Razorpay Success Story - How is it Facilitating the SMEs with Effortless Online Payment Mechanisms?

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Smartphones and the internet certainly took the world by surprise, but, at the same time, they signaled a world full of advanced technologies that would extend efficiency and availability for everyone living in it. The growth of cutting-edge software and technology thus helped in opening the gates to limitless opportunities for all the thriving sectors of the world. The banking and payments industry is one of the sectors where these developments have ushered in some major transformations. Digital payments or online payments are some of the many advantages that the new-age technologies have brought forth. The growing ways of payments and instant online payments of today are not only benefitting the banking and finance industry but the merchants and the general public as well all across the globe.

In the same field, with the vision to revolutionize the online payment mechanisms by providing transparent and developer-friendly APIs with hassle-free user integration, Razorpay was launched by Shashank Kumar and Harshil Mathur in the year 2014.

Razorpay is an Online Payment Solution in India allowing businesses to accept, process, and disburse payments with its product suite. It helps the business entities gain access to all the modern payment modes like credit and debit cards, net banking, UPI, and other popular wallets in the country namely JioMoney, Mobikwik, Airtel Money, FreeCharge, Ola Money, and PayZapp. Razorpay's online payment solutions can be integrated by both web and mobile applications.

Here's more about Razorpay, its Founders, Team, Industry, Mission and Vision, Name, Tagline, Logo, Business and Revenue Model, Competitors, Future Plans, "when was Razorpay established?" and more.

Razorpay - Company Highlights

Razorpay - About and How it works
Razorpay - Industry
Razorpay - Founders and Team
Razorpay - Startup Story | How did it start?
Razorpay - Mission and Vision
Razorpay - Name, Tagline and Logo
Razorpay - Business Model and Revenue Model
Razorpay - Partnerships
Razorpay - Competitors
Razorpay - Funding and Investors
Razorpay - ESOPs
Razorpay - Acquisitions
Razorpay - Growth and Revenue
Razorpay - Products and Features
Razorpay - Investments
Razorpay - Challenges
Razorpay - Awards and Recognition
Razorpay - Future Plans

Razorpay - About and How it works

As mentioned earlier, Razorpay enables online payments by providing developer-friendly APIs, powered by an effective integration process. Razorpay also offers a comprehensive dashboard to manage payments, as well as other plugins and integration suites for all major backend technologies and e-commerce platforms. With its efficient products, Razorpay is bettering the online payment systems for startups and other companies and improving the individual experience too.

In September 2017, Razorpay launched four products - Route, Smart Collect, Subscriptions, and Invoices, which allow businesses to manage multiple aspects of money movement including collection, reconciliation, and disbursal.

During the same time, Razorpay also announced that it was entering the SME lending space with its subsidiary venture called Razorpay Capital. It is a lending platform that is designed to support Small and Medium Enterprises with instant and easy access to lenders. This initiative is aimed at solving liquidity and cash-flow challenges by providing these firms with quick settlements and collateral-free loans. A beta version of the platform was launched in September 2018 and has already disbursed $30 million in loans.

Also, Razorpay added two new features to its services offered. These are respectively called ‘Partial payments’ and ‘Batch Uploads’.

• Partial Payments - It allows the end-users to make payments in part against a particular order ID instead of making the entire payment at once
• Batch Uploads - It lets the business entities generate and process links in bulk rather than creating individual links by uploading a single file containing collect order details.

Razorpay X (Comprehensive Banking Platform) is an AI-driven API banking platform, which is set to fundamentally transform how businesses move money. The account number provided enables businesses to manage all forms of pay-outs (salary, vendor payments through NEFT, RTGS, IMPS, UPI) and receivables on Razorpay itself. Posing as a unique solution, businesses can now do everything and more with Razorpay that they were existentially doing with banks till now. Lately, there has been a significant enhancement to the existing online payment mechanism. Razorpay has also launched more new features to its checkout. These are essentially called Affordability, Personalization, and Native OTP.

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Razorpay - Industry

The Indian market for fintech has seen massive growth in the past decade and has been hailed as the world's fastest fintech industry in terms of growth where over 67% of around 2,100 fintech companies have been set up if we look back at the last 5 years.

