Imagine this: In the remote corners of Kashmir, a small kirana shop effortlessly processes payments, equipped only with a point-of-sale (POS) device. Similarly, for a textile exporter in bustling Kanyakumari, conducting transactions in international currencies, particularly US dollars, is a breeze—all without exorbitant commission fees. This seamless bridge between consumer and merchant, this facilitation of transactions, is made possible by Razorpay. Indeed, it won’t be an exaggeration to say that Razorpay has played a pivotal role in shaping India’s digital future.
A beaming Harshil Mathur, Razorpay’s Co-founder and CEO, tells Business Today that the Bengaluru-based company—which has made it to the BT-KPMG Best Banks and NBFCs ranking in the ‘Best Fintech’ category—boasts of powering online payments for 76 of India’s 100 start-up unicorns. “The core premise of Razorpay [when it] was founded in 2014 and what it is today hasn’t changed. It is to make money movement simpler and easier, whether it is for businesses to receive money, send money, or manage money,” he says.
Razorpay’s business model is straightforward yet powerful. At its core, it provides merchants and companies with a seamless payments gateway, simplifying transactions. This foundational service has always been at the heart of its operations. In 2018, Razorpay expanded its offerings by launching its neobanking platform, RazorpayX, and lending platform, Razorpay Capital—both designed to power the financial systems for disruptive companies. RazorpayX is a new-age business banking platform, built on top of a current account (from leading banks) and is designed to automate and simplify repetitive and time-consuming financial tasks. Razorpay Capital has been solving for the liquidity and cash-flow challenges of SMEs, by offering instant settlements and business loans.
As Mathur says, Razorpay realised early on that the potential to grow internationally was huge. And so, in February 2022, the unicorn acquired the Malaysian fintech company Curlec, which was known for building solutions for recurring payments. This acquisition allowed Razorpay to offer a full-stack payments gateway to the Malaysian market. In fact, Razorpay realised that a good business strategy entailed pivoting to becoming a holistic omnichannel payments ecosystem. And for this, acquisitions played a crucial role. Its latest, also its eighth, acquisition, for instance, has been the Mumbai-based digital invoicing start-up, BillMe. Through this acquisition, Razorpay can now generate digital bills, enabling merchants to engage better with their customers. Similarly, to enter the offline payments market, it acquired Ezetap for $150 million, rebranding it to Razorpay POS. As Mathur says, it was this acquisition that allowed Razorpay to truly become an omnichannel player in payment services. In December 2023, Razorpay POS clocked 40% growth in its Total Payment Volume (TPV) from April to October 2023 compared to the corresponding period a year earlier.
According to Mathur, these acquisitions have been extremely strategic and the fintech unicorn—valued now at a whopping $7.5 billion—wants to grow even further. “Currently, Razorpay is sufficiently capitalised and is looking to create innovative solutions for merchants that can disrupt the economy,” he says. So is there an IPO plan underway? “The company is fairly ready if we were to just go public as a payments company. But we will be doing injustice to the vision that we have. We would like to go public when our other businesses break even,” explains Mathur.
But what’s holding them back? Mathur says there are aspects of credit, banking and now offline that Razorpay wants to connect. “Only then will the synergies of the platform be far higher,” he explains.
Industry watchers too are enthused with Razorpay’s success. “Financial inclusion and MSME growth are being fuelled by a robust fintech sector. Razorpay’s achievements spur national development,” says Monica Jasuja, who is a fintech and product advisor.
But the fintech space itself has undergone a sea change. And an important component of this change are the government’s regulations, bringing fintech in line with other financial services. “Regulations have enabled India to become a global benchmark in fintech and UPI is one such example. These regulations have played a crucial role in driving financial inclusion,” Mathur emphasises. In fact, he points out that for any fintech to succeed in India, it needs to possess the right regulatory insights. “Given the growing prominence of the entire fintech industry in India's financial system, any significant compliance lapse, fraud, or risk could pose challenges for the ecosystem in India. Therefore, companies must possess the right regulatory insights and uphold a high level of responsibility to ensure compliance,” he says.
Mathur reiterates that despite the vast diversification that Razorpay has undergone since its founding, its core premise remains the same: to facilitate the movement of money. And with that singular aim in mind, it continues to build an infrastructure that caters to businesses regardless of their size, shaping India’s financial future in the process.
@Teena_Kaushal