For small business owners, freelancers, and gig economy workers, the minute you’re online — you’re global.

Jody Perla, managing director at cross-border payments company Payoneer, told Bank Innovation this relatively new reality has led to increased customer and corporate expectations for seamless and transparent payments.

“Commerce is now global by nature because of the internet and access,” Perla said. “Ten or 12 years ago, it was a lot more physical. You would have to have bank accounts open in whatever countries you were doing business.”

New York-based Payoneer, founded in 2005, created a workaround for that, she said.

The company works with over 4 million customers in 200-plus countries, from companies as large as Airbnb, Amazon, and Google to freelancers and small businesses in developing countries. Perla herself works directly with banks around the world to bring the company’s capabilities to new areas that can benefit from its technology and infrastructure.

She said Payoneer is essentially a digital B2B payment platform allowing businesses of all sizes to be able to make a payment or receive a payment cross-border as if it’s a domestic transaction, meaning buyers can purchase in their home currency while sellers can receive payment in theirs.

“Digitization of e-commerce has people thinking, what more can we do?” Perla said.

Perla said traditional banks with 100,000 or more employees have an interest in providing faster, easier solutions in the cross-border payments space, but just don’t move as fast as a 10-person startup can. In the meantime, fintechs like Payoneer still need banks to move and send payments worldwide: the last mile a payment has to travel is still controlled by traditional financial institutions and therefore, heavily regulated.

She said business is now global and local at the same time, but there isn’t really one bank that is “truly local” all over the world, due largely to regulatory and geographic restraints.

“Banks recognizing cross-border is a huge opportunity,” Perla said. “They also want to provide more services to their business customers to transact and grow cross-border.”

Perla said she believes one of the biggest challenges and opportunities for the cross-border space is that it’s still in its infancy, despite its size already.

SWIFT and McKinsey & Co., in an October 2018 report, found that B2B cross-border transactions accounted for $127 billion in revenues, excluding FI-to-FI flows and related revenues, the previous year. The next-highest category, C2B cross-border payments, accounted for another $54 billion.

“I think we’re really at the tip of the iceberg,” Perla said, anticipating a focus in coming years on risk management and navigating an increasingly complex patchwork of local regulations around the world.

She said building the necessary infrastructure with the transparency and speed customers and corporates are seeking is an expensive endeavor that takes a lot of time and is full of unknowns, but that Payoneer is already regulated in many markets, with teams on the ground working with local and central banks.

“We have the good fortune of having a big organization,” she said. “Barriers to entry are steep and going to get steeper.”

A symbiotic relationship?

Flywire, a Boston-based fintech that helps universities, hospitals, and businesses accept foreign-currency payments, attacks one of the core tenets of banking with international bank wires, but does it using the banking rail, CEO Mike Massaro told Bank Innovation.

“Many banks that work with us benefit, but yet, at the same time, we’re attacking one of the inefficient products or capabilities that they’ve offered for decades,” he said. “I think that just shows people have to think differently.”

He said banks are actually coming to Flywire looking to partner, license, and do various kinds of partnerships that they weren’t doing two or three years ago.

What’s changed?

“I think that the general theme is that people want fewer relationships,” he said. “They want the ability to do business with fewer parties.”

Massaro said the ways fintech has been regulated and organized has allowed a lot of new companies create solid and heavily-focused companies. But that doesn’t mean those companies and banks can’t work together.

“Banks are in a pretty good spot, right?” Massaro said. “They’re still the center of the vast majority of capital. They’re great at lending, they’re greatest storing money. But they’re not really good when money’s in movement, and I think that’s been one of their challenges, why they haven’t played such a big role in payments.”

He said banks are more in payments from a clearing perspective and not from a “solutioning” perspective, at least when it comes to the actual movement of money. But he said people who think banks aren’t innovating, aren’t looking hard enough.

“They’re dealing with a lot of legacy systems,” Massaro said. “They’re dealing with tons of new regulation.”

At the same time, Massaro said banks are fairly quick to adopt better consumer experiences from the challenger banks, or quicker, faster lending processes when they see those types of solutions from startups.

Join us at Bank Innovation Ignite 2019, March 11-12 at the Hyatt Olive 8 in Seattle. Register here.