As per the Razorpay Team, the Indian fintech market will touch Rs 6.2 lakh crore by 2025. It also added that COVID-19 has accelerated the company's digital payments segment.

Razorpay - Founders and Team

Razorpay is co-founded by IIT Roorkee alumni Shashank Kumar and Harshil Mathur.

Harshil Mathur

The CEO and Co-founder of Razorpay Harshil Mathur is an IIT Roorkee alumnus who completed BTech in Technology. Mathur further went on to join Y-Combinator in the W15 batch in 2015. Harshil started his career as a Wireline Field Engineer at Schlumberger. After his brief stint with the company, Mathur then decided to found Razorpay in 2014 with Shashank Kumar.

Shashank Kumar

Shashank Kumar is known as the Co-founder and CTO of Razorpay. He was also a former IIT Roorkee student who completed his BTech in Computer Science before attending Y-Combinator in 2015. After completing 3 months as a research intern in the Computer Science and Engineering Department at the University of Minnesota, Kumar joined another internship at Microsoft as a Software Development Engineer. Concluding 3 months as a Microsoft intern, Kumar eventually joined as a Vice President at SDS Labs before he joined as a Software Development Engineer at Microsoft. He worked as an employee with the software giant for less than 2 years and then decided to part his ways and co-founded Razorpay.

Razorpay has more than 1000 plus employees working with the company, as of 2023.

Razorpay - Startup Story | How did it start?

This startup idea originated when the co-founders were working on the crowdfunding portal and in the process came to realize how muddled the online payment mechanism was in India. Besides, they also discovered that the US-based payment systems are not ideal for the Indian markets, especially if we look at the credit card penetration. Following these, they changed tracks to work on the payments problem in India, where the implementation of technology was really tough. Furthermore, the rate of payment failures was also considerably high and the pricing that was available earlier lacked transparency.

“We realized that most online payment gateway solutions were extremely cumbersome to get started on, especially for start-ups and small- and medium-sized enterprises. When we contacted a few payment gateway companies, we were asked for our past operational records, presence of physical offices, security deposits, and very high set-up fees. Online reviews of most payment gateways in India confirmed similar bad experiences,” said Mathur.

They, thus, started up to build a friendly online payment gateway that would be easy to integrate and use. After conducting some market surveys in the initial stages to verify the feasibility of the idea and then accumulating a positive response from potential customers, the co-founders decided on starting to work full-time on the Razorpay idea.

This initiative originated in Jaipur as a part of the winter batch of Y Combinator's startup program in 2015. Eventually, both these co-founders quit their respective jobs at Microsoft and Schlumberger after being supported by Startup Oasis in Jaipur, set up jointly by the Rajasthan Industrial Investment Corporation (RIICO) and IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE). Razorpay is also regarded as the second India-focussed company to be chosen by the Y-Combinator program, the first being ClearTax.

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Razorpay - Mission and Vision

As part of Razorpay's mission and vision, the company ensures that the "businesses find it easy to accept and receive payments."

Founded by IIT Roorkee alumni, Razorpay believes in revolutionizing money management for online businesses. The company aims to do it by providing clean, developer-friendly APIs and hassle-free integration. It offers a fast, affordable and secure way for merchants, schools, eCommerce, and other companies to accept and disburse payments online. Furthermore, Razorpay also helps its users to own a fully-functional current account and avail of working capital loans.

Razorpay - Name, Tagline and Logo

Razorpay is currently operating with the tagline #PoweringDisruptors.

Razorpay - Business Model and Revenue Model

Razorpay charges 2% fees on every subscription collection transaction made through their gateway. With the emergence of Razorpay 2.0, the company has seen a growth in its revenue streams. It now contributes about 30% of Razorpay’s total revenue generation. This online payment portal is now looking to increase its average product adoption from one to two. The team expects RazorpayX and Razorpay Capital to contribute close to 35% of the total company's revenues.

Razorpay - Partnerships

Razorapy has partnered with many companies; some of the companies are:

Razorpay has partnered with Truecaller in order to create great shopping experiences that improve convenience for both customers and companies on August 31, 2023.

Razorpay partnered with Axis Bank and the NPCI of India to launch Turbo UPI on May 30, 2023.

