RazorpayX – How We Built a Startup in a Startup

RazorpayX

If you’re someone who’s interested in the Indian fintech industry, then you surely know of Razorpay. 

Razorpay’s extensive product suite caters to accepting, processing, and disbursing payments. Founded in 2014, the journey of Razorpay over the years has been incredible, powering disruptors of all scale. With product after product, we have been able to provide the best payment solutions for all sorts of business cases, no matter how complicated or straightforward.  

With over 800,000 merchants using Razorpay’s payment solutions, the biggest names in the market ride with us. Being the 7th employee at Razorpay, I’ve seen the company unfurl into a fintech superpower in India. And, I can’t be more proud to be a part of the overall growth and mission of the company.

Today, I’d like to shed some light on the most exciting product I’ve been working on – RazorpayX, our neobanking platform.

The story is interesting because it is not just about a great product that we are building, but also about how we came about it. 

In 2018, we announced our entry into business banking with RazorpayX in our flagship event, FTX.

You may wonder – why?

The gap in the system

How business banking is carried out is not the most efficient way to manage finances. With traditional business banking, businesses spend way too many hours on manual labor every month, while dealing with buggy software and complex infra systems. 

Several Razorpay merchants conveyed to us how their business banking experience is flawed, which got us thinking – we’ve already enhanced the payments experience. Who better to take business banking forward?

So, we validated the opportunity we had at hand and delved into some primary research.  We talked to 400+ merchants to understand their experience with business banking and drew insights from our conversations.

Next, we surveyed 1,500 CxOs and gathered

  • 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

Our solution to bridging the gap – RazorpayX

Since we deal with many different payment flows, we wanted to create a whole new platform that would be dedicated only to building a product that would do away the challenges of business banking. We began to create a platform on which we can further build products that would ease the process challenges for businesses, like integrations with payroll software, and more.

During the early access, merchants were able to use the platform with virtual accounts. We created an entire API and dashboard payouts platform over a virtual account setup. In a few months, thousands of merchants started using it to make payouts at scale to vendors, customers, and even employees. 

From then to now, the platform has gone through major upgrades.

A few use-cases for RazorpayX

  1. Lending companies like Kissht and EarlySalary have been unable to disburse loans to their customers instantly owing to their dependencies on manual processes and cumbersome banking tech. With RazorpayX, these companies were able to disburse loans within seconds
  2. E-commerce companies that provide multiple payment options to their customers have traditionally not been able to process refunds for all methods with equal speed owing to an inconsistent customer experience. Cure.fit, Voylla.com, and other players in the market use RazorpayX to make instant refunds to their customers, irrespective of the payment mode (including CoD)
  3. A key component of making successful games is the process of ensuring winners get rewards, and fast. Dependencies on net-banking and manual methods were not optimal for progressive gaming companies. RazorpayX has helped companies like Mobile Premier League, RummyCulture, Pokersaints, and many more to transfer winnings immediately, and with ease

As we scaled, we realised current accounts would be integral to the product because of the growing demand to support higher volumes of transactions and superior customer experience. We wanted businesses to have the freedom to define their processes, unlike traditional current accounts.

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. We merged these banking services along with powerful tech capabilities like API banking, approvals workflow, and insightful reports.

Next, we wanted to have a payroll system within RazorpayX’s platform. And, payroll is fragmented without a clear-cut solution, which got thinking – should we build? Should we buy? Or should we partner?

The more we thought, partnering made more sense, and we found the best company to partner with. Opfin, a payroll and HR management software company, turned out to be just right to automate the entire payroll process of a business, seamlessly.

Opfin does more than just payroll and fund transfers. It also manages tax filing and compliance via a unified platform, without having to hire any external vendors. 

Ok, current account, check.

Payroll, check.

What next?

We wanted to go just one step further. 

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.

So far and more

Even in early access, we’ve hit 3 billion annualised TPV serving thousands of merchants. We’re also processing over 2 Lac payouts every day, out of which 1 Lac is consumer loans.

