Neo-Banks in India

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Part
01

Neo-Banks in India

Company Profile — Razorpay
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
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
  • 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.
USPs
  • Strong focus on tech and innovation.
  • Strong focus on what is built and who it is built for.
  • Complete focus on B2B customers only.
  • 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.
Customer Base
Target Customer Segment
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.
Product Information
  • 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.
Customer Reviews
  • 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.


Sources
Sources

Quotes
  • "Razorpay is headquartered in Bengaluru, India and has 1 office location across 1 country."
Quotes
  • "Razorpay’s primary goal is to help Indian businesses establish an online presence that enables customers to complete financial transactions quickly and reliably."
Quotes
  • "#1 You want to easily add payments to your website or app, with a seamless checkout experience Razorpay’s Payment Gateway is a system designed to handle end-to-end payments. Have we told you how easy it is to integrate our Payment Gateway? You can go live in minutes, especially because our Payment Gateway is built for developers. The APIs, plugins, and libraries are very dev-friendly. Razorpay’s Payment Gateway supports the most extensive set of payment modes. From domestic and international credit/debit cards to UPI and mobile wallets, we’ve got you covered. "
Quotes
  • " Razorpay provides payment-gateway services used by more than 30,000 merchants."
Quotes
  • "Razorpay evolved from just being a payment gateway to converged payment solutions in September 2017. Rebranded as Razorpay 2.0, it soon began contributing almost 30 percent of the company’s revenue with value-added services..."
Quotes
  • "Indian FinTech company Razorpay has secured $100 million in its Series D financing round, making it the newest unicorn in the country. The FinTech’s latest partner is GIC, Singapore’s sovereign wealth fund."
Quotes
  • "Bangalore-headquartered Razorpay, one of a handful of Indian fintech startups that has demonstrated accelerated growth in recent years, has joined the coveted unicorn club after raising $100 million in a new financing round, the payments processing startup said on Monday."
  • "The startup expects to process about $25 billion in transactions — up five times from last year — for nearly 10 million of its customers this year, said Mathur."
Quotes
  • "Launched in November 2018, Mathur said RazorpayX now has over 8,000 businesses using its neobanking systems, and it continues to scale up operations."
Quotes
  • "We have more than 10,000 businesses already using a new banking services. And we plan to scale that up. We are trying to build a better banking experience for online and tech focused SMEs."
Quotes
  • "Currently, close to 3,000 businesses and startups are leveraging Razorpay’s current account feature. The Bengaluru-based payments company states that it aims to scale this offering to 40 percent of its entire client base."
Quotes
  • "How much does Razorpay charge per transaction? On every domestic transaction, they take a 2% transaction charge and 0.36% GST which makes 2.36% in total for every transaction, and for the international transaction, they take around 3.54% per transaction."
Quotes
  • "Apart from its existing revenues, last September, the payments solution firm also released its version 2.0, which had a stack of products, including automated disbursals, collections for subscriptions, smart collect for high-value RTGS and NEFT transactions as well as automated invoicing, keeping GST in mind."
Quotes
  • "Razorpay Business Model As reported by Your Story, the platform charges about 0.25 - 0.5 percent fees for each subscription collection transaction which takes place via their gateway. Through the set up of version 2.0, the platform has prompted multiple revenue streams heading ahead. The company charges as much as two percent on every transaction carried out via their payment gateway."
Quotes
  • "Well, the larger impact is to make payments accessible to any business in India with a bank account and a phone number."
  • "We’ve realised over the 3.5 years that when you’re transparent, you create trustworthy relationships – you breed loyalty"
Quotes
  • "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"
Quotes
  • "In terms of market share, the company commands more than 12 percent of the Indian payments domain at present, up from the two percent market share a year ago. It’s further scaling up from here, Harshil says."
Quotes
  • "Understanding and using payment gateway software like Razorpay can be demanding. An important factor for business owners to consider when looking for a payment gateway like Razorpay is the support and educational resources the payment gateway platform can offer. Choose a payment gateway that is considered an industry-leader with a well tested and well known software platform. If you are thinking of using the Razorpay platform you will need to know that Razorpay is payment gateway that you can rely on."
Quotes
  • "RazorpayX launches payout links, automates money transfers, without bank details"
Quotes
  • "Armed with reasearch and a zeal to build a platform dedicated to startups and their payments needs, Harshil and Shashank embarked on the Razorpay journey."
Quotes
  • "Currently, the payments business forms 70 percent of Razorpay’s revenue and the neo-banking platform, Razorpay X along with Razorpay Capital, which forms the rest 30 percent. Read more at: https://yourstory.com/2019/11/razorpay-neo-banking-corporate-credit-card-opfin"
Quotes
  • "The USP of RazorPay’s payment platform is its ‘Checkout’ feature, that 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."
Quotes
  • "USP: Support for 90+ currencies; Ease of integration, Painless to set up and Feature-rich. If you're looking for a payment gateway that is effortless to integrate and comes with an array of features, Razorpay is your best choice. It is the only payment solution provider in India that offers a complete end-to-end product suite. It provides merchants access to all popular payment modes like a credit card, debit card, internet banking from 58 banks, UPI, PayLater, and 8 mobile wallets."
Quotes
  • "RazorPay payment gateway comes with a hassle-free setup. Within minutes of registering your business, you can go live and start taking payments through payment gateways, payment links, payment pages, SmartCollect and subscriptions. RazorPay further ensures instant refunds through payment gateways. This online payment gateway boasts of some of the robust and developer friendly APIs, plugins and libraries which all contribute to create a seamless experience. USP: Some of its unique features are instant activation within two minutes and 100 plus payment modes."
Quotes
  • "Amid salary cuts, layoffs and downsizing of businesses in this Covid-era, a new set of micro-entrepreneurs - including freelancers and individual-run businesses are on the rise. In the last 5 months of the lockdown, Razorpay witnessed a 30% month-on-month growth in payments from micro-entrepreneurs. Having spoken to over 200 Startups & Freelancers during Covid, Razorpay found that this underserved business community needs a customised 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."
Quotes
  • "Revenue model: Like a typical payment gateway, RazorPay would earn through TDR (Transaction Discount Rate, or a small fee charged per transaction which is usually borne by the merchant). RazorPay website shows the annual maintenance fee and setup fee as 0. They offer custom pricing to large enterprises as well"