Technology has clearly driven the payments industry – from within and without. Today’s payment systems would certainly not be possible without the astounding computing and networking milestones achieved over the past 40 years. Interestingly enough, this same technology is responsible for the immense growth in electronic payments volume itself. We are witnessing the inevitable transition from a paper-based economy to a global electronic payments economy. The necessities created by this revolution are being solved by the major credit card brands, and a host of alternative payments providers.

Which came first, the chicken or the egg? The same can be asked about technological advancement and electronic payments volume. One can reasonably argue that they both came at the same time, or at least they traveled together. The rise of ubiquitous Internet in the 1980s occurred at roughly the same time as the advent of electronic credit card terminal. Purchasing on the Web would not be possible at scale without online credit card payments. And although a little jerky at first, the credit card companies answered the call. The looming specter of fraud has since been relegated to well under 1% of all purchases.

Not all frontiers have been conquered, however, as using the Web to purchase goods from another country still has its challenges. There are also challenges faced by consumers living in countries with underdeveloped banking or monetary systems — a good example being China. What’s more, the term “payments” is taking on a much broader meaning. For one thing, payments are not necessarily being used to purchase goods and services. Electronic payments are now being used to compensate virtual workers, click through referrals partners, and marketing affiliates.

The major credit card networks have arguably contributed the most to the burgeoning electronic economy. In a sense, though, credit cards have had one major flaw — they only work in one direction. It’s certainly easy to buy something with a credit card, however, can you get paid on your credit card? Traditionally the answer has been “no.” Enter the fastest growing part of the card market – the debit card. You probably have one on your person right now. Well the infrastructure built to support these cards has also spawned two additional solutions, branded gift cards and “reloadable” debit cards.

Yuval Tal and the company he founded, Payoneer, have used these reloadable debit cards to solve the problem of getting paid on your card. With Payoneer, businesses and individuals can fund a virtual bank account which the cardholder can access through the debit card. This means cardholders can get paid through various methods and use the funds to withdraw cash from ATMs or purchase goods at merchants accepting the major credit card brands.

This apparently simple solution actually sits on top of one of the most sophisticated electronic payments networks in the world. And the term “world” is poignant in this case, because as it turns out, this international network is helping solve a lot of the problems associated with getting paid across international borders. “By partnering with a major credit card network like MasterCard,” says Mr. Tal, “our cardholders have immediate access to millions of ATMs and merchants in over 200 countries.”

Payoneer has leveraged the network to develop specialized payments solutions for dozens of industries. With his team of Engineers, Yuval Tal built a flexible platform that sits on top of the MasterCard network and allows Payoneer customers to quickly and securely remit funds to various types of cardholders. According to Mr. Tal, “Our customers were looking for a turnkey online system which allowed them to quickly set-up payees. This means authenticating users, issuing cards and potentially loading funds all in a matter of hours.” “Reporting and auditing was also important,” says Tal.

Initially Payoneer focused on the travel industry, where tourists and students required a more convenient alternative to cash and Travelers Checks. “What we found,” says Tal, “is that the system could be easily repurposed to support other applications.” This led to a move to new markets including affiliate networks, global freelance information workers, clinical trials and seasonal workers.

One interesting application is the payment of global freelance workers. In today’s electronic economy, millions of independent programmers and content providers in countries like China and Russia work for companies in other countries. Paying these workers can be a daunting task. Paper checks just won’t cut it – they take a long time in the mail and an even longer time to clear. Wire transfers are expensive to both parties, and it can take up to a week for the payee to actually access the funds. In both cases, the worker generally needs to have a bank account. “With a Payoneer card,” says Yuval Tal, “a company can pay a foreign worker, and that worker can — in most cases — have access to the funds in as little as an hour, all without a bank account.”

This novel application is clearly a “discontinuous innovation,” namely, its impact on the marketplace changes the way things are done in a big way. Reducing the time it takes to get paid from up to a week to up to an hour is extremely important to many people. It is also a good example how alternative payment types, like the reloadable prepaid debit card is displacing cash and traditional money transfer methods. People like Yuval Tal are forming companies akin to Payoneer all over the world, and promise to make this significant transformation a lot easier.

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