Money Movement Decoded for Online Gaming Companies

payment solutions for online gaming companies neobanking razorpay

The online gaming industry has seen a rapid expansion in recent years. It owes its growth to many attributes like increased smartphone penetration, accessible data, affordable tech, and the rise of the digital payments user base. 

Lately, we’ve seen the upsurge of several popular online games like PUBG, Fortnite, and more, successfully stirring up the interest of the youth of India. With more and more gamers joining the bandwagon, the demand for online games has increased. 

This has resulted in the outset of many online gaming companies in India. payment solutions for online gaming companies neobanking razorpay

The many forms of online gaming

“Online gaming” has multiple interpretations today. With so many different modes of gameplay, genres, channels, and player formats, the categories of online gaming are diversified.

However, among the most popular categories are freemium games and online real money games.

Freemium games

The word freemium is a fusion of free and premium. Freemium games are free to play, but compel the gamer to unlock features and customisations by paying the company. These types of games have mostly been sought after in recent times.

Online real money games

Online games that gamers play to win real money, which can be transferred to their digital wallets or bank accounts are called online real money games. These games are in high demand and are increasingly getting noticed by gamers.  payment solutions for online gaming companies neobanking razorpay

Online gaming and digital payments

Online games offer a ton of advanced features to be unlocked by gamers. And, Razorpay has already powered digital payments to several online gaming companies. 

Freemium games with in-app purchases are usually powered by Razorpay Payment Gateway, and the games that require month on month payments to unlock special features, typically use Razorpay Subscriptions. 

Let’s see how Razorpay powers online real money gaming companies.

There are two segments of online real money games. 

  1. Pay to play – where the gamer pays the company before playing
  2. Play to win – where the gamer wins money after playing

Play to win games are all the rage right now. Backed by well known VCs like Sequoia, RummyCulture, Dream11, MPL, Howzat, and more are very famous for their play to win games. 

In both these segments, instant gratification carries a lot of weight for these games to be as successful as they are. And that is simply because of the nature of these games. 

A gamer can collect their winnings after completing a game against an opponent. This means, it is not a continuous, cumulative victory, but a timed one. The gamer does not have to accumulate a certain number of points to collect their winnings. This means they might as well collect their winnings after the conclusion of each and every game. 

So, let’s talk about how these online real money gaming companies pay their winners. 

Essentially, rewarding the winner is considered a payout, a customer payout in particular. And, most of the time, there are many problems associated with making payouts traditionally.

  • Gaming companies need to make sure that the payouts are processed within banking hours so that the gamers get their money as early as possible
  • They have to wait out the cooling period after adding each one of the bank account details
  • UPI and IMPS based payouts have a cap on the total number

This is exactly why online gaming companies need a better solution so they can make timely payouts and ensure that the gamers get their winnings instantly. RazorpayX, a neobanking platform, helps with exactly that.

RazorpayX Payouts

Payouts helps automate the process of making payments to the winners, getting rid of manual intervention. 

  • The winners can be paid instantly via IMPS, UPI, without having to worry about bank hours
  • There is no cooling period, companies can make payouts to accounts immediately after adding them
  • No cap on the number of transactions

[ Read more: How to Simplify and Automate Payouts ]

Most online gaming companies do not require the gamer’s bank account details while setting up a gamer profile. So, how can they make sure the winners are awarded?

Again, RazorpayX has a solution.

RazorpayX Payout Links

Payout Links is the easiest and fastest way online gaming companies can disburse funds into the winner’s preferred bank account via IMPS or UPI. 

A Payout Link can be created on the RazorpayX dashboard. If there is a need for multiple Payout Links, APIs can be used. 

Upon sending the Payout Link to the winner, all they have to do is verify themselves via OTP and enter their preferred bank account or UPI ID. On successful entry of their account details, they receive their refund almost immediately. They will also be notified if there is an error with the account details they have provided, so they can re-enter the details or try with a different account.

The verdict – RazorpayX for online gaming

With RazorpayX, gaming companies need not make the winners wait for 5 to 7 business days to collect their winnings.  payment solutions for online gaming companies neobanking razorpay

2020 – The Year for Neobanking in India

RazorpayX - neobanking platform

Banks have been around forever. In India, the history of banking dates way back to 1750 BC. We have traditionally been dependent on banks for all of our financial needs, as individuals as well as businesses. 

Banks have offered us everything that we have required – from current or savings accounts to credit cards, various types of loans and also, insurance and investment plans. But with fintech startups, the dependency on traditional banks for these services is gradually decreasing, especially for businesses.

These new-age banking services providers are commonly known as neobanks. They are using technology to unbundle traditional banks. And how!

Lately, “neobank” has become somewhat of a buzzword in the fintech space. Quite a few neobanking platforms have emerged in the last few years, creating a storm at a global level. The term itself has gained so much momentum because of the media that it has become a hot topic.

Banking has moved forward in leaps in bounds in the past few years. The way businesses and individuals consume financial services has changed significantly ever since neobanking, API banking, and open banking became prominent in 2016. 

It’s no secret that traditional banks are on the front of increased competition from many arcs of the digital world. Neobanks are expanding rapidly, using state-of-the-art tech to win over customers, who demand simpler, faster, and more efficient financial services. In recent years, neobanks have become the next big thing in fintech. 

So, we wanted to bring you a snapshot of how neobanks are on the way to transform financial services globally. RazorpayX neobanking platform - RazorpayX - what is a neobankrazorpayx - neobanking platform

The expansion of neobanking platforms

Fintech startups all over the world, especially in banking and financial services have over 15 million consumers, out of which, over 50% of the consumers are acquired by neobanks. 

