On Tuesday, Feb. 23, a sturdy and completely bald Israeli named Yuval Tal was in Las Vegas’ Rio All-Suite Hotel & Casino, where the nightly entertainment includes the Chippendales and Penn & Teller.
Mr. Tal, behind a microphone in a blazer and open-collar shirt, was one of five international visionaries, as the brochure for the 2010 Prepaid Expo called them, who had been gathered together for an afternoon panel talk on the state of prepaid cards around the world. The conference, with a keynote address a day earlier from Bill Clinton, who got a standing ovation for a speech titled “Embracing Our Common Humanity,” cost $1,795 per person.
Two days later, Mr. Tal would be at the center of one of the globe’s juiciest international intrigues.
Papers from Des Moines to London were reporting that his New York–based firm, Payoneer—which offers prepaid cards, mostly as a way for employers to compensate foreign workers without checks and wire transfers—had been linked to this year’s cinematically brash Hamas assassination in Dubai. In the open view of security cameras, wearing vaudeville-level wigs and mustaches, a group of at least 27 agents plotted the death of the Palestinian militant Mahmoud al-Mabhouh, who was drugged and smothered with a pillow in his hotel room on Jan 19.
Dubai police said that the suspects used more than a dozen Payoneer debit cards for planes and hotels. Its chief declared he was “99 percent” certain that the assassins were from Mossad, Israel’s spy agency. Payoneer says it is cooperating with authorities.
The chronicle of the assassins has unfolded thrillingly, like something out of le Carré: One reportedly slipped into the United States the day after al-Mabhouh was found, another is said to have entered on Valentine’s Day. But the story of Payoneer and its founder, a warm man despite a Special Forces background, is even pulpier.
PAYONEER WAS A good idea. It makes customized, prepaid, private-label Debit MasterCards for companies, which can use them to pay their employees and freelancers. According to its site, Payoneer keeps a 3.5 percent commission, plus fees like a $5 first-time charge. It also has a travel affiliate that works with groups like Birthright Israel, whose Web site says that its participants are required to use Payoneer.
“The money is uploaded to the card. There’s no need for paper, for checks, for stamps, for envelopes,” Mr. Tal said in an October 2008 interview with a Web video production site called 1938 Media, which Payoneer has sponsored. “Why stand in line in the Russian winter to cash a check? When you can actually, from your basement, actually continue to do business?”
Russia is indeed one of the biggest sources of traffic to the card’s Web site. So are shakier Central Asia nations like Krgyzstan, Uzbekistan and Kazakhstan, according to statistics from Alexa. “If you are going to go after a niche in the payments industry, international payments is about as big a niche as you can get,” the blog TechCrunch wrote after Mr. Tal’s company finished a multimillion-dollar round of venture capital fund-raising two years ago. “But it can also be a dangerous game in the post-9/11 world.”
For its cards, Payoneer uses Belize’s quiet Choice Bank Limited and the Midwest’s MetaBank, which as of last year was facing several lawsuits. It used the First Bank of Delaware until early last year, soon after the F.D.I.C. charged it with deceptive marketing practices. “We decided to cut back in a number of programs. His was just one of them,” First Bank CEO Alonzo Primus said.
Meta, titled like Pynchon, was the bank for most of the Dubai cards. “We have launched our own review of the matter to further assure ourselves that Meta followed proper procedures in accordance with all bank and regulatory requirements,” it said in a statement.
The Dubai affair aside, Mr. Tal’s climb has been mostly fortuitous. In 1999, a tad late to be founding a dot-com firm, he started E4X to help Web vendors sell in international currencies. “It’s difficult to give a complete answer as to how E4X survived to reach the break-even point in the deadly e-commerce business,” the Israeli financial paper Globes wrote in 2003. “Tal admits that luck was a critical factor.”
