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Razorpay eyes $90 billion in Total Payment Volumes for 2022, crosses $50 billion milestone

Amid reports that the startup is looking to raise a fresh round of funds, co-founder Harshil Mathur said that the company is in talks with investors but did not share any concrete plans. Mathur is optimistic that the startup will see a 2.5x growth in revenues in FY22.

December 09, 2021 / 11:16 AM IST
Razorpay's Harshil Mathur (CEO and Co-Founder) and Shashank Kumar (CTO and Co-Founder)

Razorpay's Harshil Mathur (CEO and Co-Founder) and Shashank Kumar (CTO and Co-Founder)

Financial services and payments startup Razorpay has set a target of $90 billion in Total Payment Volumes for 2022, ahead of its annual event Razorpay FTX. This will be a 50 percent growth over its current TPV of $60 billion which the company clocked in by early December 2021.

TPV refers to the total value of payments and reversals executed on a payments platform, in this case across Razorpay's payment gateway, neobank and other products.

Moneycontrol spoke with Razorpay co-founders Harshil Mathur and Shashank Kumar who said their optimism is driven by the growth in the neobanking business RazorpayX, increased onboarding of startups as clients for its various products and further product launches.

Mathur, the CEO of the startup said, “We had set a goal of $50 billion in TPV for 2021, we have crossed that. A lot of growth for us happens because of the pace at which new businesses are growing today. Of the 43 unicorns that emerged in 2021, we power 34.”

In FY21, Mathur said that Razorpay saw revenue growth of 250 percent. He expects FY22 revenue growth to be in the same range.


Funding plans

In its last funding round in April 2021, the startup raised $160 million which led to a 3x rise in its valuation to $3 billion. According to news reports, Razorpay is in talks with venture capital firm TCV for a $270 million fundraise.

The round is expected to increase the startup’s valuation by over 2.5 times to $6.5 billion, the report added. Mathur however said that the company is well-funded at this point.

“There have been stories, but we are well-capitalised. We are in a heavy growth space and will probably need to raise funds. So, we keep speaking to investors but that is all I can share right now,” he said.

New products to aid growth

For its next leg of growth, the Bengaluru-based startup has launched three more products – Magic checkout, Tax Payment Suite and Rize.

Magic checkout is aimed at making the checkout process 50 percent faster for customers by reducing the number of steps involved, leading to a 20 percent increase in conversion and revenue for retailers.

“We expect 50 to 60 percent of our SME clients to migrate to Magic Checkout in the next two years,” Mathur said.

The Tax Payment Suite will provide a portal for small businesses to execute various tax-related processes including Tax Deduction at Source (TDS), Goods and Services Tax (GST), Advance Tax etc.

Kumar said that the aim was to make tax payments easier and faster for small businesses.

“Businesses have to go to various portals to do various filings. And many of these portals are not easy to use. We have added a tax payment system where you can just select the tax that you want to pay and click on pay. That's it,” he added.

Lastly, Razorpay is also looking to serve as a launchpad for upcoming startups and the product Rize will help entrepreneurs from the initial incorporation to filing their first tax, paying their first payroll, and providing the tools to cater to their sales, marketing & finance needs.

It will also help entrepreneurs acquire their first loan or funding. The startup has partnered with over 50 product companies including Amazon Web Services, Freshworks, WeWork, Zoho, Shiprocket, WebEngage for this offering.

Aligning with new and upcoming regulations

Razorpay is in the center of the rapidly changing regulatory environment for fintechs. The Reserve Bank of India (RBI)’s new guidelines for Payment Aggregators (PA) and Payment Gateways (PG) kick in on January 1, 2022 and Niti Aayog has listed suggestions to introduce a new license for Neobanks.

As per RBI’s guidelines, merchants will no longer be allowed to store a customer’s card details on its platform. An alternative to this is tokenisation which allows customers to use a pin or token number representing their encrypted card details to many payments.

Razorpay has introduced a tokenisation solution and has tied up with card companies for the same. After the major disruption caused by the new recurring payments guidelines, will we see a similar disruption when these changes kick in?

Kumar said, “There is definitely some discomfort that will happen, because a lot of businesses may not have the time and the bandwidth to integrate tokenization. Unlike in recurring payments where transactions failed, in this case the inconvenience will be that you will have to enter your card details if the platform is not aligned with tokenisation. But it won't be as disruptive as recurring payments.”

The startup also has a platform to create recurring payment mandates in-line with RBI norms. With a huge chunk of banks not ready for the guidelines, startups that depend on subscriptions for their revenues have seen a huge drop in numbers over the past few months.

“The situation is improving slowly, it is still a long path to stabilisation. 40 percent of banks are now ready with the new guidelines, but we will see more banks come in only by April-May 2022,” Kumar added.
Priyanka Iyer
first published: Dec 9, 2021 11:16 am
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