The incredible growth opportunity for neobanking platforms is sprouted by their low-cost business model, which has resulted in high adoption by small and medium-sized enterprises, as well as businesses with variable incomes and earnings, and businesses that embrace innovative tech. 

The speed of neobank adoption has intrigued investors, corporates, as well as venture capitalists all over the world. 

[ Read more: Everything You Should Know About Neobanks ]

Neobanking in India 

Globally, neobanks are entirely digitised. But, in India, regulations don’t permit 100% digitised banks. Fintech companies showcasing themselves as neobanks offer services that are built on top of traditional banking services. 

Regulatory framework for neobanks in India

Neobanks in India emerged as a comprehensive aid for banking and financial services, as well as for small and medium-sized businesses. But, RBI’s regulatory policies neither agree nor disagree with the factuality of fully digitised online banks – meaning, in India, neobanks aren’t 100% digital. 

Back in 2018, RBI kicked all forms of cryptocurrency to the curb, with an explanation that crypto transactions would be a threat to security. Also, other tech innovations like online currency and associated banking services appear to have come to a halt. This has put a damper on the tenacity of new business models since regulatory guidelines are muddled. 

However, in August 2019, RBI ushered in a new regulation for the testing of new fintech innovations in a restricted ecosystem, which is motivating for emerging fintech companies. 

Business banking with neobanking platforms

Neobanks have taken business banking to the next level on the grounds of their enormous range of offerings to businesses. 

Usually, businesses have to deal with dreary and dull processes involving payouts and disbursals. These processes take up many hours of manual effort owing to buggy software and complex infra systems. 

Neobanks are supported by the traditional banking infrastructure, and in return, neobanks help sell current accounts. With the partnership, neobanks provide all the benefits of traditional business banking, along with customised reports, flexibility for bulk upload, easier failure identification, scheduling of payouts, and so much more. And, RazorpayX is at the forefront of the banking revolution in India.

With RazorpayX, businesses can

  • Manage their contacts and end-to-end payout operations via powerful APIs
  • Get notified about their payout status and tracking codes through webhooks
  • Make 24*7 payouts, disbursals, and refunds through UPI, NEFT, RTGS, and IMPS
  • Recharge, store or transfer funds to their RazorpayX account for payouts
  • Offer 24*7 instant refunds and payouts to their customers and vendors etc., without any manual intervention
  • View financial summaries of all their transactions and drill down views of transactions at a contact level
  • Instantly access and download financial reports and summaries of their contacts
  • Get complete control and visibility of their finances with real-time summaries, without any help from financial analysts
  • Automate and execute payroll, compliance, and contractor payments with a dual tax regime compliant payroll software

The RazorpayX story

Traditional business banking is not the most efficient way to manage finances. And, several Razorpay merchants told us how suboptimal their business banking experience is. Since we were already spearheading payments, we thought about giving business banking a shot.

We conducted a survey among 1500+ CxOs and spoke to 400+ merchants to understand their business banking experience.

  • 64% of companies believe their payment service providers are best equipped to solve their payment challenges as opposed to banks
  • 10x as many companies polled believe payment service providers innovate better than banks
  • 36% of businesses believe manual dependency and reconciliation are the biggest challenges in their current money management

And so, we started our neobanking journey by creating a whole new platform on which we could build products and integrations. We created an entire API and dashboard payouts platform over a virtual account setup that merchants could use during the early access in 2018. As we scaled, we realised current accounts are the heart of the product to support higher volumes of transactions.  razorpayX dashboard - neobanking platform During our event FTX 2.019, we announced RazorpayX’s expansion into current accounts, payroll, and corporate credit cards. 

We built RazorpayX with Current Accounts in partnership with RBL Bank and included all standard banking services like cheque book, debit card, and accounting statements. For payroll, we acquired Opfin, a payroll and HR management software company, that also manages tax filing and compliance via a unified platform, without having to hire any external vendors.

We wanted to take this platform just a little bit further with Corporate Credit Cards.

We’re partnering with banks and networks to build corporate credit cards from the ground up that offer immense flexibility with limited-time credit period and auto-repayment for businesses. These cards powered by our credit intelligence engine can be used to make payments towards Google Ads, Facebook Ads, AWS, Business Travel, and so much more.

[ Read more: RazorpayX – How We Built a Startup in a Startup ]

The future of banking with RazorpayX

Online real money gaming is a forthcoming industry in India. The key aspect of making a great game that attracts a huge customer base is to ensure the game winners are rewarded, and really fast. The business model is all about providing its customers with instant gratification.

But, relying on netbanking and other manual payment modes are not the best way to go about disbursing the prize money to the winners. RazorpayX has helped companies like Mobile Premier League, RummyCulture, Pokersaints, and many more to transfer winnings immediately, and with ease.

The year for neobanking

There are over 42.5 million small and medium-sized businesses throughout India, constituting nearly 95% of the total industrial units in the country. But, only 47% of these businesses have been able to access tools for payments, disbursals, and other vital processes.

Furthermore, about 23% of SMEs use ERP software and CRMs. This means, there’s a huge market opportunity for neobanks, especially since they have a lot to offer. 

The gig economy of India has over 15 million contract workers and freelancers, who actively boost the growth of startups. And just like SMEs, only about 67% of the gig economy has access to innovative tech that helps with money management. Neobanks can help the gig economy by enabling independent workers with customer management and banking services.

