Payoneer, Which Is Merging With a SPAC, Inks Deal With E-Commerce Giant eBay
Payoneer announced a major partnership this week with e-commerce juggernaut eBay (NASDAQ: EBAY). Through the agreement, Payoneer will help eBay sellers get paid for transactions on eBay’s core marketplace in certain regions.
The move comes as eBay has been working to modernize its biggest business by streamlining payments for international sellers.
The smaller fintech company is in the process of going public by merging with special purpose acquisition company (SPAC) FTAC Olympus Acquisition (NASDAQ: FTOC) in a $3.3 billion deal announced in February. Here’s what fintech investors need to know.
A huge vote of confidence
Effective last month, Payoneer has started to manage payouts for eBay merchants based in greater China. The partnership is designed to allow sellers to have faster access to funds while also facilitating greater flexibility in managing multi-currency payments. By allowing merchants to accept payments in more currencies, they are also able to list products on several of eBay’s international sites and gain greater exposure to buyers. eBay and Payoneer plan to keep expanding into additional markets later in 2021.
“We are honored to partner with eBay, a true pioneer and giant in the world of ecommerce,” Payoneer CEO Scott Galit said in a statement. “Their goal of creating a streamlined, modern marketplace that simplifies cross-border commerce is one that resonates deeply with us and our customers.”
The deal serves as major validation for Payoneer’s platform and services. The company processed $44.4 billion in payment volumes in 2020, a 53% jump from 2019. Payoneer says the COVID-19 pandemic accelerated the shift towards digitization and e-commerce, which has benefitted Payoneer.
eBay has been increasingly distancing itself from PayPal (NASDAQ: PYPL) in recent years after spinning off the leading payment provider back in 2015 to unlock shareholder value. PayPal had long been the primary payment method for eBay’s marketplace, but eBay is now actively diversifying payment processors. In 2018, eBay inked an agreement with Adyen to become its primary payment processing partner. Payoneer is just the latest alternative that eBay is adding to the mix.
Closing the SPAC deal imminently
Meanwhile, Payoneer continues to work towards closing its merger with FTAC Olympus Acquisition, a transaction that gives the fintech company an enterprise value of $3.3 billion. That SPAC is led by financial services veteran and The Bancorp (NASDAQ: TBBK) founder Betsy Cohen. The company already has an established revenue base of $345 million in 2020, which is forecast to grow to $432 million this year.
The transaction will raise over $1.05 billion in cash proceeds for Payoneer, including $755 million in the SPAC’s trust along with $300 million in PIPE (private investment in public equity) financing. However, a large portion of that money will be used to buy out existing shareholders and pay down debt.
Once the deal closes (which is expected to occur in the second quarter) Payoneer should have around $563 million in cash on its balance sheet.
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