UPS Capital teams up with Payoneer for cross-border B2B transactions

With a focus on providing customers and shippers in more than 200 markets and 150 currencies the ability to leverage a secure, digital platform to conduct and perform B2B (business-to-business) transactions protected by licensed escrow, UPS Capital, a financial services subsidiary of UPS, announced a new offering today through a collaboration with cross-border payments company Payoneer.

UPS Capital Vice President, Marketing, Dave Zamsky said that UPS Capital is focused on three key aspects of the supply chain, including:

• risk mitigation in the form of supply chain insurance;
• cash flow or leveraging the goods in the supply chain and helping businesses improve their cash flow; and
• payment solutions and how to shorten the cash conversion cycle

“What we are trying to do is to help customers grow their top line and protect their bottom line at the same time,” he said. “We try to cover all aspects of the order-to-cash cycle in the supply chain.”

Today’s announcement was spurred on by UPS Capital’s focus on small and medium sized businesses and what it can do to help them grow their business, he explained. And from a B2B perspective, payments have traditionally been very manual, cost-prohibitive and a very difficult thing for businesses of that size to get through.

“We saw an opportunity through what is going on in the B2B and B2C space to help them by creating a more efficient, cost-effective way to do payment, particularly in the B2B space, as you think about it going across borders,” he said. “There is a lot of focus these days n B2C, but the B2B market is actually larger than the B2C market by about twice the size. And when you look at the research you find that…that the B2B commerce aspect is projected to be about $1.2 trillion in sales by around 2020 [based on data from Forrester, U.S. Census and Internet Retailer]. There has been so much focus on the B2C space that there has not been a lot done to help these B2B customers, buyers, and sellers in this e-commerce space. It is also a pain point for small to medium sized businesses, and in order for them to grow the need to source internationally, with 95% of the population lies outside of the U.S. as does two-thirds of the buying power.”

As a result he said a lot of these businesses are reluctant to grow internationally, because they don’t know how to navigate that as a buyer or a seller in terms of different currencies and languages, as well as how to vet new customers and create trust between the two businesses. He also stressed that managing banking relationships can be complex once an entity reaches outside of the U.S.  

The collaboration between UPS Capital and Payoneer provides buyers and sellers with access to more than 200 countries and 150 currencies, and it provides a secure digital platform for moving payments across those borders.

“There are three major components of the supply chain transaction,” he said. “The shipper-consignee is the first major component, payment is second, and the third is the transportation. When you look at that, we have an opportunity to tie those three components together in a seamless transaction and that can be very powerful and this is a vehicle to do that. What happens is the shipper and a buyer agrees to go on to Payoneer and sign up on the site. There is no application required, you sign up and register and activate within minutes.”

From that point, he said that the seller communicates what goods it has with an agreement to buy some supplies or products, and once that agreement and price is reached the payer or buyer can put those funds into escrow as a licenses secure escrow managed by Payoneer. And when that is done a message is sent to the shipper that funds are in escrow and goods can be shipped (goods shipper by UPS in these transactions receive a 10% discount on fees, said Zamsky). Once the goods are received and the buyer validates that the goods are exactly what was ordered and in good shape, another message gets sent in to release the funds and funds are released to the shipper, completing the transaction.

“This is where the trust comes in, because most small to medium sized business don’t want to do international transactions, because as a shipper they are afraid of non-payment, lost sale, or insolvency,” he said. “If you are a buyer, you don’t know if your goods are going to be ordered or if you are going to get them at all, or if they will be in good order when you get them. There is this kind of dual lack of trust, and this new online service really creates that risk mitigation piece and helps to link buyers and sellers.”