New York-based business-to-business online payments service Payoneer on Tuesday announced it acquired Armor Payments, a Silicon Valley-based, escrow-as-a-service payment company. Terms of the deal weren’t disclosed.
Armor’s software will be integrated into Payoneer’s platform to offer a service that lets business-to-business buyers and suppliers conduct escrow payments to accounts around the world.
Under the combined service, businesses of all sizes can conduct cross-border payments, the companies say, for transactions between $500 and $1 million—which go beyond the typical use of credit cards. Scott Galit, CEO of Payoneer, says cross-border trade is a huge market, which he says will grow in 2020 to $50 trillion in annual transactions. However, the industry has changed little over the decades. “It’s still really done by wires and checks,” he says. “It’s still very much a legacy infrastructure.”
Scott Reynolds, CEO and co-founder of Armor Payments, says his company got started to help businesses make payments and get paid cost-effectively. “Credit cards and PayPal work well for consumers, but are not well-suited to B2B transactions,” he says. This issue is becoming more noticeable, Reynolds says, as more small and midsize companies look to buy and sell online and internationally with their business clientele.
Payoneer’s digital platform wants to make it easier to get business trade done. The acquisition of Armor, Galit says, adds a secure payments infrastructure that allows buyers and sellers who do not know each other to have an escrow account between them. “It helps to reduce friction that might make it hard for them to trust each other in trade,” he says.
Consumers already have the benefit of online marketplaces, such as Amazon and Airbnb, which let them find and buy different goods and services, Galit says. Businesses can find marketplaces for buyers and sellers, yet they have not been able to make purchases around the world through those marketplaces. He says Armor brings such capabilities to Payoneer.
Armor Payments initially focused on domestic transactions, but Reynolds says the escrow platform was drawn into more and more international transactions. Looking for a partner to help navigate such cross-border payments, he saw Payoneer as a natural pick. That relationship eventually led to the acquisition deal.
The team from Armor Payments is in the process of moving into the Palo Alto, CA, offices of Payoneer, Reynolds says. Armor’s development center in North Carolina will remain in place.
