India evolving into smart entrepreneur economy: Payoneer CEO Scott Galit

Financial technology firm based out of the US - Payoneer is looking to enter the India market soon. They aim to offer payment services to the country’s freelancers, online marketers and small and medium enterprises and other such professionals who face high fees and slow transfer times for cross-border payments. In conversation with CEO Scott Galit, he says the company can definitely tap into the opportunity that the new and surging entrepreneur economy in India brings and shares some advice for e-commerce businesses in India that are new to the global marketplace.

What trends are you seeing in e-commerce, and how does Payoneer fit in?

E-commerce is creating a mass democratisation of opportunity. In the last decade, the Internet has enabled businesses and individuals to get increasingly connected and we’ve seen an increase in the power of the individual and the small business to compete against bigger companies. Today, if you have knowledge and technology, you have the power to either change the world, or at least participate in our rapidly changing world.

The most transformational impact is being felt in emerging markets that have had the hardest time accessing the rest of the world. These markets have always had smart, resourceful people, but now those people have access to the tools and the opportunities to leverage the global economy.

Why was Payoneer interested in India?

India is incredibly well positioned to succeed on a really big scale. What we see there is similar to what happened in China with manufacturing. First, Chinese businesses started off making goods for other companies and economies; this was the “Made in China” trend. As time went on and Chinese businesses got more ingrained in the global economy, we saw a rise of goods being “Designed in China” and “Branded in China”. These businesses are no longer simply assisting in the success of a foreign company; they are successful world-wide, in their own right.

Similarly, India is seeing the development of its entrepreneur economy. For a long time, India has been producing very smart, well educated people. In many ways, India was the tech world’s equivalent of China’s manufacturing. Now, we’ve had a couple of generations of highly trained, intelligent people who are well poised to succeed. These individuals are ready to move beyond traditionally outsourced service roles, and move more prominently into the global economy. In this new economy, the smarter you are, the more technically savvy you are and the more ideas you have, the fewer limits there are for you.

India is known to have a highly regulated banking system. How did Payoneer overcome hurdles in seeking an entry to India?

At Payoneer, our compliance capabilities are one of our core competencies; we’ve spent the last 10+ years developing a robust global compliance infrastructure. Our global compliance team represents about 20% of our total workforce of nearly 700 people. In short, we’re a large, global company with a compliance-first mindset, which is crucial in being able to set up the type of infrastructure and robust processes to maintain global regulatory compliance.

In India, we took a lot of time to engage in the market, we worked collaboratively with our banking partners and the regulators to understand the regulatory requirements, making sure to comply not only with the letter, but with the spirit of regulation. We hired the best local lawyers to advise us, engaged with members of the community, and really tried to learn the policies behind the regulations. India’s government is taking very constructive steps in trying to open things up and stimulate growth, and it’s important to understand the intentions behind the rules that were being laid out. Once we understood the requirements, we ended up having to re-design our traditional products to be better suited to the needs of Indian businesses and regulators.

Who is most likely to benefit from the new opportunities that are arising in India?

The incredible thing about this newly-democratized access to the global economy is that anyone has the potential to benefit from new opportunities, regardless of the size of their company. No longer are only massive corporations able to expand internationally and compete on a global scale. Small business owners in India who are smart, tech savvy, and see opportunities to either use technology to deliver value globally, or see opportunities to connect to the rest of the world and find new opportunities through the internet and otherwise, will succeed.

So, any small export business, anywhere in India has new opportunities available. Payoneer brings a set of tools that’s really geared towards helping these types of businesses sell and grow globally. Manufacturer or service provider, sole proprietor or large company, we view all of our services as being geared towards a range of business owners.

When it comes to cross border currency transfer, are there any technological challenges involved?

When it comes to the technology, the biggest challenge in cross border currency transfers is related to legacy banking infrastructures. There are so many incredibly complex banking systems set up throughout the world, and the challenge is to create an easy-to-use layer of technology on top of that, which allows customers to have an experience that’s not dependent on the banks. This is what we do at Payoneer - we abstract complexity.

In this business, however, the greatest challenge is not technology, but to create ease of use in the customer experience. What’s particularly difficult is how many layers we have to get right, from connectivity to banking systems, to risk systems, treasury systems, compliance systems, and regulatory reporting. The biggest challenge in cross border currency transfer is connecting these systems in a way that is effortless for our network of over 3 million users, while ensuring that regulatory, compliance and risk obligations are met.

What are security and a safeguard mechanisms that protect individuals and businesses from theft/loss?

First and foremost, our users are protected by our massive investments in infrastructure and monitoring, along with the various bespoke information systems that we use to ensure we’re protecting customer data and access. As part of being highly regulated, Payoneer is obligated to hold capital and funds in protected, segregated accounts, and have extra insurance policies to protect loss of money, among other precautionary measures. When it comes to security, size and scale of the business matters, because you need not only to monitor fraud, but to help resolve problems.

We’ve also had intensive security audits and reviews by some of our most stringent clients, like Google and Amazon. As a result, our security mechanisms are built to not only protect small business owners, but to be robust and scalable enough to safeguard a huge corporation as well.

What advice would you give to ecommerce businesses in India that are new to the global marketplace?

Look to those who are succeeding in this new economy for guidance.

India has an opportunity to become an export powerhouse the way China has. We really think there’s an opportunity to look at China as a model - to connect to marketplaces and channels as a way to build a brand and awareness, to focus on creating referenceable relationships, and to develop something unique and differentiated, which is crucial when you have mass democratization of market access. In the end, those who have the best product and the widest reach will triumph.