Over the last 3 years, India has seen the rise of neobanks with 811 by Kotak, Yono by SBI, RazorpayX, Open, NiYo, and more. And, these neobanks have been successfully helping SMEs, large enterprises, and the gig economy with billing, cashflow management, disbursals, vendor management, and so much more.

Special Report: The Impact of Lockdown on Digital Payments

covid-19 era of rising fintech

Life during a pandemic is not something we anticipated. With social distancing, these trying times have affected the way we go about our daily lives. While we are still confined to our homes, trying to keep safe from COVID-19, the distress still persists. The pandemic has also devastated businesses across industries, including digital payments.

We analysed the digital payments made before and during the lockdown for our 5th edition of The Era of Rising Fintech report and gathered some noteworthy observations and insights.  

All findings in this report are based on digital payments made on the Razorpay platform during March and April 2020.

Key highlights

  • There was a 180% surge in NGO donation transactions in the past month since the beginning of the lockdown
  • During the lockdown, industries like utilities (bill payments), IT & software, and media & entertainment grew by 73%, 32%, and 25% respectively
  • Industries like travel, real estate, and food & beverage, and  groceries were hit the hardest as they observed a slump of 87%, 83%, 68%, 54% with closed establishments and cancelled travel plans
  • Mobile wallets exhibited impressive growth in the lockdown period, with Jio Money growing by 66%, Amazon Pay by 63%, and Paytm by 43%
  • In tier 2 and 3 cities, the mobile wallet wave swept over as they continued to witness a massive surge in wallet transactions for bill payments
  • Before the lockdown, UPI at 46%, remained the most preferred payment mode and continued to be so at 43%, 30 days into the lockdown
  • We firmly believe that fintech companies are likely to gain the profound trust of Indian consumers in the months to come
  • With tier 2 and 3 cities rapidly adopting the digital route for making payments, we foresee a gradual rise in digital transactions across industries

Fintech: 2020 and beyond

  • The trade impact for India has been estimated to be $348 million, according to the UN Conference on Trade and Development
  • We believe that the pandemic may boost demand for fintech-related services for consumers and offline businesses
  • We can also anticipate an expansion in various spheres like consumer banking, neobanking, as well as wealth management 
  • Investments in financial technology and opportunities for partnerships are likely to grow manifold as the fintech industry continues to burgeon steadily

 

Introducing Saved VPAs for UPI Payments through Razorpay

save upi vpa razorpay

UPI has become the most preferred payment method across India, but one problem that consumers still face is remembering their UPI Virtual Payment Address (VPA). Given the way VPAs are structured, it often also happens that they are entered incorrectly. 

We have observed this to be a major challenge when businesses on our platform accept UPI payments from their consumers. Nearly 20-25% of consumers enter an invalid VPA. Hence, to make your end user’s experience fast and seamless, we are happy to introduce the ‘Saved VPA’ feature on our Standard Checkout.

This feature will allow users to save their UPI VPAs so that they don’t have to enter the same again.The best part is that this feature is aligned to the existing Saved Card feature of Razorpay. So if you are already using the Saved Card feature, it will be really easy for you to understand and integrate. 

We have enabled the Saved VPA by default for all businesses on our Standard Checkout.

What problem will ‘Saved VPA’ solve? 

Let’s start with a simple question – Do you really remember all your UPI account VPAs? We know this is not easy. 

In the current scenario, the customer is asked to enter their VPA whenever they are carrying out a transaction via the UPI Collect flow (enter VPA to proceed). Data for users on IOS and desktop shows that 99% of UPI payments are done through the UPI Collect flow (the rest is UPI QR code). For users on Android, there are many apps/platforms where UPI intent (click on app to make payment) option is still not available. 

In all of these cases, the user has to enter his correct VPA address to make the payment. Let’s take an example: Rahul has created accounts in all the major UPI apps and has linked his 2-3 bank accounts with these UPI apps. Let say, his VPAs are: 

  • Google Pay: user_name@okhdfcbank (note: not just okhdfc), user_name@okaxis, name@okicici (note: not okicicibank) 
  • BHIM: Slightly easy to remember – phone_number@upi
  • PhonePe: phone_number@ybl or user_name@ybl
  • PayTM: phone_number@paytm

There are many other apps and platforms in the market for the user to register and create a VPA. The UPI VPA is different for different apps and platforms. No wonder then that someone like Rahul will end up taking a long time to make UPI Collect payments and often end up entering incorrect VPAs. 

No more incorrect VPAs

As the feature name suggests, Saved VPA allows customers to save their UPI VPAs so that they don’t have to enter the same again and again. The user has to just tap on his Saved VPA to initiate a new UPI payment. This feature helps in improving your overall user experience, reduces cart abandonment, reduces time taken by the user to complete the transaction, and improves payment success rate.

Initial insights have shown that the success rate for UPI Collect payment goes up by upto 15% with this feature.

Razorpay Saved VPA benefits:

  • VPA details are stored within a PCI secure vault
  • Removes the need for the businesses to store the VPA details
  • Ideal for businesses wanting to implement a quick checkout process for known customers
  • Seamless process to add and delete VPA details within the vault

USP: Global Saved VPA

  • Razorpay Standard Checkout allows users to store their VPA while carrying out a transaction for a business and can then be accessed (with login credentials) wherever Razorpay Standard Checkout is enabled, even with other businesses
  • For example: A user who is visiting Cure.Fit for the first time will be able to fetch and use his Saved VPA, if he has done a UPI transaction on any other business using Razorpay, like IRCTC.

For Server to Server/Custom UI integration, you will be able to fetch customer VPAs that were entered on your site or platform using local tokens.