“What he and his teammates were building seemed very appealing at the time, and that’s all I can say,” one of E4X’s first-round investors, Eytan Lombroso, said this week. “And obviously you don’t only invest in technology; you invest in management.”
Another first-rounder was Ofer Timor, who had been a combat fighter pilot in the Israeli Air Force. More noir-sounding financial connections have trickled out recently. In March 2007, the two-year-old Payoneer did a $4 million fund-raising round led by Greylock Partners’ Moshe Mor, a former captain in Israeli military intelligence. “The Internet payout space may well become,” he said then, “a killer application.”
And according to two online job biographies, a Payoneer account manager clerked for the chief justice of the Supreme Court of Israel. One blog pointed out that Carmel Ventures, which led an $8 million investment round, was co-founded by a venture capitalist whose firm biography says that he served in an elite Israel Defense Forces technology unit.
“This is hardly a market space for the faint of heart,” Charlie Federman, managing partner at Crossbar Capital, another investor, said in a 2007 Payoneer press release. A recent report from Gulf News described him as a managing director of the venture capital fund co-founded by the mayor of Jerusalem, Nir Barkat, which isn’t quite right. Mr. Federman is that firm’s former managing director.
Since last month, a clip of Mr. Tal’s appearance on Fox News during the 2006 Lebanon War has been circulating: “Yuval, thank you for being here,” the host says. “You used to be an Israeli soldier, special ops, et cetera—you know this inside and out.” He nods and smiles. As his biography for prepaid industry conventions like last year’s Expo puts it, he served “in an elite combat unit of the Israel Defense Forces.”
FRAUD IS BECOMING more sophisticated,” Mr. Tal said on April 1, 2003, “to the point that it’s almost an art these days.”
Five years later, after the Carmel investment in Payoneer, he announced that the money would go toward working on compliance issues and beefing up customer-identification tools.
As it happens, that press release said the company had hundreds of thousands of cards in circulation, though three weeks afterward, a different press release put the number in the tens of thousands.
Payoneer would not comment for this story. “I don’t think that we can meet,” Mr. Tal wrote, “but I’ll truly try to see that we chat.” He didn’t respond to further emails. A visit this week to the 15th floor of 410 Park Avenue, the company’s address, revealed that it was a virtual office that handles mail and call screening for hundreds of firms. Payoneer’s real Manhattan headquarters is a fifth-floor suite on Broadway near Columbus Circle, decorated by large blowups of prepaid cards. Its site says the firm also has a research-and-development center in Tel Aviv.
It’s not clear who handles compliance for the company. Last year’s Prepaid Expo listed Cherie Hamblin, a certified anti–money-laundering specialist, as its chief compliance officer. At this year’s event, she was on the panel of five judges that gave Payoneer a 2010 Paybefore Award for best business-to-employee program.
Las Vegas was nice. Mr. Tal went out for coffee with the British attorney Robert Courtneidge, a fellow panel member he’d met at the previous year’s Florida conference. “He comes across as a very nice individual. Very trustworthy,” said Mr. Courtneidge. “You meet with him and feel comfortable right away—family man.” They both had pregnant colleagues along with them, who chatted.
The businessmen talked about maybe doing business together in Europe. “There’s a lot of money in the prepaid industry, a lot of people looking with interest at how to capitalize on the growth of the prepaid phenomenon,” said Tony Craddock, the head of an industry organization called the Global Prepaid Exchange, also a panelist. “A lot of people making money and a lot of people who want to make more.”
In 2007, the research firm Mercator Advisory Group said that around $11.3 billion in American wages had been distributed on prepaid cards the previous year. Mercator estimates that last year’s sum was $20.6 billion, and that in 2012 the number will be $33.1 billion.
“He’s a well-respected business professional, he’s got a very clever business model, he’s doing something, as far as anything can be in the world, unique,” Mr. Craddock said. “He’s very well backed, and he’s very well referenced. I don’t know what else to tell you.”
Additional reporting by Alexandria Symonds