Digital payments platform Razorpay was founded in 2014 as India’s first payment gateway for startups and small businesses. Soon the company evolved from payments to banking and in 2017 launched two new financial products aimed at businesses, freelance workers and home-based entrepreneurs. It also acquired a number of start-ups. CEO and co-founder Harshil Mathur speaks on the company’s future plans. Edited excerpts:
What are your plans for the coming year?
Our aim is to develop new technologies and scale up our product suites, Razorpay Capital which is our lending arm and the neo-banking platform, RazorpayX. We also expect these products, along with the non-payment gateway suite to contribute to 40% of our revenue by next year. With a 500% growth in the last one year, the company has been witnessing a healthy growth rate of 35% month-on-month. We are also looking at doubling our current headcount of 600 by 2020 and strengthening our leadership team further. Currently, we are powering payments for over 800,000 businesses including the likes of Indigo, BSE, Thomas Cook, Reliance, SpiceJet, Aditya Birla, Sony and Oyo and are working towards increasing this to 1,400,000 by 2020. We expect a 4x growth in our volumes by 2020-21.
How has the Indian fintech ecosystem grown in the last year?
India seems more than ripe for a Fintech revolution now, 2019 has been a year of exponential growth and innovation in fintech. The Indian fintech industry has matured and stepped intoan eraof rapid change. Let's consider these basic metrics. By 2020, digital transactions are likely to account for more than a quarter of transactions in the banking sector. By 2022, digital banking will have more than 50% penetration levels. By 2023, digital payment volumes in India are set to grow at over 20%, faster than China, and I believe all this is not a distant dream to achieve if our entire ecosystem is determined to build new and intelligent technologies to improve the Indian financial infrastructure. When was the last time you used cash to make a payment at your nearest kirana store? India has come closer to turning into a less cash reliant economy since the dispatch of UPI, which has become one of the fastest payment modes to bring financial inclusion. For instance, in September’19, UPI went past cards and other popular modes to become the most preferred payment mode, and in October’19, UPI was responsible for 50% of transactions on – surpassing cards by a 15% margin. I am certain that this will only grow as UPI continues to lead the way with more customised offerings and features.
Also, the demand for services such as credit facilitation and money management has increased considerably in tier II & tier III cities last year, and this will continue to grow in the near future. The country’s tryst with digital adoption has only just begun. The developing FinTech infrastructure, the transitioning mindset of people and traditional businesses, and collaborative effort of the government and financial institutions will significantly aid this growth in the country.
What is your strategy behind acquiring startups?
Our war is against cash, hence we want to address all problems surrounding it through new integrated data science technologies. Our acquisition of Thirdwatch, an AI driven company for real-time fraud prevention, has improved the response and redressal mechanisms of partner businesses in combating fraud. It is also aligned with Razorpay’s long term strategy of building core-competencies in big data and artificial intelligence (AI) by bringing in disruptive minds that can solve unique business problems in the industry. Our second acquisition of a Payroll and HR Management Software company, Opfin was to solve for seamless automation of a business’s entire payroll process. Payroll is a fragmented market with no clear solution. With Opfin, Razorpay hopes to make this effort a lot easier with robust technology and an enhanced experience. The Opfin acquisition is a significant part of RazorpayX’s business banking strategy and will also fastrack a few years in how the payroll industry has functioned and ensure that businesses follow all compliances.
Are you planning to raise more funds?
Razorpay raised its last funds through the Series C round of $75 Million in 2019, led by Ribbit Capital, Sequoia India and existing investors Tiger Global Management and Y Combinator. As we are well capitalised right now, we don’t intend to raise another round for the next six to eight months.