How does this work?

  • You can save the details of a VPA entered by the user on Checkout
  • The entered VPA details are saved as tokens by Razorpay
  • On a repeat visit, while making a payment, the customer is shown all the generated tokens
  • The customer selects Saved VPA and completes the payment by just tapping on the shown VPA

Saved VPA is secured by PCI-DSS compliance 

  • Encryption through PCI-DSS compliance: First things first, Razorpay does not store your data as it is. Razorpay is PCI DSS compliant. The PCI Security Standards Council is a global organization that sets compliance rules for managing user data for all online payment systems. What this means for you is that your online transactions are encrypted to ensure there is no data interception
  • Tokenization to prevent exposure of data: The sensitive UPI information entered by the customer is stored and secured as “tokens” in Razorpay. This “token” is a unique set of characters that replace your original VPA address. This allows the payment to be processed without exposing your sensitive details
  • Consent to save: In case of Razorpay Standard Checkout, the customer’s explicit consent is taken to store the details. A checkbox is shown with the ‘Saved VPA’. option

Want to get this enabled for your business? Leave us a query here and we will get back to you. Not a Razorpay Customer? Sign up today for the ultimate payments experience!

Rang De – Uplifting Rural Entrepreneurs Across India

Rang De was started to address the huge unmet need for affordable credit for livelihood to overcome poverty. The inspiration for Rang De came from Muhammad Yunus and his contributions at the Grameen Bank. In its earlier avatar, Rang De has successfully reached out to 65,000 entrepreneurs and helped them build sustainable livelihoods.

“Our unique model leverages technology to connect social investors to rural unbanked entrepreneurs.”

Since their inception in 2008, they’ve been persistent in providing credit at affordable interest rates to credit-starved communities–early-stage or new entrepreneurs from low-income households.

Razorpay has helped Rang De in serving thousands of rural entrepreneurs across India with affordable credit by helping them raise social capital online from social investors. They have just relaunched Rang De as an NBFC-P2P. They are now regulated by RBI and are excited to be working with Razorpay in their new avatar.

“Rang De’s rural entrepreneur network is growing at 50% month on month and Razorpay has played a critical role in enabling this.”

Rang De uses a key Razorpay feature called Smart Collect (Virtual Payment Account) to receive repayments from their borrowers across India. Smart Collect makes their operations super efficient and also cost-effective.

Razorpay smartcollect

All of Rang De’s repayments from their borrowers are powered by Razorpay Smart Collect. 

They plan to serve 1 million low unbanked entrepreneurs with affordable credit across the country in the next 5 years, Razorpay’s Smart Collect is going to save them 100s of man-hours every month in doing this.

“Integrating our core product was quite easy with Razorpay. Two weeks off the block, and we were able to migrate most of our social investor’s credit balances from Rang De’s older platform into our new NBFC-P2P platform.”

That’s a lot of saved manual effort since all of their repayments now come through Razorpay and are reconciled in real-time. 

Rang De wanted a unified payment gateway for web and mobile, which passed the high-security standards mandated by RBI. With Razorpay, they got more than they asked for.

The story of Rang De

We asked, Ramakrishna NK, Co-founder and CEO of Rang De, to tell us more about the birth of Rang De and the way forward for it.

1. What are your company’s vision and goal?

By reaching out to underserved communities and offering them credit at affordable interest rates, our vision is to make poverty history in India.  

Started in 2008, Rang De is a pioneering peer-to-peer lending platform. Our mission is to reach out to early-stage, first-time entrepreneurs from low-income households and provide them access to venture debt at affordable interest rates. 

Our unique model leverages technology to connect social investors (lenders) to rural entrepreneurs, Rang De has been able to reach out to 65000 entrepreneurs with credit at really affordable interest rates and helped them build sustainable livelihoods and create jobs. 

Recently, we have transitioned into an NBFC P2P and are on a mission to provide credit to 10 million credit-starved entrepreneurs across India.

2. What was the idea behind the birth of Rang De? 

The idea behind Rang De emerged in 2006, the same year when Muhammad Yunus won the Nobel Peace Prize for his work in the field of microcredit. We felt that credit could be a powerful tool to help people fight poverty.

However, the interest rates that borrowers were being charged were exorbitant. We felt something had to be done about it. That’s how Rang De was born – to connect individuals who needed access to credit with Individuals who could lend small sums of money.

3. What is the problem(s) your company is solving?

Our idea was to leverage the power of the internet to connect individuals who want to make a difference sustainably, by creating sustainable livelihoods to thousands of individuals who are either denied or not offered credit. 

By tapping into the power of many, and decentralizing the source of funds, we have been able to significantly reduce interest rates on our loans to change the lives of potentially millions of credit-starved individuals across the country.

4. How do you see your company growing in the coming years?

We see credit as that financial opportunity that could help people overcome poverty. In the next five years, we would like to reach out to 10 million individuals across the country and provide them with access to need-based customized credit.

Upgrade to a Dual Tax Regime Compliant Payroll Software this Financial Year

dual tax regime opfin

Earlier this year, the Finance Ministry of India introduced the dual tax regime, a whole new tax regime to the existing one, bringing in prevalent changes to the way taxes are calculated for employees from the financial year 2020-2021.  

Since the financial year has just begun, businesses need to quickly upgrade to a payroll software that is compliant with the dual tax regime and automate their payroll process.

Let’s talk a little bit about the tax regime.

