ICYMI: How Tariffs Impact Global Payments

John Caplan, CEO of financial technology company Payoneer, discusses how a the health of the American consumer impacts the global digital payment industry. Payoneer sees the uncertainty surrounding global trade and tariffs posing a headwind to revenue, prompting the company to pull its outlook for the year when it reported earnings last month.

 The New York City-based fintech company specializes in facilitating cross-border payments and is one of the top performers in the space along with Paypal and Venmo.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy, plus global business finance and tech

(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio.

Speaker 2 (00:33):
Last month, shares a Pioneer Global Film more than thirteen
percent after the fintech firm with drewist guidance for the year,
citing on certain macro conditions. The company also reported adjusted
IBITA for the first quarter tim that beat alist expectations.

Speaker 3 (00:47):
John Kaplan is the CEO and director at Pioneer. It's
got a roughly two point four billion dollar market cap,
shares down about thirty three percent so far this year.
He joins US now from our Chicago bureau. John, Welcome
to Bloomberg Business Week Daily. I'm curious how you see
conditions out there. Are macro conditions more or less certain
now than they were a month ago when you pulled

(01:07):
your guidance.

Speaker 4 (01:09):
Yeah, it's great to be here, and I think that's
a really important question as it relates to the global
trade environment, we have not seen a pullback in US consumers.
I'd also say that as the trade relationships between China
and the US and the US and other countries gets resolved,

(01:30):
that will lift uncertainty. But we still are existing in
an uncertain environment, and we are seeing our customers entrepreneurs
around the globe who do business cross border increasing their
focus on globalizing their business. A pioneer, forty percent of
our revenue is businesses doing business with one another that

(01:53):
never touches the United States, fifteen percent of our revenue
is customers in China exporting to countries around the globe,
not including the US, And twenty percent of our revenue
comes from China based entrepreneurs who are selling high quality,
low cost consumer goods to US consumers. And as you know,

(02:15):
the US consumer is forty three percent of the world's
consumer consumption and seventy percent of the US economy is
driven by the US consumer. So it's super important that
US consumers are healthy, that they're spending money and getting
the products that they want.

Speaker 3 (02:36):
Why So, if you think about where you are now
and given what you just told us, John, do you
stand by the decision to pull the guidance about a
month ago, was that the right move.

Speaker 4 (02:48):
It absolutely was. You know, one of the things that
we do a pioneer is we are building the firm
for long term growth, and in doing that, it's establishing
a trusted relationship with our shareholders and helping them understand
exactly what we see. So at the time of our
May seventh earnings announcement, the tariffs were still one hundred

(03:09):
and forty five percent, effectively an embargo between China and
the United States, as Secretary Besson had described it, and
so it was important at that time to not play
chicken with the US administration or with the market about
how trade would resolve, which is call balls and strikes,
And at the time it was prudent and responsible to

(03:29):
give our shareholders exactly the guidance we did, and we
feel comfortable about it.

Speaker 2 (03:34):
Do you feel like you have better visibility today?

Speaker 1 (03:37):
You know?

Speaker 4 (03:37):
You know what we said at earnings was that our
Q two results we anticipated would look very similar to
our Q one results, and I can reaffirm that message here.
I'm hopeful that the politicians around the world will meet
with one another resolve their structural issues because I know
the entrepreneurs around the world want to continue to do

(03:59):
business with one another.

Speaker 2 (04:01):
Is it really because of the strain between US and
China specifically, or is it more than that.

Speaker 4 (04:07):
Yeah, for our business, you know, really our emphasis as
we looked at guidance was primarily related to the US
and China. But it's important what you just mentioned, which is,
you know, at the time there was a pause and
a reduction in the in the tariffs as it relates
to countries like Vietnam and elsewhere those are anticipated to.

(04:28):
That pause was ninety days mid July. That ends and
we're hopeful to see resolution, but we got to wait
and see. One thing about our customers that we've seen
is they are you know, on the front foot growing
their business exporting goods and services around the world. You know,
we have customers in one hundred and ninety countries and territories.
We have you know, really broad broad business in terms

(04:51):
of industries, geographies, size, and sort of category. So when
we look at our customers, we feel very confident and
about what the long term future looks like for payoneer
and in fact see value at these levels.

Speaker 3 (05:05):
Well, can you tell us about how you're looking at
stable coins and what you do right now with stable coins.

Speaker 4 (05:10):
Yeah, you know, I'm glad you asked the question because
the paying your customers hold seven billion dollars of funds
in their payoneer account. The pain aer account is one
hundred percent of an entrepreneur's cross border accounts receivable and
accounts payable, and we view the momentum and energy around
stable coins as confirmation of the innovation that's going to

(05:30):
come in cross border trade.

Speaker 1 (05:32):
Today.

Speaker 4 (05:33):
We have not made any significant announcements as of yet
of where we'll go with stable coins. I think rest
assured you read lots about Circle and Ripple and other folks.
I think they envy the distribution we have, the brand,
we've built, our last mile relationships, our network of licenses.
We feel well positioned to bring the hype into the

(05:57):
reality cycle and drive adoption. We choose to sort of
put our foot on the gas there.

Speaker 3 (06:02):
So are you working on a stable coin?

Speaker 4 (06:04):
I'm not going to share yet here today what our
plans are, but we're very focused on providing solutions for
customers in partnership with others to enable our customers to
move funds around the world in a fast, effective inexpensive way.

Speaker 3 (06:20):
How would it make it faster and less expensive if
you were to have a stable coind.

Speaker 4 (06:25):
Yeah, in some ways, pay your account functions as the
promise of the of the new currencies and new technology. Today,
customers use payoneer to send an invoice to their business
customers around the globe. They get paid. They get paid
practically instantly today. So I don't think it will largely

(06:45):
change the speed, although we may pick up seconds here
or there. What likely it'll give us is more diversity,
and that diversity is something we think pockets of the
globe are excited about. Argentina and freelancers in Argentina, for example,
excited about some of that innovation. We have the ability
to drive its penetration.

Speaker 2 (07:03):
And that's what I was going to kind of ask
you what particular regions would this be the most useful
and if you count is it Argentina, is it elsewhere? Yeah.

Speaker 4 (07:11):
So we do see you know, adoption, you know, quality
adoption occurring in Latin American in some pockets. We see
quality adoption and interest occurring in APAC in some regions.
But it is you know, the hype cycle is pretty
intense right now. We're very focused on the practical applications
of helping two million active customers eighty billion dollars of

(07:34):
funds transacted across the pay in Aer platform in twenty
twenty four. We are, you know, a big platform helping
cross border SMBs, and they are diverse and have different
needs depending on just what country they're in, what use
case they're deploying against.

Speaker 2 (07:50):
All right, super appreciate it, John, Thank you so much,
John Kaplan. He is Chief executive officer director at Pioneer,
joining us from our news bureau in Chicago,