We are perpetually endeavouring to make the RazorpayX platform more and more stable every day. We want to further grow the platform by building and integrating products that can extend to simplify business banking while providing the best possible experience to prove all businesses a viable alternative to traditional business banking.

We are constantly working towards reimagining and redefining business banking in India, and we’re looking forward to all of you joining us in our journey.

Bangalore Contributes 35% of All UPI Transactions in January

It’s interesting to note that within two years, UPI has created a league of its own. If you recall, UPI overhauled cards (debit & credit) for the first time ever in September 2019. And it continues to do so with a 44.23% contribution in January ‘20. 

One of the major reasons for its massive adoption is the push from the government, multiple banks, and wallet players.

When launched in 2016, UPI was just an addition to the evolving modes of P2P payments. However, the easy, instant, and hassle-free usage has led this payment mode to become the champion of digital payments today. 

This January, PhonePe is catching up to Google Pay. Let’s take a look at more numbers. 

All findings in this report are based on the P2M UPI transactions made on the Razorpay platform.

 

It does not come as a surprise anymore to see Google Pay as the first choice for UPI transactions. Almost half (49.08%) of the total UPI transactions on Razorpay were carried out via Google Pay alone. 

Close to Google Pay’s heels was PhonePe with an impressive share of 30.08%. And, in the third spot,  PayTM contributed 10.21%.

The other UPI apps that did not make it as big but got some traction are ICICI, SBI, Axis, and HDFC with 1.44%, 0.38%, 0.11%, and 0.06% respectively. 

Let’s also have a look as to how each of these apps grew individually. With a high spike on the charts of PhonePe and PayTM (growth of 13.6% and 17.95% respectively), Google Pay, one of the most preferred options saw a growth of 1.56% while BHIM saw the other side of the story, a decline of 3.24%. 

The other UPI apps on the list were the brick and mortar banks making their way into the wall-less world. SBI saw a growth of 15%, Axis climbed up by 4.95% while HDFC saw a growth of 1.83%. 

Move over, plastic money (January ’20)

While the users have given a safe corner to UPI on their screens and minds, the race between UPI and cards have gotten the most interesting spectators.

Here are some insights:

  • UPI contributed  44.23% of the total transactions that were made on the Razorpay platform
  • Cards comprised of 39.62% of the digital transactions while Netbanking stood third with a share of 9.05%
  • The rest of the modes were wallets (3.56%), bank transfers (2.41%), e-mandate (1.06%), and EMI (0.06%)

UPI in India – adoption and usage (January ’20)

In the effort of enabling digitalization across the nation, UPI has been a role player. In other words, UPI has easily been able to bridge through the set norms about the hassles of digital payments. The mobile-only payment option has made its way to become the primary payment option. But do you know how the individual states and cities contribute to the overall economy via UPI? 

Take a look:

  • Karnataka gets the tag of the most digitized state yet again by making up to 24.94% of the total UPI transactions that took place across the country. Among cities,  Bengaluru was the biggest contributor eating up a whopping 35.5% of the share
  • Maharashtra stood second in the row by contributing 15.2% with Pune contributing to 10% 
  • Thirdly, the southern state of Tamil Nadu contributed 10.21% to the overall UPI transactions in the month of January

Note: You may wonder how Karnataka’s contribution is 24.94% while Bangalore is 35.5%. The reason is, the state split is different from the city split. We consider the whole country to provide state-wise contribution, whereas we look into top 15 cities and calculate their contribution.

UPI in the last 6 months

Now, let’s also take a look at the past 6 months to understand this game-changer.

UPI saw its biggest growth jump in the month of September 2019. This was a striking hike of 39.56%! Just once in the past six months was there a dip in UPI usage, which was in November. From December 2019 to January 2020, UPI climbed up the ladder by 6.89% marking an incredible start to the new year, setting a benchmark for UPI in the months to come. 

UPI in 2020

In the upcoming months, we expect UPI to move ahead at this very pace. Being one of the most groundbreaking innovations in the payments space, UPI has come a long way from where it started. 

