Harshil Mathur of Razorpay is all about sharp edges

When we meet in early January, it’s just over a year since the embargo on onboarding new merchants imposed on the company by RBI in December 2022 (linked to licensing issues in a fast-changing financial environment where products often precede laws) was lifted. In the calendar year following that, the company grew at an unprecedented pace, says Mathur. “Typically, we onboard 100,000-200,000 merchants in a year. Once the moratorium was lifted, within a period of two months, we onboarded 150,000 merchants because almost 80% of the businesses that had signed up before it was imposed came back and started using Razorpay again," says Mathur.

It is great validation for the company—after all, even though complexity and a tough regulatory environment make digital payments a less competitive space than, say, e-commerce, Razorpay has several top-tier competitors, among them PayU, CC Avenue, Cashfree, Paytm and Stripe. “There is this famous quote that one of the best ways to know if your startup is important is that if you vanish tomorrow, how many customers will miss you? And I think this made it very clear for us. These were customers who had gone live with other companies in this space but when we were live again, they wanted to switch back to us," recalls Mathur.

With 5 million-plus customers, among them high-profile companies like IDFC First bank, Zomato, Swiggy, Westside, Cognizant Technologies and BookMyShow; 3,300 employees; and an annualised total payment volume (the amount of money it processes as payments) of $180 billion, Razorpay could well rest on its laurels. But even during the 10 months or so that it took the company to start acquiring new clients again, it didn’t remain stagnant. It launched over 50 new products for existing clients and diversified its business into areas such as offline payments, its neo-banking arm Razorpay X, and international markets—they launched a payment gateway in Malaysia. Valued at $7.5 billion in its last funding round in December 2021, the company has had one of the fastest growth trajectories among Indian unicorns.

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At the Razorpay office in Bengaluru’s Koramangala, the post-new year rush is visible on the day we visit. The colourful office is almost full, with employees working out of cubicles, on couches and bean bags and from the many meeting rooms named after famous inventors. We meet Mathur in “Guglielmo Marconi", named after the inventor of the wireless radio telegraph system.

Though Mathur and his co-founder Shashank Kumar don’t do too many interviews, as the company turns 10, there has been a decided push to be more visible. “Some founders spend a lot of time building personal brands, and I understand that it is probably useful if you’re building in the consumer space, but it doesn’t offer a significant advantage to us and can in fact become a distraction. In the finance space, you want to create a sense of trust and responsibility, and I think oversharing (one’s) personal life somewhere dilutes that," says Mathur.

It’s not an act—“both me and Shashank are naturally very private people," says Mathur—but it is a persona they had to deliberately cultivate when they were just starting Razorpay as fresh-faced techies in their early 20s. “Payments is a complicated business, and both Shashank and I were techies in our first jobs when we started building Razorpay. We didn’t come from finance industries, so we didn’t really have a lot of connects in the ecosystem," recalls Mathur. Payments is also a business where you can’t build in a silo—“you can’t just write code, deploy a website and start operating".

They needed banks and other financial institutions to partner with them, and were laughed out of many meetings when they said that they didn’t need help setting up a payment gateway for their product, but were building a brand new one.

“In the first year, I personally would’ve met a hundred-ish bankers to get an approval," recalls Mathur. “There were moments when we wondered—is this the right space to build in? Because we could do something like e-commerce where we would be in control of our destiny and not have to depend on getting approvals or a partnership. It took a lot of time, but the only thing that kept us going was the fact that our customers kept telling us that they needed this problem to be solved."

Around 2013, the two co-founders, who were friends from IIT Roorkee, where Mathur studied mechanical engineering and Kumar computer science, started building Razorpay remotely in their spare time while working their day jobs—Mathur in Dubai at Schlumberger, and Kumar in the US with Microsoft. “We didn’t have a lot of hobbies and we loved to code" is how Mathur explains it.

 

Initially, the two were working on a side project in social crowdfunding and wanted to accept payments, which is when they discovered how difficult it was for a small startup or SME to set up an online payments system. At that time, e-commerce in India was taking off, but payments remained a big issue for all but the biggest merchants as the digital payments infrastructure was geared towards large enterprises and transactions.

“We spoke to a lot of startups and asked them ‘how do you solve for payments?’ and they all said they’re facing this issue. Many were doing only cash transactions because of this and that didn’t make any sense. The technology was also subpar because it was built for very large enterprises, which would optimise multiple things on their side. So it took three to six months for a startup to do the payments integration and start operating," says Mathur.

The day Razorpay launched, it had brought this timeline down to a week—today it takes less than a day.

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The two got their first big break when they applied for a spot on Y Combinator (YC), one of the biggest startup incubators and accelerators in the world based in Silicon Valley, US, and were accepted. It was during their time at YC that they learnt a lesson about crafting an image, and it was then YC president Sam Altman, now famous as the CEO of OpenAI, who delivered it.

“We were telling Sam that we were finding it difficult to get banks and VCs to take us seriously. We looked too young, we looked like techies. So he said ‘if the problem is you look young, why don’t you try looking old? Why are you going around in T-shirts? You should wear a suit, you should dress up. You should look like bankers if you want to interact with bankers.’ It really shifted our mindset," says Mathur.

They got their first suits stitched and started going for bank meetings dressed formally. The advice seems to have worked, because soon, Razorpay had landed a partnership with HDFC Bank.

Razorpay, though incorporated in the US as many companies were at the time—being funded by YC was a factor—actually started life in Jaipur, where Mathur grew up with his father, who worked at a bank, his mother, who ran a beauty parlour, and a brother. “The easiest way is to start in your parents’ house because you don’t have an operating cost," says Mathur. Along with himself and Shashank, most of the founding team of Razorpay were college friends from IIT Roorkee.

The two founders returned from the US with Series A funding from Y Combinator in their kitty. “That’s when we decided to move our base to Bengaluru. We were just a 12-15 people team and we had got $11.5 million in capital. We knew we had to expand rapidly and it was not possible in Jaipur, so 10 of us moved into a four-bedroom apartment in Koramangala. We lived and worked out of it for years," remembers Mathur.

In fact, he lived in that Koramangala flat with Shashank and another friend till last year when he got married, reveals Mathur, grinning—something not many people know. “We would do hiring interviews in that house and people who had heard about us and knew that we were a well-funded company would wonder if we were actually legit or a fly-by-night operation."

 

At the moment, the company is in the process of “reverse flipping"—relocating its headquarters from the US to India, a complex manoeuvre involving potentially large tax implications, approvals from RBI and the National Company Law Tribunal (NCLT), and US regulators. This is all by way of heading towards an IPO. “We are still waiting for the approvals to happen so it should take anywhere between three-six months from now. After we flip, we need at least six-eight quarters of clean financials before we go public, so I’d say that we are at least two years from an IPO," says Mathur. 

With nearly a 5x increase in its net profit to ₹34 crore in the last financial year, the company also has plans to launch operations in Singapore and other South-East Asian markets. It already has an international presence with operations in UAE and Malaysia. It expects each vertical—offline and neo-banking businesses—to break-even and eventually become profitable by FY26 before it lists in the bourses; the core online payments business is already profitable.

His banker father still doesn’t quite understand how startups and their funding ecosystem work, reveals Mathur. “The first time we raised money, he was like ‘how will you pay it back?’ Now with the IPO coming, he gets it better, but I think all of us are a bit amazed at how big this has become."

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