Commissions on transactions are primarily its largest revenue generator.
Payoneer has fast become a go-to platform for international payments, trusted by businesses and freelancers across Africa and beyond. The payment processing platform simply connects you to the global marketplace, allowing you to send and receive payments in multiple currencies, much like popular services such as PayPal, Grey, and Stripe.
If you’re new to Payoneer and need to understand what it’s all about, our previous article on (how Payoneer works) will give you all the insights you need.
But in this article, you’ll not only learn how Payoneer makes money but also gain the confidence to use this platform effectively to improve your international payments or grow your business.
Company Profile
Here’s a closer look at Payoneer’s company profile:
| Name | Payoneer Inc., NASDAQ: PAYO |
|---|---|
| Website | payoneer.com/ |
| Founding date | 2005 |
| Founder | Ben Yaniv Chechik, Kai Stalmann, Yuval Tal |
| Key People | Yuval Tal (Founder), Scott Galit (CEO), Michael Levine (CFO), Keren Levy (COO). |
| Employees | Approximately 2,167 |
| Headquarters | New York, NY, United States |
| Industry | Financial Technology (FinTech) |
| Business Model | Online payment system, digital money transferring platform |
| Key Services | Cross-Border Payments, Local Receiving Accounts, Marketplace Payments, Billing Service, Payoneer Card, Bank Withdrawals |
| Revenue (FY 2023) | $831.1 million |
| Competitors | PayPal, Grey Finance, GeegPay, Skrill, WorldRemit, Cleva, Wise. |
| Contact Email | community@payoneer.com |
What has changed since 2005?
Payoneer’s story is one of continuous innovation and growth in the international financial services industry. Founded in 2005 by Yuval Tal and Ben Green with the goal of making international payments easier, the company initially gained traction as a solution for freelancers and online marketplaces needing a reliable way to handle cross-border transactions.
By 2010, Payoneer had expanded its services to include businesses of all sizes, marking the beginning of its global presence. Significant growth followed in 2013 with an increase in the number of supported currencies and countries, and by 2015, the company secured substantial investments that fueled further development, including the introduction of new products like lending services for small and medium-sized businesses.
In 2018, Payoneer integrated advanced technologies, such as artificial intelligence, to enhance user experience and transaction security. However, the company faced challenges in 2020 when it struggled to convert its mobile web traffic into mobile app users. Despite the substantial influx of traffic to its mobile web platform, Payoneer lacked an effective means of bridging the gap between its website and app.
In 2020, Payoneer ran into some trouble getting people to move from their mobile website to their mobile app. Even though a lot of people were visiting their mobile site, not many were making the jump to download the app. To fix this, in 2021, they started using smart banners and deep links that encouraged users to download the app directly from the website. They teamed up with Branch, a company that specializes in making this transition smoother. This change really helped Payoneer get more people using their app and made the whole process a lot easier for users.
What is Payoneer’s business model?
One thing to keep in mind is that Payoneer, like any other payment platform, charges a fee for each transaction. It’s not a free service, but it does offer a low-cost solution for international banking.
So, how does Payoneer make money? The answer is pretty straightforward—it’s all about commissions. Every time you use Payoneer to send or receive money, they take a small cut. That’s why they need as many people as possible to use the platform and all its features. The more users interact with Payoneer, the more revenue they generate. It’s a simple business model, really—get more people on board, and the profits follow.
Payoneer has also partnered up with MasterCard, which means they’ve got some serious backing. They work with all kinds of partners, from global platforms to business consultants. This helps them offer even more ways to connect with clients and get paid, no matter where you are in the world.
So how much does Payoneer make per transaction?
1. Currency Exchange Rate
When you exchange currencies through Payoneer, they add up to a 2% fee on top of the mid-market rate. Typically, the person receiving the payment covers this cost. But if the recipient isn’t a Payoneer user, the sender picks up the tab. And if you’re just moving money between different currencies within your Payoneer wallet, there’s a 0.5% fee.
Total Value Generated: For every $1,000 exchanged, Payoneer earns $20 (2%) or $5 (0.5%) for internal transfers.
2. Transfer Fees
The fees here can vary:
- If you’re transferring money from one Payoneer account to another and it’s in USD or EUR, it’s free. But for other currencies, you might get hit with a 1% fee.