UPI will also be a gamechanger in the recurring payments space. NPCI has announced that consumers will be able to make recurring payments through UPI very soon. We believe that this will be the next big thing to take UPI forward by leaps and bounds in 2020.

Let’s wait and see how UPI will continue to explore new grounds in the Indian payments space in 2020. 

Now Collect Payments Faster with Payment Links Reminders

payment links reminders

Here’s an interesting fact: More than 40% of the B2B sales made in India are given on credit! This has been the nature of business in India for a very long time. And it’s not changing anytime soon. The relative or absolute pain of chasing after payments is immense. Almost every business, big or small,  endures this ordeal almost every day.

If it is one thing to close a deal with the ambivalent Indian customer, it is quite another to collect payments from him or her. It often happens that a customer or client leaves the business hanging with unrequited payment requests.

Razorpay Payment Links has been one of our earnest endeavours in trying to solve this problem. Instant links to collect payments instantly! In the last one year, we have seen a tremendous growth of our product with more than 1 crore payment links being created.

While this makes us feel proud about being able to help the smallest of businesses to the mightiest of banks collect hassle-free payments without any coding in a matter of minutes, we also know that getting payments on these links is certainly one of the most daunting challenges for them.

The typical ordeal for an MSME goes like this.

Day 0 – “Hello ma’am, we are so happy you want to buy our service, let me send out a payment link to you right now..”

  • Link sent 

Day 1 – “Hi, I hope you liked our service. Just wanted to check if you are having any difficulties in finding the payment link? Please let me know.”

  • Few days later 

Day 5 – “Hello ma’am, for the service you had used last Friday, we still haven’t received the payment. I have resent the link to you“

  • Business resends the payment link 

Day 6 – “Ma’am, payment is still pending”. To this, the customer says, “Can I pay you by an account transfer or UPI?” The businessman replies, “Of course, you can open the link and do so. I will also send you the account details and UPI ID additionally.”

  • The customer finds it difficult to find the link and sends the money via account transfer
  • The business spends half a day in carrying out the payment reconciliation, using the UTR of the transfer and again calls up to confirm with the customer

This is probably a softer version of what really happens. It is not unheard of for businesses to even send someone over to collect the payment in cash. While some of this is problematic owing to structural and possibly, cultural underpinnings, there is still a window of opportunity for us to deliver more value to our merchants.

Introducing reminders on Razorpay Payment Links

Payment Links will now come with automated reminders, which are orchestrated by the system based on the payment status of the link. These automated reminders will help you do the following:

  • Increase the number of paid invoices and links
  • Reduce cost and manual effort required to collect payments
  • Reduce the number of days taken by your customer to make the payment

You can either schedule the reminders based on the date of sending the payment link, or if you set an expiry to the payment link, you can have the reminders sent before the payment link expires.

“Schedule a reminder 1 day before expiry”
“Schedule a reminder the day after you send the link”

The reminders will be sent on SMS/email or on both.  The reminders will be sent at a time in the day based on our analysis of the payment patterns that we have noticed across a wide range of consumers and industries.

razorpay payment links reminders

Our merchants cited that automated reminders can complement the pursuit process in terms of the number of touchpoints through the collections process (SMSes were cited to have a better impact in this regard.) This can also be of help in nudging customers if they have been issued a link, which they haven’t paid yet. A classic example would be where a customer has expressed interest to buy but hasn’t crossed the threshold to go ahead and make the payment

We already have over a few hundred merchants sending 100,000 reminders using this product, just through organic discovery in the early rollout phase. I would suggest you go ahead and take a crack at it as well.

Yes, we can …get paid faster!

Don’t use Razorpay Payment Links yet? Start collecting payments without a website or app today!

Also read: Introducing the Payment Links Chrome Extension

Big Bang Reforms to Bring the Economy Back on Track

budget 2020 startups esops msmes

It took quite some time coming, but when they did, the reforms came as big bangs in Budget 2020.