Razorpay partnered with Mastercard in July 2021, and this partnership helped the company, together with two other companies, Rupay and Visa, launch TokenHQ.

Company partnered with Sokin in August, 2020; it is the first European business to do so with Razorpay. Through this arrangement, customers will have access to a rapid, secure, and legal means of transferring money back home.

Razorpay and Shiprocket announced a partnership in August, 2020 that will accelerate daily operations for logistics companies while reducing many inefficiencies.

RazorpayX partnered with Visa will introduce corporate cards to support small business owners in November, 2020.

Razorpay and PayPal have partnered to integrate with and accept payments from global clients in year 2020

Razorpay - Competitors

The online payments market is fairly crowded when it comes to ventures operating in the sector. In a market scenario like this, Razorpay competes with both well-established and new entities. Some of the prominent Razorpay competitors are:

• InstaMojo
• PayPal
• Paytm Business
• PayU
• Payoneer
• GoCardless
• Apple Pay for merchants
• Oxigen
• Citrus Pay

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Razorpay - Funding and Investors

Razorpay has raised total funding of $815.7 million, as of June 6, 2022. Razorpay last raised around $75 million on May 9, 2022, in a secondary transaction ESOP sale.

The company raised $375 million in the previous Series F funding round with the help of Alkeon Capital, Lone Pine, and TCV, who were the lead investors of the round the company saw on December 19, 2021. Furthermore, this round also saw other existing investors like Tiger Global, Sequoia Capital India, GIC, and Y Combinator. The Series F round is expected to help the company ramp up its banking suite, RazorpayX. With this round, the company has now become the most valued fintech startup in India. The valuation of Razorpay was last confirmed to be $7.5 billion on December 20, 2021.

The company's October 2020 funding round led by Sequoia Capital India, GIC, and existing investors of $100 million has given Razorpay a "Unicorn" Status amidst the coronavirus pandemic.

"We at Razorpay have always been a payments company, and our focus has always been financial solutions. With this funding we want to go further in our reach. We aim to build deeper tech products and solutions, as we always have done" - Says Harshil Mathur, Co-Founder & CEO, Razorpay

Here are the funding details of Razorpay below:

Razorpay - ESOPs

Razorpay's journey in ESOP buybacks began in November 2018 when it organized its first ESOP sale for 140 employees. Subsequently, in November 2019 and March 2021, the company conducted its second and third ESOP sales, with 400 and 750 eligible employees, respectively. The March 2021 ESOP buyback was valued at $10 million.
Razorpay announced a major ESOP buyback program, where approximately 650 existing and former employees sold their shares, collectively valued at nearly $75 million. These shares were sold at a 15% discount compared to the company's preference shares, following the entry of Lightspeed and Moore Strategic Ventures into the company's cap table. This $75 million ESOP buyback initiative marks Razorpay's fourth and largest to date, positioning it as the second-largest buyback in the Indian startup ecosystem, with Flipkart's Rs 600 crore ESOP buyback in 2021 standing as the largest of such buybacks.

To date, Razorpay has awarded ESOPs to more than 1,940 employees, both current and former, creating significant wealth opportunities for its workforce.

Razorpay - Acquisitions

Razorpay has acquired eight companies as of September 12, 2023. The acquisition of BillMe was the latest acquisition on September 12, 2023. The acquisition of PoshVine on September 27, 2022, was followed up with the acquisition of Ezetap on August 18, 2022, and IZealiant Technologies on March 16, 2022. The company acquired Curlec on February 8, 2022, and TERA Finlabs on July 19, 2021. The last two of the acquisitions are Opfin on November 23, 2019 and ThirdWatch on August 5, 2019.

Here's a listing of the 8 acquisitions of the company:

Razorpay - Growth and Revenue

Razorpay has managed to record an exponential growth rate since its inception, and currently, the company powers payments for more than 5 million small and large businesses, including Facebook, Ola, Swiggy, Zomato, Indian Oil, Cred, and more. The Bangalore-based fintech services company claims to process total payments worth around $50 billion annually and records a healthy growth rate of 40% - 45% month-on-month.