As opposed to the higher tax slabs with benefits and exemptions, the new tax regime is all about lower tax slabs, but without the benefits and exemptions. The Union Budget 2020 allows employees to choose from the two options.

dual tax regime payroll software

  • The new income tax for employees whose income lies between ₹5 lakh and ₹7.5 lakh is 10% whereas according to the old regime, the income tax is 20%
  • The next slab is for the range between ₹7.5 lakh and ₹10 lakh, where the tax is 15% while the tax is 20% in the old regime
  • Employees with income between ₹ 10 lakh and ₹ 12.5 lakh would pay 20% tax, which is reduced from 30% in the old regime
  • Finally, for income over ₹ 15 lakh, the tax is 30%

The perks of the new income tax regime

Lower taxes

Your employee can take home more money than before under the new tax regime since the taxes are reduced. Meaning, your employee need not exclusively invest in tax saving schemes.

Fewer compliances 

The new tax regime is very straightforward compared to the old regime. Except for NPS, savings interest from the post office, and PPF, benefits, and exemptions are cut off, making the tax filing process much simpler.

Flexible investments 

With the new tax regime, your employee can personalise their investments that provide better fluidity to withdraw their money.

Like we mentioned before, the benefits and exemptions are nearly cut off. HRA (House Rent Allowance), housing loan interest, investments like life insurance, provident fund, etc. (Section 80C investments), medical insurance, education loan interest, savings bank interest, and leave travel allowance are removed.  

What exemptions are still available in the new regime

  • Leave encashment on retirement
  • Scholarship received for education
  • Funds received on VRS up to ₹5 lakh
  • Maturity amount and short term withdrawals from NPS
  • Pension commutations
  • EPF
  • Death, retirement benefits

How to choose between the two income tax regimes

Your employee should consider both the advantages and disadvantages of the new tax regime in comparison with the old one. They should calculate their deductions, income after taxes, and the total tax for their annual income, based on both the regimes. 

This will help them understand what works for them the best. 

How the new income tax regime will impact your payroll 

Payroll compliance is absolutely important, especially when there is a change in regulations. Having an out-of-date payroll software will definitely not help you with change management and will limit your productivity since payroll can be largely time-consuming if done manually. 

Also, let’s not disregard the fact that your HR team will have to spend hours and hours every month to keep step with compliance, whereas they could be contributing to the business. 

If you’re wondering what can help your business minimise impact, let’s introduce Opfin, a payroll software that will put an end to all your payroll processing troubles. 

Opfin is compliant with the dual tax regime. The payroll software allows your employee to choose their preferred regime during the time of their investment declaration for the financial year. 

They can also see their projected taxes for the year based on their income and regime so that they can make an informed decision keeping their tax liabilities and savings in mind. dual tax regime Your employee can then file their declarations and edit them based on their regime. Opfin also recommends a breakup predicated on their salary, so that they’re aware of the benefits of both regimes. 

This helps you completely automate your payroll process without having to worry about the dual tax regime compliance, without any manual intervention.

[ Suggested read: Automate Your Employee Salaries with Opfin ]

Opfin for all your payroll needs

Relying on outdated payroll software will create a big setback for your business.

Opfin will help you carry out your business operations without any interruptions since the software scales itself and helps you stay up-to-the-minute with changing regulations and compliance. 

Using Machine Learning to Detect Fraud: Introduction

machine learning fraud prevention e-commerce free trial software

The last couple of decades have seen the rise of e-commerce throughout the world, and both merchants and customers are now able to experience a level of comfort in dealing and shopping that could only be imagined before. For the merchant, this means easier showcasing of goods, 24×7 operation, a chance to expand their global outreach and so much more. Unfortunately, it isn’t just the stores that have evolved, major problems that shop owners used to face in the pre-internet era such as fraud have evolved too.

Fraud is a much less talked about facet of e-commerce which has a large impact on the revenue of a business. E-commerce businesses across different industries have seen up to 40% of fraudulent orders on a regular basis.

Types of fraud

E-commerce frauds happen on Cash On Delivery (COD) as well as prepaid orders. One common type of fraud is the Return To Origin (RTO) fraud where the customer initiates a return on receiving the product and either using it temporarily, swapping it with a faulty/damaged product or denying that they ever received the product. Payment frauds related to credit cards, where the customer initiates a chargeback on receiving the product and denies having made a purchase with the card in question, are also quite common. Other types of e-commerce fraud include promo code abuse, where a single customer signs up multiple times on an app to avail discounts using promo codes, and account takeover, where a fraudster gains access to a customer’s account and purchases multiple items on the customer’s behalf.

return to origin orders e-commerce flow

However, it would be a gross underestimation to think that e-commerce frauds are limited to these types. Frauds are ever-evolving and new ways of defrauding come up more often than one would imagine.

The data age

Traditionally, tech solutions to problems centred around fixed rules for solving problems. For example, to tackle e-commerce fraud, one of the rules we can create is, “if the mobile number and pin code of the customer doesn’t seem correct, declare the order as a fraud”, which roughly translates to (note that this is just an example and more rigorous checks can be carried out),

if (no. of digits in mobile number != 10) then
  if (length of pincode != 6 or no. of digits in pincode != 6) then 
    reject order;

This seems like a good way to tackle this problem, but this has several issues, the most important one being that we don’t really know what rules to build and apply. While active research is being carried out to solve such problems, something like e-commerce fraud is ever-evolving and hence, no fixed set of rules will ever be able to cover all fraud cases.

This is where data-based solutions come in. These involve recording and analyzing data over a period of time and trying to figure out patterns in the data that would provide enough insight to come up with a solution. 

