Neo-Banks in India
Company Profile — Razorpay
- Razorpay is a financial technology platform that offers payment gateway and processing solutions for individuals and businesses. RazorPay is headquartered in Bengaluru, India and was founded in 2014 by Harshil Mathur (who also acts as CEO) and Shashank Kumar.
- RazorPay’s primary goal is to help Indian businesses establish an online presence that enables customers to complete financial transactions quickly and reliably. The Payment Gateway, a system designed to handle end-to-end payments, was used by more than 30,000 merchants as of 2017.
- On every domestic transaction, the company take a 2% transaction charge and 0.36% GST which makes 2.36% in total, and for the international transaction, they take around 3.54%.
- By September 2017, RazorPay had evolved from just being a payment gateway to converged payment solutions. Rebranded as RazorPay 2.0, it soon began contributing almost 30% of the company’s revenue with value-added services, such as RazorPay Route, RazorPay Smart Collect, RazorPay Subscriptions, and RazorPay Invoices and Payment Links.
- By 2019, the company had command of more than 12% of the Indian payments' domain, up from just a 2% market share one year previously.
- RazorPay saw approximately 300% growth in the 6 months leading up to October 2020, despite the Covid-19 pandemic.
- After a period of sustained accelerated growth, in October 2020 RazorPay announced they had achieved unicorn status after securing $100 million in a new financing round.
- Along with the valuation of $1 billion and most recent series D financing round of $100m, RazorPay has raised a total of $225m in funding from over 30 investors.
- In 2019, the payments business formed 70% of RazorPay's revenue, and the neobanking platform RazorPayX, (along with RazorPay Capital) formed the remaining 30%
Business Model and Revenue Model
- RazorPay charges 0.25 to 0.5 percent fees on every subscription collection transaction made through their gateway.
- The company charges as much as 2% on every transaction carried out via their payment gateway.
- The RazorPay 2.0 product suite still contributes about 30% of RazorPay’s total revenue generation, as of 2020.
- 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 percent of the company's revenue.
- Like a typical payment gateway, RazorPay earns through TDR (Transaction Discount Rate, or a small fee charged per transaction which is usually borne by the merchant). RazorPay website shows there is no annual maintenance fee or setup fee. They also offer custom pricing to large enterprises.
Aims and Values
- To make payments accessible to any business in India with a bank account and a phone number.
- An open and transparent culture.
- Developing new technologies and scaling up business activities.
Some of Razorpay's Competitors
- PayMate — A business-to-business payment solution provider headquartered in Mumbai.
- PayTM — An Indian e-commerce payment system and financial technology company.
- HyperWALLET Systems — Financial technology company that offers an online worker payout platform for financial institutions and marketplace companies. Its payment platform and settlement network allows companies to distribute funds across countries in different currencies.
- Innoviti — Indian payment solutions company that designs products to help businesses find innovative solutions to solve real-world payment problems.
- RazorPayX is the neobanking platform of RazorPay, described as one of India's top 4 neobanks.
- RazorPayX is a business banking platform: a fully digital banking software that allows businesses to do everything from open a current account, track invoices, schedule payments, pay tax, apply for loans, and view financial reports, all from one dashboard. This helps businesses manage their finances seamlessly and have complete visibility and control.
- RazorPayX can be used as a fully-fledged business banking platform. In addition to being able to add funds via various methods, you can also use it as the default settlement account for all your online payments. From there, you can process payouts through API or the intuitive dashboard to your customers, vendors, partners, employees, etc.
- In addition to standard banking features like cheque book, unlimited deposits and withdrawals, and account statements, you also get access to custom features like maker-checker, queued and scheduled payouts, bulk payouts, vendor invoice management, instant tax payments and more.
- RazorPayX began providing current accounts, cards and services in partnership with RBL (formerly known as Ratnakar Bank), an Indian private sector bank headquartered in Mumbai.
- Towards the end of 2019, close to 3,000 businesses and startups were leveraging RazorPay’s current account feature .
Some Industry Trends
- Impact of the Covid-19 Pandemic — Domestic SMEs faced stiff challenges during 2020. Many were hoping to bounce back by leveraging digital technologies to increase their revenues, while the freelancer economy is also starting to flourishing again. While the potential for SMEs and freelancers continues to grow, businesses still lose out on prospective global clients due to highly complex payment and banking infrastructure, processes and systems. As a reaction to this, in 2020 RazorPay announced a partnership with PayPal, to facilitate global transactions for small businesses and freelancers . By integrating PayPal into RazorPay's payment platform, freelancers and SMEs will now be able to accept international payments without having to write a single line of code.
- Another trend arising from the pandemic — Gaming companies reported 30% increased demand for online gaming services during a three-month period of lockdown. Businesses were struggling with their manual financial processes to get instant access to customer’s bank account details, in order to transfer rewards and winnings immediately. A delay in processing payout winnings or prize money can detrimentally affect the gaming experience for the user and impacts brand trust. Designed to automate and process instant payouts to customers and vendors without bank account details, RazorPayX announced the launch of Payout Links for businesses in gaming, e-commerce, rental and other sectors. Traditionally, businesses have been following manual processes and undertaking multiple follow-ups to collect customer’s bank account details to initiate payment to the customer. Lack of an automated process has cost customers a waiting period of 5-7 days after being contacted, and impacted businesses with a 40% increase in operational cost. RazorPayX Payout Links help businesses reduce this friction by automating and centralizing the process with minimal human intervention, empowering businesses to process payouts to customers instantly, in under 5 minutes via UPI, IMPS and within 1 hour via NEFT, RTGS. Rental & e-commerce businesses stand to gain from this offering, as it helps them eliminate time and effort required to process payouts by 95%, without any human intervention required to collect bank account details; and further reduce 30% of customer support tickets arising from such delays.