The company is now hailed as the most valued, privately-held fintech company with a valuation of $7.5 billion, and the second-most valued Indian fintech service company after One97 Communications Ltd. The valuation of Razorpay witnessed a seven-fold jump in its valuation since 2021 when it was valued at a little over $1 bn.

Some of the growth highlights of Razorpay at a glance are:

• The merchant count increased to 3,00,000 in 2019, which is currently estimated at over 8 million, and may rise to 10 million too in FY22.
• Razorpay achieved $60 bn in total payment volume (TPV) via its platform in 2021, 20% above $50 bn, which was targeted for the year.
• Razorpay witnessed an impressive 3X increase in its transaction volume, which was registered at around 400% in September 2021.
• The fintech startup has deployed its ZealPro product suite across 50+ banks spread over 18+ countries in Asia and Africa.
• On the disbursement side, Razorpay powers more than 5% of the IMPS transactions.
• Out of the Indian unicorns, more than 34 of them are powered by Razorpay, when last reported in December 2021.

Razorpay Became Payment Aggregator After the RBI Sanction

Razorpay received in-principle approval from the RBI against the payment aggregator license, as per reports dated July 8, 2022. Pine Labs was another company that received the same, as its wholly-owned business Setu received the same via its subsidiary, Agya Technologies, which is now an account aggregator. PhonePe and NSDL E-Governance were two other entities that received the same in 2021.

Company also released the first product of its kind in the world: Buy Now Pay Never (BNPN) on April 1,2022.

Financials

EBITDA

Razorpay - Products and Features

Razorpay has launched many products and features some of the prominent features are:

• Curlec By Razorpay (July 2023): Razorpay introduced its first international payment gateway, Curlec By Razorpay, tailored for the Malaysian market.
• MoneySaver Export Account (July 26, 2023): Razorpay launched a special solution for Indian exporters called the MoneySaver Export Account.
• Turbo UPI (May 2023): In collaboration with the National Payments Corporation of India (NPCI) and Axis Bank, Razorpay introduced "Turbo UPI."
• Payment Reconciliation Service (April 27, 2023): Razorpay, as a member of ONDC, became the first payment gateway to launch a payment reconciliation service for buyer and seller apps.
• Affordability Widget (January 20, 2023): Razorpay unveiled the Affordability Widget as part of its Affordability Suite.
• Foreign Exchange Service (January 30, 2023): Razorpay initiated a foreign exchange service to assist startup founders in repatriating venture capital raised abroad to Indian bank accounts.
• UPI Autopay on QR (Global Fintech Fest 2023): Razorpay and NPCI jointly unveiled "UPI Autopay on QR" at the Global Fintech Fest 2023.
• Accept Credit Card Payments via UPI (January 20, 2022): Razorpay became the first company to enable merchants to accept credit card payments through UPI.
• Digital Lending Platform (November 2022): Razorpay launched a digital lending platform catering to NBFCs and fintech companies.

Razorpay - Investments

Razorpay has seen 4 major investments to date. The latest investment of Razorpay was in HostBooks on June 10, 2022. The Gurgaon-based fintech startup, which has raised its Series A funding round worth $3 mn, where Razorpay was counted as the lead investor. Biswajit Mishra and Kapil Rana founded HostBooks in 2009, which is currently serving as a cloud-based platform that provides accounting and compliance functions to small and medium enterprises (SMEs). HostBooks will use these funds to scale up operations and the product suite they have.

The previous investment of Razorpay was in the Seed Round of NextPay, a payments fintech that supports SMEs in the Philippines.

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Razorpay - Challenges

Razorpay had its share of challenges and yet another challenge came up in the form of cybercrime. Razorpay underwent a theft of Rs 7.3 cr against which the Bengaluru-based fintech company has filed a complaint with the South-East cybercrime police. The cybercrime was conducted over a period of 3 months and the police are trying to track down the hacker, as far as the reports dated May 20, 2022. The Head of legal disputes and law enforcement, Abhishek Abhinav Anand of Razorpay, filed a complaint when the company failed to reconcile the receipts of Rs 7,38,36,192 against 831 transactions, on May 16th, 2022.