Large companies record mind-boggling quantities of data every day, given that we as end-users turn to the internet for much of our daily activities. As early as 2017, for instance, in every minute of an average day, Google conducted 3.6 million searches, Skype users made about 1,54,200 calls, Netflix users streamed 69,444 hours of videos and Instagram users posted 46,740 photos. By 2018, over 2.5 quintillion bytes of data was generated each day of the year. As of 2020, it’s estimated that about 1.7 MB of data is generated by every single person on Earth every second, and all of it is being stored. The age of data is upon us.

Implementing rule-based solutions for complex and ever-changing problems such as e-commerce fraud is not feasible and hence data-based solutions are preferred for such problems.

Hence, it is no surprise that data-based solutions have become the most popular ways of tackling the e-commerce fraud problem. Specifically Machine Learning, a concept closely related to Artificial Intelligence (AI) is employed these days to try and solve this problem.

The basics of Machine Learning

How does ML work

Machine Learning (ML) is a set of algorithms that can actively recognize patterns from large amounts of data and use these patterns to predict a certain parameter – in this case, whether a given order is fraudulent or not. Machine Learning has been around for a while now – since the later part of the 20th century but only came into mainstream programming in the 2010s.

On a broad level, ML algorithms can be classified into supervised and unsupervised algorithms. Both kinds of algorithms require many examples (data records) to learn any useful patterns. The difference is, supervised ML algorithms require labels for each data sample while unsupervised ones don’t. A popular example of a supervised ML problem can be rent prediction; we can provide a dataset containing various attributes pertaining to the area, location, number of rooms, size of rooms, etc. of the house and label each house with its corresponding rent.

A supervised ML algorithm can learn how these attributes affect the rent of the house. An example of an unsupervised algorithm can be learning from user behaviour and giving recommendations based on their liking. Detecting e-commerce frauds is mostly a supervised classification problem, given that a dataset with orders and labels (fraud/not fraud) would be available.

To sum it all up,

Supervised Machine Learning algorithms require labelled samples to learn from data, while Unsupervised ML algorithms don’t need labels to learn from data.

Further, this problem is a classification problem, in which the output can be one of a predefined set of values called classes (‘fraud’ and ‘not fraud’ in this case), as opposed to a regression problem, where the output can be a range of real numbers (say ‘10.0’ to ‘100.0’). A classification problem in which the number of output classes is equal to 2, as in this case, is called a binary classification problem, as opposed to a multi-class classification problem, where the number of output classes is more than 2.

The working of ML models varies according to what algorithm is used to implement the model, however, all supervised models follow a certain pattern of working. The very basic idea of a model is that it would learn a function mapping between the inputs ‘X_i’ and the output ‘Y’ using the examples given to it. The complexity of the function that a model can learn varies according to the algorithm. For instance, an algorithm like Logistic Regression would end up learning a much simpler mapping as compared to a Multi-Layer Perceptron. This function is called the Hypothesis. A sample hypothesis for a model operating with two features ‘X_1’ and ‘X_2’ can be:

 h(X) = W_0 + W_1*X_1 + W_2*X_2

This is a fairly simple hypothesis that is used by a model like Linear Regression. The figure below demonstrates how a simple hypothesis function like a line can do well in a binary classification task if the points from the two classes are already separate. The blue and orange points represent two separate classes. Points on the left side of the hypothesis would be marked as ‘blue’ and those on the right as ‘orange’. This would mean that most of the points could be classified correctly using this kind of a hypothesis.

In case the data is more complex, i.e. the points from both classes are more “mixed” with each other, a more complex hypothesis function will be needed.

using machine learning for fraud hypotheses

At the core of the algorithm is a loss function, which tells the model if it is learning correctly or not. The objective of the training process is to minimize the loss function as much as possible. For each sample that the model sees, it provides an estimation of what the value of y can be for that sample. If the estimation is close to the real value, the loss function is minimized, else it increases, thereby ‘penalizing’ the model. For each update in the loss function, the parameters ‘W_0’, ‘W_1’ and ‘W_2’ are updated in such a way that the next estimation is closer to the real value. Hence, the model learns the mapping between the features and the labels.

Training an ML model involves iteratively updating certain parameters such that a loss function is minimized. The set of parameters which gives the minimum value for the loss function are used to predict the target variable for new samples.

The general process of building and using a Machine Learning model is simple enough to understand. We gather data (in this case, a dataset of recent orders) with multiple features (in this case, for instance, order date, order time, price of the product, information about the product, user account details, etc.) and label each of these as true if they are fraudulent and false if they are not. An ML model is then iteratively trained on this data and tested on a hold-out set (also called the test set), which is never shown to the model during training (more on this later). If the model performs well on the test set, we decide to use the model to predict the order status of future orders. 

using machine learning for rto orders ecommerce

Now, once a new order is passed to the model, it can predict if the label for this new order would be true or false. This being said, the model would not output a value saying ‘true’ or ‘false’ exactly, it would output the probability of the order being fraudulent, i.e., ‘P(fraud)’. It would now be up to us to set a cutoff on the probability that would work for us. This is explained in more detail in the next blog.

Why use ML for this problem

In a nutshell, the reason why ML-based solutions for e-commerce fraud detection are gaining popularity fast is that we as humans cannot fathom how each factor in the e-commerce ecosystem might be affecting the fraudulence of a particular order. We know that there are a lot of factors that might hint at an order being fraudulent, for instance, a user might have made an abnormally large amount of orders in the past few minutes, or the user has entered a monkey-typed address in the address fields or the user has skipped over the basic information needed for an order to be delivered, which will result in an RTO. We cannot, however, evaluate each factor and determine their contribution towards the fraudulence of that order manually.

