Payoneer Part 2: How Payoneer Can Build Moats in China?

  1. Use the following moats as a framework to find and analyze competitive advantage for Payoneer China. The moats applied are : (i) Intangible Assets (ii) Network Effects (iii) Cost Advantage (iv) High Switching Costs.
  2. For intangible assets, consider reward points and perks for different status. For network effects, consider leveraging Payoneer’s international presence. For cost advantage, consider integration cost advantage. For high switching cost, consider leveraging data and software build out.

The Economic Moats

The oracle from Omaha, Warren Buffet, has famously used the term “economic moat”:

Apply Economic Moats to Payoneer

Intangibles Assets:

First, the intangible assets. Intangible assets mostly refer to brands, licenses, or patents. Let’s look further at brand. Brand or “the brand effect” is hard to achieve in the highly commoditized digital world. Let me clarify, brand itself doesn’t equal asset, but only brand that produce value.

Source: Bank on Status
Metal card is advertised as “Make a statement”
  1. Points program to keep users, and create different tiers: silver, gold, platinum
  2. Reward for the points can be free tickets, free hotel stays, or free vacation, or exclusive access to events
  3. Different tiers will have different perks, such as free access to airport lounges. Assuming travel is a big area of interest for target users.

Network Effects:

Network effect refers to companies with moat that makes it harder for others to enter due to the amount of capital and effort required. For example, one of the moat Amazon has is its massive number of warehouses that makes it very hard for any competitors to set up another FBA (fulfilled by Amazon).

Cost Advantages:

Cost advantage typically refers to business able to provide services at lower cost than competitors. This can be achieved by a number of ways, such as better technology, unique assets, or better access to resources.

Payoneer IaaS Layer

High Switching Costs

High switching cost can provide competitive advantage for business. Some clients will stay with a product due to high switching cost even though there are better products (cheaper or more features). For example, Americans are known to not want to switch bank accounts due to the hassles involved. A number of software vendors also enjoy this advantage as companies don’t want to re-train their staff to the new software. After all, human are creature of habit. Hence, One of the way Payoneer can create high switching cost is by building out its product offerings.

Bring it together:

  1. Intangible asset: establish reward points and perks for different status.
  2. Network effects: leverage international presence, and build out a stronger seller and supplier network to help sellers grow
  3. Cost advantage: create integration as a service (IaaS) layer to enable users seamless payment acceptance worldwide.
  4. High switching cost: build out more software features and leverage data.



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Ming-Chieh Lee

Ming-Chieh Lee


passion for #fintech #payments #RTP real time payment #Banking as a Service #digital strategy #blockchain