Our Honorable Finance Minister, Nirmala Sitharaman presented her second Union Budget at a time when the Indian economy is witnessing its biggest slowdown since 2008. The economy needed a Budget to bolster growth by way of increased consumer demand, higher employment rates and ease in corporate as well as personal taxation. The FM delivered on all three counts.

And she adopted a three-pronged approach to do that – by focusing her Budget speech around aspiration, economic development and compassion. There was the possibility that this Budget would end up being merely a vision statement of the government, but thankfully, we believe it will give the economy that impetus it really needs. 

Of course, even though the Budget had a lot for businesses, big and small, the highlight will remain the new personal income tax regime. Income tax slabs have been revised to lessen tax burden on the middle class, thus increasing their disposable income and purchasing power. This is great news not only for consumers, but businesses as well. Higher purchasing power translates into higher sales for businesses, after all. This encourages businesses to innovative job creators.. 

Like the Finance Minister said, entrepreneurship has always been the strength of India. Indian businessmen are risk takers who come up with disrupting solutions. And as someone who belongs to the robust startup ecosystem of India, I can say for all of us that the proposals presented in the Budget for startups and MSMEs will go a long way in boosting the economy.

For me, the two most important announcements in the Budget were around reduced compliance for MSMEs and relief in ESOP taxation.

The FM has proposed that the audit threshold for small traders and MSMEs will be raised from Rs 1 crore to Rs 5 crore. This means that there will be no requirement for businesses to get their accounts audited  if their annual turnover doesn’t exceed Rs 5 crore. The one caveat here is that this will apply to only those businesses that carry out less than 5% of their transactions in cash. This move will decrease compliance requirements for small businesses and give them one more strong reason to accept digital payments.

For startups and their employees, the relief in ESOP taxation is a major positive to have come out of the Budget. The perquisite taxation at the time of exercising ESOPs has been deferred to 5 years or till they leave the company or till they sell their shares, whichever is earlier. This move will incentivise talent to work for startups. I had spoken about this to the media in my pre-Budget expectations as well. ESOPs are often a significant component of a startup employee’s compensation, and not having to pay tax at the time of allotment of shares will work wonders for the best talent in India to continue being a part of this burgeoning ecosystem.

Another huge plus for startups for the increase in turnover limit for tax exemptions, from Rs 25 crore to Rs 100 crore. The eligibility to claim this exemption has also been hiked from 7 years to 10 years. What this means is that startups with turnover below Rs 100 crore will not have to pay tax on profits up to 10 years.

Coming back to the MSME sector, it was heartening to hear the FM say that 5 lakh MSMEs have so far benefited from the restructuring of loans. I am happy that the Finance Ministry has asked the RBI to extend this debt restructuring window by one more year. This, along with the proposals to introduce an app-based invoice financing product and a new logistics policy, will make MSMEs more competitive and ease their working capital issues

Among the other notable Budget highlights that caught our ear were on the lines of encouraging entrepreneurship within the country. The single investment clearance cell that will aim to expedite the process of setting up a business by merging all required licences into a single hub is great news. In a similar vein, the digital platform for seamless application and capturing of intellectual property rights will help startups protect their original ideas. India is already moving up in the Ease of Doing Business index and both of these endeavors will further help. 

Overall, I can only say that the traditional bahi-khata wrapped in a red cloth, which has replaced the corporate briefcase, seems to be bringing good news for the economy. India needs a clean, reliable and robust financial sector to pull the economy out of the slump. And Budget 2020 was a step in the right direction. There is spirit, there is hope and now, there is also a clear roadmap. 

This article was first published in Financial Express.

budget 2020 highlights startups msmes

Razorpay Partner Program: Earn Commissions by Becoming a Reseller

razorpay partner program

The payments landscape in India is at its most evolutionary path. Digitization of payments is a win-win for everyone involved, after all.

Having already offered digital payment solutions to over 8,00,000 businesses in India, we believed it was time for us to build an affiliate program for partners to bring more businesses on board the digital payments ecosystem. 

