Payment solutions firm Razorpay ventures into SME lending

Published: December 11, 2018 3:41:55 AM

The company has also announced the launch of The X Club, a subset of the Razorpay X.

Previously, Razorpay had partnered with Unified Payments Interface (UPI) and opened its platform for multiple digital payments options for businesses.

By Srinath Srinivasan

Razorpay, a leading converged payment solutions company, has ventured into lending to small-to-medium enterprises (SMEs) by launching Razorpay Capital, along with two other products — Razorpay X and Razorpay Flash Checkout — at RazorpayFTX, its flagship fintech conference.

Previously, Razorpay had partnered with Unified Payments Interface (UPI) and opened its platform for multiple digital payments options for businesses.

With the new additions to its product suite, Razorpay 2.0, the firm will focus on not just providing payment gateway but also subscriptions, disbursements, business-to-business collections and the goods and services tax (GST)-enabled services. The team at Razorpay aims to add value to the fintech ecosystem with its suite of products enabling payments for disruptive business models.

Razorpay Capital aims to validate a business’ transaction history with Razorpay and provide credit from lenders who have partnered with it. This would try to reduce SMEs’ waiting time for loans and hasten for transfer of loans to their accounts.

The product already has $30-million annual lending disbursals in its trial stage. The firm aims to increase it to $100 million, cumulatively, by the end of March. Currently, over 100,000 businesses are on board with Razorpay which can integrate this service to their business accounts.

The company has also announced the launch of The X Club, a subset of the Razorpay X.

Razorpay X will be India’s first artificial intelligence (AI)-driven application programming interface (API) banking system. Unlike a banking account which is transactional, the product will unbundle the services to enable the management of all forms of payouts — salary, vendor payments through National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS), Immediate Payment Service (IMPS) and UPI — on a platform. The AI core will give real-time insights on how much financial runway is left and what is the annual revenue rate for a given business. The X Club will be a community which will offer initiatives like training, bootcamps and networking from leading start-up accelerators and investors.

To do away with traditional two-way authentication through SMS while shopping on e-commerce sites, the Razorpay Flash Checkout has an in-app Native One Time Password system.

This is supported by all banks and ensures there is little to no waiting time. What this means for the e-commerce companies is an increase in their conversion rates (a visitor turning into a customer) by up to 15%. This will also enable users to stop searching for preferred payments method – saved card or digital wallet and also stop using Virtual Payment Address (VPA) for UPI transactions. While there are no direct homegrown rivals for Razorpay, the firm may compete head-on with US-based payments companies like Celery, PayTrace, Sezzle, PayU and Daxko.

Razorpay co-founder and chief executive officer Harshil Mathur said, “While large businesses have their own services, we want to transform the way disruptive small and medium businesses transact. Moreover, it is also possible for large businesses to partner with us and make their payments easier than before. We are also the fastest-growing company to achieve a billion dollar annualised total payment volume, as of December 2017.”

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