To prove this point, consider that we take a traditional approach towards solving this problem. We would eventually come up with a set of rules that will determine if an order is fraudulent or not. For example,

if (X_1) then
   if (X_2 and X_4) then 
       …

The rule is far more complex than we as humans can write in an affordable amount of time. On the other hand, Machine Learning models can come up with such rules in a very short amount of time and hence reduce cost, time and manual labour on this task.

Another reason is that these rules can be dynamic and can change over time. Fraudulent users keep changing their tactics to avoid getting caught and novel ways of committing fraud keep coming up from time to time. Giving valuable resources into creating rules only to change them over time is a very cumbersome and wasteful task, and ML provides a far more comfortable solution.

There’s more to come!

This is only the first of the four-part blog series on how Machine Learning can be used to effectively detect fraud in e-commerce. The next instalment of this series would focus more on the technical aspects of which algorithm to choose for this Machine Learning task and which features can be created for the task of detecting e-commerce frauds. Stay tuned for more!

Decoding Payroll – Why Businesses Should Automate Employee Salaries

RzorpayX opfin payroll software

Payroll is one of the most important financial operations a business carries out, no matter the size of the company. For businesses, it’s crucial to ensure that their employees are being paid without any delays.

Having a smooth, reliable, and error-free payroll process directly reflects upon the morale and the financial stability of the business. 

But, do you trust your payroll process to be the best?

What is payroll?

Payroll is the total amount of fees paid by a company to its employees, contractors, and other workers. It’s an organisation’s biggest disbursement, not to mention, the most time consuming human resource task.

Payroll is typically processed over a specific period of time. Organisations differ in the way they process payroll. While the process is different, they all need to work in a highly organised system, be updated with the latest rules and regulations, and a highly structured plan. 

Why your business needs a payroll software

Payroll processing is long, tedious, and so time consuming that it takes away your efforts from other important business tasks. Processing payroll by yourself means never-ending administrative and tax-related responsibilities.

Plus, you need to be somewhat of an expert in tax law and payroll if you don’t want any run-ins with the IT department. Using a payroll management software will help unscramble the process so you can focus on what’s important. Razorpayx opfin payroll software Businesses end up spending too many hours on manual efforts on payroll processing every single month. A payroll software enables you to spend these hours on something more productive. Processing payroll manually is not simply time consuming, but is prone to human error, too.

You have to take into account salary structure, working hours, overtime, vacation days, etc, making manual calculations as complex as can be. 

What you need in a payroll software

You can find two types of offerings in the market today. 

SaaS tools

There are a few tools available that are mostly focused on effective processing. These tools help with salary disbursal and compliance fees like PF, PT, TDS, and more.

This does not mean your entire payroll is automated, someone still has to oversee the process and the disbursal, while making sure compliance is upheld.

Payroll agencies

Several agencies provide services where you outsource your payroll process. These agencies collect your employee database along with all the details they’ll need to calculate their salaries. They either process it manually or using their inhouse tool.

You’ll need to approve the calculations so that they proceed to pay your compliance You need the best of both offerings to have a fully functioning and automated payroll system. 

Opfin – a payroll software that has decoded payroll processing

If you’re wondering what’s so different about Opfin, let’s break it to you.

Opfin works on a Direct Deposit model in which Opfin processes payroll, as long as you maintain your balance. Think of it like a wallet you deposit your money into using which your payroll is carried out. It’s designed to be highly intuitive and easy to use, that takes away all the redundant steps. 

The upside is, you don’t have to worry about TDS, PF, ESI, and professional taxes, ever again. Plus, your employees are always paid on time! Next, you can pay your contractors and pay TDS automatically. Opfin deals with quarterly filings, form 16s, and 24Q.

Opfin gives more power to your employees by allowing them to claim their reimbursements and tax exemptions on their dashboard, based on which their monthly payroll is adjusted automatically. 

Who is Opfin for

A business should be able to carry out its processes without having to interrupt them for payroll.  Opfin helps you track attendance, time and leave management, along with vendor and contact payments.

So, any business that is looking for a non-intrusive payroll processing, needs Opfin. 

The Types of Payouts and How Businesses Can Simplify Them

Razorpayx payouts

A structured financial management system is the pillar of any well-heeled business strategy. As much as a business would like to focus on great cash inflow, making payouts is also an equally crucial task.

And, leveraging out-of-the-box technology to streamline the process is what every business should do.

Let’s take a step back.

What is a payout?

A payout is a taxable payment made by a business to its stakeholders from the company’s current or retained earnings. In traditional business banking, the methods using which a company can process payouts are IMPS, NEFT, RTGS, and UPI.

What are the different types of payouts?

types of razorpayx payouts

Vendor payouts –  payments made by a business to a vendor (supplier) for the goods or services provided

Partner payouts – a business pays a commission to another business or a contractor for cross-selling products or services

Employee payouts – a business pays its employees for their services

Customer payouts – Cashback, rewards, and refunds made by a business to its customers

Common problems with payouts

Have you ever had to make a crucial payment to your vendor or customer, but you couldn’t process it because of fixed banking hours? Delayed payouts often lead to interrupted service. Not to mention, they’re just embarrassing.

But it can happen more often than not for many reasons.

