Razorpay is one of the largest payment gateways in the Indian market, and like many online businesses, has seen huge opportunities during the covid pandemic as everything went online. The company offers infrastructure for businesses to accept, process, and disburse online payments via its website or app. It aims to make money transactions and management hassle-free so that startups can focus on other aspects of growth.
Over the years, the company has expanded its service portfolio to enable businesses make faster refunds to their customers, automate and execute payroll, automate vendor invoice and TDS payments, collect recurring subscription payments, and offer collateral-free business loans.
Features like address correction and automated order confirmations have also been introduced recently to help ease the logistics aspects for online businesses as well.
Today, the company says that over 8 million businesses use Razorpay and adds that it saw tremendous growth in 2020 due to the COVID-19 digital revolution. Razorpay also says that it processed $40 billion (roughly Rs. 2,93,944 crores) in total payments volume, and revenues grew 40 – 45 percent month-on-month throughout 2020.
In the next few years, it plans to increase depth by offering newer products that provide a better experience and simplify financial operations further.
Expert opinion: TechArc chief analyst Faisal Kawoosa acknowledges the exponential growth of digital payments in the Indian market. “The digital payment segment has gone substantially up for users across cities and segments. There are now some segments in metros which are making over 80 percent of their payments digitally through a mix of online banking, cards and wallets,” Kawoosa says.
However, he thinks that digital payment providers must work on the security aspects to reduce scams. Kawoosa adds, “I think the biggest gap right now is fraud using digital payment platforms. These wallets must work on additional checks so that users, especially with digital payment being increasingly used, are not cheated and scammed of their money.”
Gadgets 360 spoke to Shashank Kumar, co-founder and CTO, Razorpay to know a bit more about the company's journey so far and its future plans.
1. What were you doing before you began Razorpay?
After completing my graduation at the Indian Institute of Technology, Roorkee, I worked as a Software Development Engineer at Microsoft, Seattle,USA.
2. What motivated you to begin Razorpay? How did you and Harshil meet?
My co-founder Harshil and I studied together at IIT Roorkee and we collaborated together for a number of projects during the course of our college days. After we graduated, I moved to the USA to work with Microsoft while Harshil went on to work with Schlumburger in the Middle east. Having been good friends since college, we stayed in touch and worked on a bunch of side projects.
On one such side project in 2014, we were building a crowdsourcing platform to collect online donations for a cause and that's when we realised that most of the online payment gateway solutions were extremely cumbersome to get started on, especially for startups and SMEs. 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. The online reviews were bad, technical integration was clumsy and support provided by most payment gateways was terrible. The success rates, especially on mobile were bad then due to an inefficient payment flow. Having faced such bad experiences, we decided to shift focus to solve the online payments problem.
Most payment platforms take their APIs from banks. Then, they integrate with banks and build a further layer. Hence, they all look similar. But with Razorpay, we got to build the product first, keeping bank integration as the black box. We discussed what the merchants want and what our customers demand. We answered these and built our product. And thus Razorpay was founded as a payment gateway in May 2014.
3. What was it like in the first year of being in business? What are your key learnings from the early days?
Razorpay was founded on the premise of the inherent need in the market for a simple, online payment solution for startups to accept money from customers and we wanted to do everything we can to solve it. In 2014, it was a space none had travelled to, there was a lot to work on and we knew there'll be a thousand challenges coming our way but we were really determined to travel that journey.
Here are a few learnings that we still try to incorporate in our daily processes even today.
Firstly, keep talking to your customers at every stage of your business development. Whatever be the product you are trying to build, whatever be the problem you are trying to solve, identify your customer's needs by talking to them and solve them.
Secondly, dedicate your resources solely to processes that give you growth. There are many things a business needs to think about at the early stage like hiring, marketing and a hundred other things. But the focus point of all actions needs to be growth, because once you can achieve that, everything else will follow.
Today, we're sitting on a massive opportunity to create an impact not just in India but the world. And believe me when I say, we've just scratched the surface, which means there's much more work ahead of us than ever. But we believe we're better prepared today, we have more clarity in our vision and the path we want to take in the coming years.
And through it all, my biggest learning has been resilience, to keep moving forward.
4. How was it like sailing through the unprecedented COVID-19 crisis?
None of us have faced a pandemic of this sort in our lives before, and it affected us as much as everybody else. Our revenues dipped 30 percent in the first three months of the pandemic, morale was low and employees felt uncertainty. After the first 3 months, we started observing a huge interest from businesses across the country, small and large enterprises, to digitise their finances. The pandemic catalysed the adoption of digital technologies and gave rise to a lot of native-digital businesses.
