Bengaluru-based Razorpay, a converged payments solution company, has taken lot of strides in revolutionizing digital payments and helping businesses, especially start-ups, scale big in a short time.
In an exclusive interview, Harishil Mathur, Co-Founder & CEO of Razorpay, shares his views on India’s digital journey and about Razorpay, which works with more than two lakh businesses powering their payments.
Below is the edited excerpts of the interview.
Q: How has Razorpay’s journey been so far and what is the biggest differentiator that has helped in scaling your business?
A: One thing what we did when we launched Razorpay in late 2014 was that unlike other payment companies, we did not focus on large businesses. We focused only on start-ups and registered companies. We onboarded thousands of start-ups when nobody was really catering to them. They were very small companies not doing very significant volumes. We got them in good numbers and some of them grew up to become really big. Betting on those start-ups helped us grow very quickly and one or two of them scaled up 1000 to 2000 times. I think that bet played very well for us.
Some businesses, who were doing less than $ 1,000 in volume, are now doing millions of dollars. As they scaled up, our business too scaled up with them and we started serving larger and larger companies. So, on-boarding start-ups proved to be a major differentiator for us. Even today we strongly focus on start-ups and ensure that our business is built for start-ups.
Q: Could you share more details on Razorpay Capital & Razorpay X?
A: We launched two new verticals - Razorpay X and Razorpay Capital - in January this year. Razorpay Capital is our lending arm through which we help businesses on our platform get loans from our partner lenders based on the customer’s transaction pattern and history.
Razorpay X is a back-end platform, where it allows businesses to manage their entire current account through Razorpay. It is essentially a digital bank account where businesses can own and operate their account. It gives them lot of visibility into how their business is performing, how their revenues are growing and how their costs are affecting. It gives them real time insights into various things. It’s kind of an AI-driven digital bank. Both Razorpay X and Razorpay Capital are seeing very good traction.
Q: Where does India stand in its journey of digitizing its financial sector?
A: India is in the early stages of digitization of its financial sector as a significant chunk is still doing business in the non-digital and traditional channel routes. The focus of government and the regulators towards digitization, demonitization, GST and with new instruments like UPI and others – all of these are significant towards digitizing the sector, but it still has a long way to go.
Overall, the digital payments market in India is $50 to 60 billion. Compared to markets in US and China, which is over trillion dollars, we are too small for an economy like ours. In the next four to five years, given the data that we are seeing, it should almost go ten times from here. And that change is necessary if we really want to call India’s digital journey a success. The smart phone penetration is definitely helping the sector go digital at a fast pace.
I think we are on the right track and the regulator has opened up a lot of things in the last couple of years. However, there’s a need to remove a lot of red tape in having more openness in terms of regulations.
Q: How has been the growth of UPI in India?
A: Unified Payments Interface (UPI) is one of the biggest growth drivers for us as a company. Early on we placed a big bet on UPI as we realised that this is going to be a game changer. We saw the technology and realised that this definitely has a scope for changing the way payments are done in the country. UPI, which contributed less than 2 percent of our payment volume a year back is now contributing almost 18 to 20 percent. It has grown by almost ten times in the last one year.
Overall, the biggest advantage of UPI is that it’s one of the only instruments in the country today built for mobile first. And with the deep smart phone penetration in India, UPI is shaping up in a big way. UPI coming on Whatsapp will definitely change the game in India and it will have a more significant impact on digital payments.
From Razorpay’s perspective, the role we play in UPI is acceptance. We help businesses accept UPI. The initial growth of UPI came on P2P. Once they saw the kind of traction it was getting, they realised how easy it was to make payments via UPI. Now it is much more simpler and business are agreeing to accept UPI.
Q: What are your plans for this financial year?
A: Last financial year has been exceptionally good for Razorpay, where we grow by almost 500 per cent. This financial year too, our target is to grow by a similar multiple. Our new verticals - Razorpay X and Razorpay Capital - have seen an early traction. Our focus this year would be to scale them up. We want to add a lot of features and additional services on both.
Our long-term goal is to build the entire financial ecosystem for disruptors. The companies that we are working with are generally disrupting our segment. Our goal is to provide them with the entire ecosystem - from banking to lending to payments - under one roof. I think we are closer to achieving that objective now than we were before.
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