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RazorpayX, the business banking platform of fintech unicorn Razorpay Software Pvt. Ltd, has started a foreign exchange service for startups, joining other venture capital-backed startups aiming to solve cross-border payments and disrupting a segment dominated by banks.

The service will allow startups to seamlessly transfer funds raised from global investors to India at a time when the country has become an attractive investment destination.

During the three months of its beta launch that ran till December-end, the service has enabled over 15 startups, such as Virohan, Tortoise, and Coupl, across the edtech, fintech, and financial services sectors, respectively.

The companies have raised funds translating into 350 crore annualized run rate in the beta phase.

Currently, forex transfers for startups are riddled with several gaps, as the overall process is expensive, slow and complicated. Multiple compliance paperwork adds to the challenges. “Getting funds into account could take up to two months or more, owing to the complex process. For instance, startups have to upload a lot of documents to the central portal of the Reserve Bank of India (RBI) before bringing the capital to India. It is a fairly manual process. There have been several instances where various errors have slowed down the process," said Rahul Kothari, chief business officer, Razorpay.

RazorpayX’s forex service looks to fix these challenges with a single window through which the entire documentation process can be automated while ensuring there are proper checks before uploading documents to RBI’s portal, said Kothari. “The platform helps startups complete the process in just 48 hours."

Startups in India also face higher forex rates, administrative fees and conversion charges. For example, if a startup has to pay 20 paise per US dollar for forex transactions, it could eventually end up losing nearly 20 lakh for receiving $10 million from global investors.

“Razorpay’s research noted that eight out of 10 founders discovered that they could have received a better forex rate while bringing capital to India. We have been able to bring the cost down by a lot," said Kothari. The Tiger Global-backed firm has joined hands with its existing partner banks such as RBL Bank for the forex service. It has also collaborated with forex experts specializing in working with startups.

Razorpay, founded in 2014 by Harshil Mathur and Shashank Kumar, provides payment gateway services to businesses and e-commerce platforms as well as several business services under its RazorpayX platform. It claims to have over 30,000 RazorpayX clients and aims to grow the customer base three to four times by the end of FY24.

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