Razorpay and its Business model
Startups and the regular happenings and events should be your top priority to check in each day. If you haven’t started reading about startups yet, start now with this article that we bring to you.
Razorpay has recently joined the unicorn list. It has become the fifth Indian Fintech startup to be valued over $1 billion including several other startups such as Paytm, Billdesk, Byju’s, Flipkart owned PhonePe and Policybazaar. Paytm is currently the most valued startup with a valuation of about $16 billion.
All the future entrepreneurs should look at Razorpay and understand how it achieved this significant success. Don’t worry, we have done the research for you. Let’s begin with the story.
When you have an initial idea and decide to make your own venture to cater to the problems faced by most of the general public or a specific group of the society, you need to accept that it’s not at all easy. You have to invest, take risks, fail and start again, work even on sundays and you never have time in the initial years.
And even after giving up your leisure time and the best of your efforts, your startup can fail. An estimated 90% of the new startups fail !!
Razorpay and its Co-founder Harshil Mathur have a similar success story. It is a story of perseverance and speed which is a motivation for all those emerging entrepreneurs to keep moving. Razorpay is a B2B payment solutions company which was rejected by about 100 banks but now beating all odds has turned into a huge success. In 2014, the idea emerged when the co-founders Harshil Mathur and Shashank Kumar were working on the crowdfunding portal and realized that the online payment mechanisms were quite cumbersome. The engineers were not trusted, due to a lack of financial education background and hence faced problems but pulled it off at the end.
So, how does Bengaluru based Razorpay make revenue and what are the services offered?
Razorpay consistency in innovation is a major reason for its significant performance and revenues. It enables online payments by providing integrated solutions and developer friendly Application programming interface with a comprehensive dashboard to manage payments including UPIs, credit cards, payments and receivables. In 2017, Razorpay launched Invoices, Route, Smart Collect and Subscriptions which allow businesses to manage multiple aspects of money movement.
Apart from this, it is also responsible to support Small and Medium enterprises through Razorpay Capital by providing them easy access to lenders and fulfill instant cash requirements. Razorpay launched two features for improving its services offered, namely partial payments allowing users to make payments in parts against a particular ID rather than all in once and other being Batch uploads, let business process bulk links at once rather than individual links by uploading a single document containing multiple orders.
Razorpay X is a comprehensive banking platform launched to fulfill multiple needs of businesses through a particular account number. This enables businesses to manage all forms of payouts and receivables on Razorpay itself. It is built on robust technology to provide innovative services to the businesses.
Razorpay X and Capital contributes to about 35% of the total company revenue. It charges 0.25 to 0.5 percent fees on every transaction made through its gateway. Razorpay 2.0, an evolved version also accounts to about 30% of the company’s revenue and is looking to increase product adoption from one to two. Razorpay has raised a Total funding of $206.5 Million till date. It generated a revenue of over INR 197 crore in FY 2019 as per Inc 42.
The fintech startup witnessed 500 % growth alone in 2019 and provides services to over five million businesses including Swiggy, Zomato, Cred, Facebook, Aditya Birla, NSE, Airtel and several others.
“If technology is a second step, if technologies are second thought after cash and traditional modes, then it can never overtake cash. That’s what clicked for us,” quotes Harshil Mathur, CEO and Co-founder, Razorpay.
Harshil Mathur believes that speed has been a part of the growth journey. Razorpay was an early bird introducing UPI payments, complete digital onboarding process for businesses, first to launch support for Bharath QR, and also the first to introduce recurring payments for businesses through Razorpay Route. At the moment, Razorpay cater to more than 350000 merchants onboarding 5000 merchants everyday.
“There’ll be ups and downs, but you need to stick to what you believe and you need to keep pushing,” adds the techie-turned-entrepreneur.