- Need to request a payment from a client? Payoneer has a handy billing feature for that. If your client pays via Mastercard, there’s a 3% fee; for eCheck, it’s just 1%. Plus, if you’re withdrawing money from certain online marketplaces into Payoneer, there might be a small fee, though this often depends more on the marketplace than Payoneer.
Total Value Generated: For a $1,000 transfer, Payoneer earns $10 (1%) or $30 (3%) for Mastercard payments, and $10 (1%) for eCheck payments.
3. Withdrawal of Funds
Payoneer is linked up with a bunch of banks worldwide. For most of these, withdrawing your money is free, especially when you’re transferring to local banks. But if your account is in USD or EUR, there’s a $1.50 fee for each withdrawal.
Total Value Generated: For each withdrawal in USD or EUR, Payoneer earns $1.50.
4. Debit Card Charges
Payoneer gives you a debit card to make things easier. The card itself is free, but using it comes with some costs. For every transaction, there’s a $3 fee. Cancel a transaction? That’ll be $1. ATM inquiry? Another $1.
Total Value Generated: For each transaction, Payoneer earns $3, and for each cancellation or ATM inquiry, they earn $1.
By being aware of the various fees, such as currency exchange rates, transfer fees, and withdrawal charges, users can strategically plan their transactions to avoid unnecessary expenses.
This knowledge helps in choosing the most cost-effective methods for transferring and withdrawing funds, ultimately enhancing the efficiency of your financial operations and maximizing your earnings.
How to optimize your Payoneer usage and minimize unexpected costs
To get the most out of Payoneer, follow these tips:
- Choose the right currency: Whenever possible, transfer funds in the same currency to avoid currency exchange fees.
- Take advantage of free transfers: Use free transfers between Payoneer accounts in USD or EUR to save on transaction costs.
- Plan and monitor withdrawals: Withdraw larger amounts less frequently to minimize fees. Also, keep an eye on exchange rates to transfer funds when rates are favorable.
- Stay Informed: Regularly check Payoneer’s fee schedule and updates to stay aware of any changes.
- Understand marketplace fees: Be mindful of extra fees from online marketplaces when withdrawing funds.
- Secure your account: Use strong passwords and enable two-factor authentication to protect your account from unauthorized access.
Tips on how to use Payoneer effectively for International Payments
There are sweet conveniences for international transactions, like using the Payoneer MasterCard Debit card to access ATMs worldwide and make purchases online or in stores that accept MasterCard.
The platform’s flexibility also allows you to receive payments from multiple affiliate networks without needing a bank account.
To make the most of these perks though, remember to:
- Use Payoneer’s Global Payment Service to receive payments in multiple currencies from international clients.
- Utilize Payoneer’s billing feature to request payments from clients, ensuring you choose the most cost-effective payment method.
- Convert currencies within your Payoneer wallet when rates are favourable to save on conversion fees.
- Make purchases directly with the Payoneer card to avoid withdrawal fees.
How much would it cost to build a payment processing app like Payoneer?
Creating an app like Payoneer typically costs between $25,000 and $100,000, depending on factors such as the developers’ skills, project setup, and team size. Clear communication and sufficient funds are essential for staying on track.
Development usually spans a few months, starting with project setup and moving through feature development, integration, and testing. The main phase, where key features like international payments, bank transfers, and virtual accounts are built, takes about three to four months.
This is followed by a month for integration and testing, with the final month dedicated to extended tests and launch.
The table below outlines the estimated development cost and timeline for building an app like Payoneer:
| Development Stage | Timeline | Key Focus |
|---|---|---|
| Project Setup | 1 week or less | Clarify structure and scope, assign tasks |
| Prepping for Development | 1 week or less | Ensure resources and equipment are ready |
| Development Stage A | 3 months or less | Main feature development, ongoing feedback |
| Development Stage B | 1 month or less | Feature integration and testing |
| Development Stage C | 1 month or less | Extended tests and final launch |
Conclusion
Today, Payoneer continues to evolve, offer a range of financial services to millions of users worldwide, and solidify its status as a global financial leader.
What sets Payoneer apart is its unique market fit, offering services that are often unmatched in some regions. The user experience has seen significant improvements so far, particularly in the mobile app and website interface, although there’s still room for further enhancement.