  • You can only process payouts via NEFT and RTGS, and only within banking hours
  • Uploading contacts in bulk to make a bulk payout is very complicated because of complex file formats
  • There’s a hold-up upon adding a contact for a payout
  • You can’t verify the validity of a bank account before making a payout
  • Limitations on bulk payouts when made via UPI and IMPS
  • A low cap on TPS
  • No easy way to track and identify errors because of complicated and vague error codes
  • Reconciliation can be very difficult in the case of refunds and failed transactions

So, how can this process be made simple so that businesses don’t have to go through these setbacks? 

Let’s introduce to you, RazorpayX Payouts

razorpayx payouts

Imagine solving your payouts problem in just a matter of minutes, and further simplify all of your business banking operations! That’s exactly what RazorpayX Payouts can do for your business.

Whether you’re making a bulk payout or just a one-off, RazorpayX helps you move money seamlessly, without you having to worry about banking hours. RazorpayX Payouts is that one single platform that automates your business banking operations to such an extent that you don’t have to worry about making any manual effort.

How does RazorpayX simplify your payouts process?

  • Make payouts, disbursals, and refunds via UPI, IMPS, RTGS, and NEFT, at any time of the day, instantly
  • No hold-up upon adding a contact; transact immediately
  • Upload any number of contacts in one go, without dealing with confusing file formats
  • Create payouts in bulk via APIs or directly from the dashboard
  • Offer 24*7 instant refunds to your customers and vendors etc., without any manual intervention
  • Add multiple team members with access control and secure payments with 2-factor authentication
  • With intelligent error code mapping, identify errors without any trouble
  • Reconcile refunds and failed payments in ease
  • Track, automate, and accelerate money movements and make impactful business decisions

How to make a payout via RazorpayX?

You can make payouts on RazorpayX in five simple steps.

  1. Signup and activate RazorpayX account
  2. Add funds to your business account
  3. Create contact
  4. Add fund account to the contact
  5. Create payout

What kinds of payouts can RazorpayX handle?

Bulk payouts You can make your payouts in bulk, all at once. Simply upload all your contacts, sit back, and relax. RazorpayX will take care of all your outflow.

Payouts queue – If you need to make a payout and your account is low on funds, RazorpayX will queue your payouts that go over balance, and process your payouts when you add funds to your account.

Scheduled payouts (coming soon) We’re working on helping you schedule your payouts well in advance, so you don’t ever have to worry about delayed payouts.

Payouts, simplified!

Like we said before, making payouts is as important as cash inflow. Never worry about delinquent or delayed payouts ever again! Make fast, effective payouts to your customers, vendors, employees, and partners, and track all forms of money movement with RazorpayX.

24x7x365 Settlements Even on Holidays – Never Run Out of Cash

razorpay early settlements

What does a business need the most to scale and grow from one stage to the next? Customers? Of course! Employees? Sure. Continuous development of their offerings? The answers can be many. But one of the most important requirements is working capital. 

Working capital is required for numerous reasons. And it is important because easy access to money for a business’s day-to-day activities can help improve business convenience greatly. This was the primary reason behind the launch of our Early Settlements feature.

While the Early Settlements feature allowed businesses to receive funds on the same working day, there was still the need for them to get funds even on non-working days and in near real-time.

And as usual, we have become the first to solve this problem as well with 24x7x365 On Demand Early Settlements. With this feature update, businesses can now get their funds on any time of the day, any day of the year, even on weekends and bank holidays. And that too at a very nominal fee.

The feature will allow businesses to get easy and early access to their money, reducing their daily cash crunch for any kind of operational or non-operational needs, and allowing for better management of inventory and stock.

Currently, businesses can trigger “On-Demand Settlements” at any time from their Razorpay dashboard by clicking on “Settle Now” under the Settlements Tab. In case you don’t see the option, you can reach out to our support team or drop an email to capital.support@razorpay.com.

Continue reading further to understand how Razorpay Early Settlements work.

What is Razorpay Early Settlements?

With Early Settlements, you get access to your funds on the same day instead of your traditional or default settlement cycle. Razorpay Early Settlements helps you reduce your settlement period from T+2 days to within a few minutes (from the time of transaction), thus enabling your business to avoid cash-flow challenges and prepare better for working capital requirements. 

razorpay early settlements

A ready inflow of cash that will help you amplify your business, and meet day-to-day cash requirements without any hassles. 

What are the benefits of Early Settlements for your business?

  • Easy and early access to your money
  • Reduction in daily cash crunch and increased cash flows
  • Better management of inventory and stock
  • Payments to creditors and vendors without any delays

Can the settlements be done at any time of the day on any of the days?

Yes, they can. Early settlements can be rolled out on any day, even on holidays.

Razorpay levies a small fee that is deducted from the merchant’s settlement balance. This fee is primarily charged because Razorpay has to bear the subsequent cost of processing the early settlements by taking a loan from loan providers. This deduction takes place only if you decide to process the settlements instantly or on the same day.

Who is Early Settlements for?

It is technically for every business onboarded on Razorpay. Primarily in the last 6 months, we have seen 30% of e-commerce businesses that have gone live with Razorpay availing the Early Settlement functionalities to power their daily vendor payouts. This is followed by 17% of financial services businesses and 15% of IT services companies. For IT services, a majority of the users are freelance designers or web developers who want quick access to capital for the work they have done. 

We carry out risk checks (around refund rates, chargebacks, etc) before offering this feature to any business. To sum up, though we have seen a high traction among the industries mentioned above, businesses from almost every industry has availed Early Settlement and it has seen a high repeat rate.

To explore more about Early Settlements, click here.

Also read: Manage Working Capital Easily with 100% Visibility in Settlements