solutions, there are three sets of customers we support from a size perspective — solopreneurs, SMBs and large corporations.

We have a link-based product through which customers can pay using a credit card or a debit card. It becomes a super complicated transaction for large corporations, like eBay, which needs to make payments in 180 countries, billions of dollars to millions of people and with an added layer of regulation and compliance. That’s where we come in and let corporations focus on their core business, and we drive the transactions.

ET: For an SMB, why is your solution a better one in terms of what it provides?
GS: A couple of things you should look at. Let us talk about what banks provide and then talk about what I do. If you are an SMB and you need to collect from somebody in the US, there is only one way to collect it, which is through a wire. Wire costs you $40-50. This is what a bank in the US charges. It happens through a SWIFT (global banking network) channel, which has its own fees.

The way money moves is bank A in the US may not speak to bank B in India directly. There might be somebody in between who has an account to make the transaction, which means that you don’t know what will land in your account, because the correspondence banks might charge landing charges, and some other fees. And it takes longer. So, these are some inefficiencies which banks have.

What we do is we provide a virtual collection account. So, think of it as you are doing a local transaction — NEFT, RTGS, IMPS. So, the buyer makes a payment to a local bank account; Payoneer moves the money from there and transfers it to the seller’s local bank account. What we provide is speed and, second, we convert it at a mid-market transaction rate.

Banks are very translucent on this – if you are a corporate, you will get a great rate, but if you are an SME, you may or may not get a good rate, because the transaction size is not big enough. With us, you will at least know what is landing in your account. With us, you know the rate at which you are going to get the money.

Third, your customer could traditionally only pay by wire.But in our case, a customer can pay through a local bank account, credit card and debit card. In the US, there is something called a direct debit, so you can pay through a direct debit. What it does is when the buyer has multiple options to pay, the card abandonment rate goes down and improves the transaction success rate.

ET: And does Payoneer also take care of the local laws and regulations? There will be specific RBI guidelines on receiving foreign currency. What happens to SMB players?
GS: So, there are two steps to it. If you are a goods or e-commerce exporter, what you need to do is to prove that this transaction has come from a particular buyer, it has come in a certain currency and it is against this shipment. So, the process is – we issue a FIRA, which is Foreign Inward Remittance Advice. Some banks call it NOC and we provide a digital document for this. After this, the customer takes the shipping bill to his bank and that is where the Export Data Processing and Monitoring System (EDPMS) gets updated.

When we started in 2016, the process to get the FIRC took one and a half to two months, depending on how aggressively you are chasing the bank. We realised this was a problem. We worked with our banking partner and automated it. On our platform, FIRC is generated within two days, which completely eliminates going to a bank. What this has done is that every player in the market was forced to make the change. The entire industry had to change the standards, and this is what fintechs typically do. They will come, and they disrupt the market.

Economic Times: Within e-commerce, what are the kinds of MSMEs that you see as most active? Which are the countries in which Indian MSMEs are most active?
GS: If I look at it from a business perspective, the US is by far the biggest market. This is followed by the UK and Europe. Having said that, we are also seeing a very good trend from the Middle East now.

From a category angle, what gets sold is a lot of home furnishing, a lot of handicraft and toys. New categories doing very well are products in ayurveda, essential oils, and beauty. And this is a very recent phenomenon in Europe.

ET: If you look at the global scenario, what would be the top concerns for you now?
GS: I would say the biggest concern now is how every country is becoming more centric around solving their issues that their businesses face and hence creating more barriers, which is exactly the opposite of what has happened in the last 10 years. I think that’s a concerning fact. There is the war that is happening and that also is impacting companies and businesses because people had large operations in those countries. This has led to a realignment of priorities.


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