Razorpay-Alt News Controversy

The Alt News Co-founder Mohammed Zubair was arrested on June 27, 2022, in response to a tweet made by him in March 2018, which had the picture of a banner of "Honeymoon Hotel" repainted as "Hanuman Hotel". However, as the case proceeded, it came out that Alt News didn't receive foreign funding from countries like Syria, Australia, Singapore, Pakistan, and the UAE, but the money it got was only from donations from the Indian banks via Razorpay. This had Razorpay suspend all its payments that ensured donations to Alt News. However, following clarity on the issue, the reputed payment gateway service provider has unblocked and reinstated the merchant account. Nevertheless, Razorpay was strongly criticised for suspending the Alt News donation links and admitting the sharing of the donors' data with the investigating agency. Alt News also stated that the payment gateway-providing company shared the donors' data without asking for any consent from the fact-checking website. The Razorpay CEO, Harshil Mathur has finally opened up and mentioned that the data that Razorpay shared was "within the scope of the investigation”, as per reports dated July 9, 2022.

Razorpay - Awards and Recognition

The various awards and recognitions that Razorpay received throughout the years include:

• 2022- At the ET Startup Awards, Razorpay received the "Startup of the Year" award.
• 2018 - Recognised as one of India's Top 50 Mid-Sized Workplaces in the category of “Great Places to Work.”
• 2018 - Awarded by IAMAI as the “Best Digital Payment Facilitator.”
• 2018 - Awarded by LinkedIn as India’s 25 Most Sought-after Companies to Work for.
• 2017 - Was a runner-up for the “Financial Express Software Product of the Year.”
• 2017 - The co-founders Shashank Kumar and Harshil Mathur got selected for the 'Forbes 30 Under 30'.
• 2017 - Backed the Bronze Award for the Best POS Innovation by PYMNTS.com.
• 2016 - Made it in the Nasscom 'League of 10' Companies.
  

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Razorpay - Future Plans

Razorpay announced its strategic decision on February 23, 2024, in line with its aggressive intentions to conduct an initial public offering (IPO) within the next two years. This financial move is a major turning point in Razorpay's future trajectory and reflects the company's deliberate attempts to position itself favorably for the impending IPO.

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FAQs

What is Razorpay?

Founded in 2014, Razorpay is a Bangalore-based fintech company that stands as a popular payment gateway service provider for online payments. With a wide variety of payment modes that Razorpay enables the merchants to have access to, it allows businesses and individuals to accept, process, and disburse payments via its product suite. With its fast and effective products, Razorpay is revolutionizing the online payment systems for startups and others.

When was Razorpay established?

Razorpay was established in 2014 by Harshil Mathur and Shashank Kumar.

What is the transactional limit for Razorpay?

Razorpay encourages transactions up to a maximum payment of Rs 5,00,000. However, the Razorpay limit per transaction can also be increased by speaking to Razorpay customer service support.

How much does Razorpay charge per transaction?

Razorpay charges around 2% per transaction according to its standard plan designed for small and medium-sized businesses and individuals.

Does Razorpay refund money?

In case of an incomplete or failed payment, Razorpay refunds the amount back to the source.

What are the Razorpay competitors?

Some of the Razorpay competitors are:

• Paytm
• PayPal
• Stripe
• PayU
• GoCardless
• Payoneer
• Apple Pay for merchants

What is the Razorpay revenue in 2022?

Razorpay clocked Rs 1481.1 crore in revenue in 2022, which made it turn with a net profit of Rs 7.3 crore.

What is the total Razorpay funding?

Razorpay has received $815.7 million in funding to date, as of May 9, 2022.

What is the Razorpay helpline number?

The Razorpay helpline number to contact the company is 1800-123-1272.

How to change the business name on Razorpay?

The process of changing Razorpay business name is easy and efficient for the users to follow. They simply need to go to the Customized Checkout section, and then navigate to Change Business Name and Description to do effortlessly. This will help them change the business name that appears on the Checkout section of the Payment Link's payment request page.

Does Razorpay charge for UPI?

No, Razorpay doesn't charge for UPI transactions.

Does Razorpay login need money?

No, Razorpay login is via an easy process after the user has already signed up with the Razorpay company. There are no setup or maintenance fees for Razorpay account and the Razorpay login doesn't even need money.