Nuvei enters Israeli payments market as Payoneer deal expands its reach
The Canadian fintech company has received a local payment clearing license, allowing it to serve international retailers and airlines processing transactions from Israel. Nuvei also plans to target Israeli technology exporters as it prepares to combine with Payoneer in a $2.75 billion deal.
Following its $2.75 billion acquisition of Payoneer, Canadian fintech company Nuvei is expanding its presence in Israel after receiving a payment clearing license from the Israel Securities Authority.
According to Nuvei, the decision to apply for a local clearing license was driven by demand from its clients, primarily large retailers, seeking to expand their operations in Israel. The company began the application process about a year and a half ago and has now received approval. The license will allow clients including online retail giants Shein and Temu, as well as airlines such as Lufthansa and KLM, to process payments in local currency, among other benefits, while reducing costs.
Nuvei already has a strong position among large retailers and plans to target Israeli high-tech companies, most of which are exporters that need clearing services for payments received from abroad. The license covers payment clearing, not card issuance, meaning Nuvei will not compete with credit card companies in issuing cards. The company will also connect to SHVA, or Automated Bank Services, as required of relevant financial entities operating in Israel.
“One shouldn't underestimate the purchasing power of Israelis; they are very active online and also travel extensively abroad,” Yuval Ziv, Nuvei’s president, told Calcalist. “That is why our clients are very interested in this market, despite its small size. We will also contribute to the Israeli economy, as, until now, merchants from abroad had to go to great lengths to process payments originating from here.”
For consumers, Nuvei’s service is expected to operate behind the scenes. Online merchants serving Israeli customers, however, could benefit from lower payment processing costs, savings that Ziv says should ultimately be passed on to consumers.
“When an Israeli shops on a site like Shein, it is considered an international transaction from the merchant's perspective, which makes it more costly for them. Switching to Nuvei will allow Israelis to pay using local credit cards (rather than international ones), and it will also reduce the rate of transactions flagged as potential fraud, which generally boosts revenue. These cost savings should be passed on to the customers,” Ziv said.
Nuvei already has a local presence in Israel, largely through its 2019 acquisition of SafeCharge, the company founded by Teddy Sagi, for $890 million. In 2021, it also acquired Simplex, a provider of cryptocurrency payment solutions, for $250 million. That acquisition has been considered less successful.
Nuvei currently employs 350 people at its Tel Aviv hub, out of a global workforce of approximately 2,600. The company is headquartered in Montreal. Its Israeli presence is expected to grow significantly following the completion of its acquisition of Payoneer, an Israeli fintech company, under a deal signed in June. Nuvei is set to pay $2.75 billion for Payoneer, which is of a similar scale in terms of revenue and headcount. The combined company is projected to generate an annual revenue run rate of approximately $3 billion and employ nearly 5,000 people.