- Health insurance — Less than 10 percent of Indian businesses can afford health insurance for their employees as the process is tedious, lacks transparency, and is expensive. This problem is magnified further for startups with less than 20 employees, especially when health insurance is key during this Covid-19 era. To ensure they no longer have to struggle with this, in December 2020, RazorPayX announced the launch Group Health Insurance, in partnership with Plum and ICICI Lombard, covering teams as small as two employees. Businesses using RazorPay payroll can now access benefits and affordable premiums within 60 minutes.
- Localized multilingual payment experience - India already has nearly 700 million internet users, of which more than 300 million prefer to interact in local languages. A new solution has been developed which will deliver a localized payment experience to customers, with a multilingual checkout page for completing financial transactions. The new solution will help thousands of non-English speaking merchants and customers from tier-III and tier-IV cities view the checkout page in languages including Hindi, Kannada, Tamil, Telugu, Marathi, Gujarati, and Bengali.
- Having spoken to over 200 Startups & Freelancers during Covid, RazorPay found that this under served business community needs a customized payment solution which is easy and fast to implement, requiring no technology expertise or dependence on third party vendors for receiving payments. This led to the launch of RazorPay Payment Buttons, a platform which converts the capabilities of a full-stack payment gateway into a payment button, requiring no developer support and giving end-users a simple, fast and secure checkout experience. In addition, RazorPay’s Payment Buttons will enable new growth avenues for the micro-entrepreneur community by supporting 100+ currencies for international payments. The product helps businesses to send automated receipts to customers without any manual intervention and is compatible with leading website builders and content management tools.
- Strong focus on tech and innovation.
- Strong focus on what is built and who it is built for.
- Complete focus on B2B customers only.
- Being able to reduce hassles for merchants who want to sell online, allowing them to upload their documents and automate the entire payments process .
- Features such as 'Checkout' on the payment platform. This allows customers to start and end the payment process on a single page without any re-directs, leading to better payment success rates and customer retention rates. RazorPay’s solution comes with a powerful dashboard that allows merchants to track key business metrics as well as get customized reports. The dashboard also enables merchants to easily handle customer refunds at a click of a button.
- Payment gateway support for 90+ currencies; ease of integration, painless to set up and feature-rich.
- Some more unique features of the payment gateway are instant activation within two minutes and over 100 payment modes.
- The company recognized 5 million business clients in 2019. CEO Harshil Mathur announced he expected the company to process $25 billion transactions for 10 million customers in 2020
- RazorPayX serves B2B customers exclusively. In August 2020, CEO Harshil Mathur reported that the company had over 8,000 businesses using its neobanking systems.
- By October 2020, Mathur revealed that this number had reached 10,000 businesses using RazorPayX banking services.
- In 2018, the company revealed that almost 20% of RazorPay's merchants were from Tier I cities, while the rest are mid-scale merchants. The company's gateway also powers payments for internet companies like Yatra, Goibibo, Zomato, Swiggy & Voonik. It also powers subscriptions for the recently launched Zomato Gold
Target Customer Segment
- RazorPayX's target segment are Millennials, Generation Z, SMEs and Workers.
- Small businesses and startups are central to RazorPay. The goal from the start was to build a platform dedicated to startups and their payment needs.
- B2B customers.
Customer Behavior and Sentiment
- RazorPay's 2019 Digital Transactions report, which provides analysis of the online spending pattern of consumers and businesses across multiple payment modes and rapidly evolving FinTech ecosystem in India, found digital payments grew 106% alongside improved consumer sentiments.
- RazorPay is of the view that the incentivised programs to promote digital payments and greater collaboration between banks and FinTech firms will be beneficial for the digital payments' ecosystem.
- By 2020, it was observed that consumer sentiment has changed due to the economic slowdown, with job losses and pay cuts particularly prevalent during the global pandemic. According to reports, buyers are wary of spending money and are opting for micro-credit options. Consumers are embracing the idea of micro-credit for small-ticket purchases. And e-commerce players in India are looking for new financial services to attract and retain customers by offering them a micro-credit option where a consumer can buy now and pay later without having to pay any interest if paid within the agreed time.
- The complete list of RazorpayX products and services include Payments, Current Accounts, Cheque Book, Credit Card, Payroll Management, IT and Compliance Management, and Customer Relationship Management.
- RazorPay has generated generally positive customer reviews.
- However, there are some examples of customers who have had negative experiences.
- The most praised aspects are the technical features such as ease of use and setup.
- Complaints log registered issues with fraudulent activity.
- Some parts of the payment gateway software have been criticized.
- Homepages contains a view of an example of the RazorPayX dashboard and front end screen.
- Scrolling down you can find features, such as demonstrations of the banking hub and process flows.
- Customer feedback is also available. Scroll to the right at the prompt to view four different customers detailing the support and influence on their business activities.
- At the bottom of the homepage, you can select one of three current account plans, Basic with a virtual account, Pro with a current account, or Enterprise for high volumes of payouts.
- Selecting Capital from the Products drop down menu gives a view of financing such as loans or credit cards.
- Development information, support and pricing are all also available from the drop down menu here.
- We do not have the option to provide screenshots of the website.