Cashfree aims to cross Rs 1,000 crore revenue in FY25, projects 25% from non-payment products

Reeju Datta, Co-founder, Cashfree

State Bank of India (SBI)-backed online payments processor and aggregator Cashfree Payments is targeting a revenue milestone of Rs 1,000 crore for the financial year ending March 2025, with a projected 25 percent anticipated to come from non-payment products, said co-founder Reeju Datta.

While Cashfree is yet to post its results for FY24, this statement comes at a time when the company is under significant pressure to rebound from a challenging period marked by a 46-fold increase in losses in FY23.

The company's growth was impeded by a temporary ban from the Reserve Bank of India (RBI) on enlisting new merchants, which had slowed its expansion over the past two years.

The recent lifting of the RBI embargo in December 2023 has been crucial for the fintech firm, but it now faces the daunting task of restoring profitability and gaining market share amid increased competition in the fintech sector.

"We are focused on returning to profitability by the first quarter of FY25 and sustaining that profitability going forward," Datta told Moneycontrol. “The plan is to have 30-35 percent of revenue from non-payment products. It is about 25 percent as of today.”

Focus on non-payments and cross-border opportunities

Besides meeting the pent-up demand for new merchant sign-ups, Cashfree has been actively working on diversifying its revenue streams by launching a range of new products and upgrading its existing offerings.

The company's new product lineup includes RiskShield, a risk management solution for payment gateways, and Flow Wise, a payment orchestration platform. Other additions are no-code link KYC or know your customer service for verifications, embedded payments, BNPL Plus, a buy now, pay later product, and an escrow offering.

These were all launched within the last 12 months.

“Big marquee names that want to use multiple payment aggregators are signing up for Flow Wise. There has been a lot of talk about fraud monitoring across businesses. So we are getting strong interest from entities looking to ramp up their compliance,” Datta stated.

Flow Wise is designed to manage the entire payment process, including integrating various payment methods and optimising success rates in real time.

“The platform has swiftly scaled from inception to a remarkable 4,000 crore monthly processing volume,” the company reported.

Cashfree is also targeting the regulatory technology (RegTech) space with the launch of RiskShield and KYC Link, a digital identity verification solution for micro, small and medium enterprises, and emerging sectors.

These products are expected to enhance Cashfree's competitiveness against standalone identity verification and fraud management firms like Signzy, Hyperverge and IDFy.

The company recently ventured into cross-border payments, becoming the first firm to secure a licence for this segment. “The opportunity here is significant. We expect it will add new users, including freelancers, exporters and global brands,”Datta highlighted.

Fundraise in the offing

In March 2024, Cashfree reportedly raised a bridge funding round of Rs 130-150 crore from existing investors, with plans to seek additional funds from external investors.

"It (the additional fundraise) is expected this year. We are looking to raise money and will announce it soon," Datta added.

Cashfree had raised funds in June 2021 from SBI at a post-money valuation of $200 million. The company has raised over $44 million to date, according to Traxcn.

Additionally, the company has undergone a senior management reshuffle as part of its strategy to bolster growth.

Harsh Gupta, former senior vice president at Razorpay, has joined as chief revenue officer. Arun Tikko, the current chief business officer, is now leading the international business expansion, while banking and alliance lead Anshul Lal has exited the company.

Compared to Cashfree, rival Razorpay, backed by Peak XV Partners, reported a consolidated revenue of Rs 2,279 crore for FY23, a 53 percent on-year increase, primarily due to growth in enterprise and SME customers. However, Razorpay’s net profit remained flat at Rs 7.3 crore for FY23.

Cashfree on the other hand recorded 75.43 percent growth in its operating scale in FY23 while the losses  surged to Rs 133 crore versus Rs 3 crore in FY22 on the back of slow growth and high costs. The FY24 numbers, which may reflect the real impact of the slowdown, are yet to come out for both the firms.

Meanwhile, Prosus-backed PayU India, another Cashfree rival, which also underwent a temporary 14-month ban till April this year reported a moderated growth of 11 percent in revenue to $444 million in FY24.

The growth was lower than the 31 percent in FY23 due to the embargo on onboarding new merchants.