This meant there was a need in the market for intelligent payment and business banking products that can simplify money movement for startups so they can focus their efforts towards growing their business. Within a year, Razorpay processed $40 billion (roughly Rs. 2,93,944 crores) in total payments volume, and revenues grew 40 – 45 percent month-on-month throughout 2020. Today, over 8 million businesses use Razorpay which stands testimony to the growth and uptake we have seen for our services over the past year.
5. In which year did Razorpay make considerable progress? Could you offer more details on what happened through that year?
2020 was definitely the watershed year for us, as we saw a phenomenal growth in business. After a 30 percent dip in the first three months of the pandemic, we started observing a 40 – 45 percent month-on-month growth. We onboarded over 1 million small businesses on the Razorpay platform in just six months, who in turn referred us to a lot more digital-native startups.
In October 2020, Razorpay's valuation reached $1 billion (roughly Rs. 7,348 crores), bringing us the coveted Unicorn status. And in just 6 months, in April 2021, our valuation tripled to $3 billion (roughly Rs. 22,046 crores). Such a fast growth in such little time was unheard of, and was made possible by the effort of every single Razor. Today, Razorpay has grown from a payment gateway to one of India's leading FinTech organisations that addresses the entire length and breadth of a business's money movement journey.
6. What does the recent IPO of Zomato mean for startups in India?
A lot of early startups in India including Zomato have done a phenomenal job to inspire entrepreneurs to startup. When Flipkart raised a $1 billion (roughly Rs. 7,348 crores) funding, it was unheard of in the Indian startup ecosystem. We are seeing a similar case with Zomato's IPO, which essentially reinforces the interest and trust that people have in startups and their business models. This trust from the ecosystem is essential for any Indian startup to thrive. I'm sure in the next couple of years, we can see a lot more startups doing things that are so far unheard of.
7. Are Razorpay services available outside of India? Could you detail some of the other services you offer?
Only businesses and individuals/freelancers in India can use Razorpay services as of now, although we support international payments in over 100 currencies. Razorpay is a full-stack financial services company that offers innovative solutions built over robust technology to address the entire length and breadth of the payment and banking journey for any business.
Overall, Razorpay offers 25+ different products that help businesses accept payments, make payments, borrow money, automate accounting and compliance and avail associated financial services such as payroll, insurance, fraud prevention, etc. The classification of our services is as below:
Payment Gateway: Razorpay's primary offering allows businesses to accept payments from India and international payments from over 100 currencies through a variety of payment instruments. Under the payment gateway product suite, Razorpay offers over 7 different products to customise and simplify the payment collection process. This includes Payment links, Checkout pages, Payment buttons, Subscriptions, etc.
RazorpayX: A next-gen business finance platform designed to automate and simplify repetitive and time-consuming financial tasks. From facilitating day-to-day payments, accounting and reconciliation to helping businesses borrow collateral-free loans, automate the payroll process, and adhere to the latest compliance standards, RazorpayX provides businesses and entrepreneurs with a future-forward solution.
Integrated with a current account (provided by India's leading banks), along with Razorpay's intelligent application layer, the platform creates a hassle-free and convenient business banking experience. Under RazorpayX, businesses can also avail additional services such as RazorpayX Payroll, Group employee insurance through Plum, and access to capital via Razorpay Capital.
8. You were valued recently at $3 billion after the recent round of funding in April? How do you plan to use the money?
Our vision is to build the central nervous system for fintech in India, and over the past 7 years we have been steadily stepping towards achieving this. We plan to invest heavily into developing new innovative payment and business banking solutions that can simplify business finance functions, specifically for startups and SMEs as they have been majorly under-served.
9. Do you have any advice that you'd like to share with future entrepreneurs?
I think right now is the best time to begin a startup journey, given the infrastructure development that has happened over the years, and the amount of resources, support and mentorship that's available.
The next big opportunity is in tier-2, 3, and 4 towns which will see massive innovation that can change the way people live their lives. There are a lot of problems to be solved for and if anybody is on the edge of whether to startup or not, I say take the plunge and be persistent, don't give up!
10. What are the big plans for the future? What new features and initiatives can be expected?
Like I said earlier, Razorpay is committed to building the central nervous system for Fintech in India. We have made some strides towards that journey; our recent initiatives in the Banking and Lending space through RazorpayX have helped businesses solve some very unique challenges around access to credit, managing money, empowering businesses to grow in spite of an economically difficult year.
This year and next, we plan to double down on our efforts further in these two areas to meet the rising demand and enable more and more traditional businesses to transact online. We plan to expand the breadth by increasing market share, and penetration, and increase depth by offering newer products that provide a better experience, simplify financial operations and significantly contribute to the growth of our partner businesses. Over 8 million businesses use Razorpay currently, and our aim is to increase this number significantly by the end of this year.
11. What is the employee strength? Is Razorpay hiring currently?
Razorpay has over 1,750 employees currently and is actively hiring for a variety of roles.