We had opened the doors to the Razorpay Partner Program a few months back with that in mind.

With the Razorpay Partner Program, not only will you have a channel to earn a sizable side income but also assist growing MSMEs in combating one of the biggest challenges – hassle-free and secure online payment systems.

What is the Razorpay Partner Program?

The Razorpay Partner Program is a referral program through which you can offer the Razorpay product suite to your clients or customers and get rewarded for the same. The program then becomes a source of additional income for Razorpay partners.

razorpay partner program

This affiliate program is not just limited to agencies and companies alone. Even individuals, freelancers or unregistered businesses can be a part of this program and earn commissions by referring businesses to Razorpay.

Who can be a part of the Razorpay Partner Program?

Simply put, anyone from a student to an e-commerce consultant can partner with Razorpay for the affiliate program. Here’s some of the popular categories amongst existing Razorpay partners:

  • Web & app developers
  • Digital marketing service providers
  • Web hosting services
  • Bloggers and influencers 
  • Freelancers & unregistered businesses
  • E-commerce consultants
  • Individuals & students

Anyone ranging from an enterprise business to an individual with a client base that needs online payments solutions for their business can be a part of this referral program.

Here are the primary reasons to help you understand why should you become a part of the Razorpay referral program:

  • Fast & seamless onboarding: Get started with Razorpay in less than 5 minutes with 100% paperless onboarding
  • Lucrative rewards for all: Earn commissions for every transaction carried out by your affiliate accounts
  • Extensive partner support: Get features like bulk email, chatbot support, refund tracking system along with a dedicated account manager
  • Powerful dashboard: Take better business decisions by analysing detailed reports about payments, settlements and refunds
  • API driven products: Save on time by using our ready-to-use integration kits for leading service providers like Magento, WooCommerce, Shopify and so on
  • Multi-currency support: Razorpay supports over a 100 foreign currencies 
  • Robust product suite: Get a solution to all your payment issues on one platform: Payment Links, GST-compliant invoicing, Payment Gateway, subscriptions and a lot more

We are trusted by thousands of partners coming from all across India.

Here’s what Shashwat Swaroop from Marmeto has to say about the Razorpay Partner Program:

The suite of products Razorpay has is just amazing. They are easily integrable, super user-friendly and highly reliable. The Partner Program has pushed the horizons even further with an amazing support and handhold approach. We now have more power to build secure and scalable solutions for all our merchants. Kudos to the team!

How to get started with the Razorpay Partner Program

The process to start referring and earning is as simple as it could be. Just follow these steps:

Step 01- Visit https://razorpay.com/partners/ and enter your details 

Step 02- Once the signup is complete, you will get access to the Partner dashboard 

Step 03- Add your merchants’ details and invite them to complete their KYC 

Step 04- Earn a fixed commission the first time a merchant transacts and continue earning a variable commission right through his journey with Razorpay 

What makes the Razorpay Partner Program different from others?

While there is a list of affiliate programs that are up and running, there arises a question: What makes the Razorpay referral program better than the rest? Here’s your answer:

  • Widest range of payment methods, ranging from credit cards, debit cards, netbanking, EMI, wallets, UPI, BharatQR. You name it, we have it
  • 100% online onboarding for merchants across any line of business
  • Dedicated account manager for each partner
  • 24*7 assistance by our team for a hassle-free experience
  • Personalized dashboard for every partner for easy tracking and better decision making

What’s in it for your customers to onboard?

No more worries about collecting online payments! While you as a business will earn awesome incentives, the customers you onboard enjoy a list of perks like:

  • No setup fee, no annual maintenance charges
  • 24/7 fraud protection via Razorpay Thirdwatch
  • Wide range of products
  • Frill-free solutions like Payment Links and Payment Pages
  • Easy and quick integration kits 
  • Industry best success rates 
  • Subjective free credits

The Razorpay Partner Program is a win-win for partners and their customers. While partners earn commissions by providing the most trusted payments solutions at special prices, their customers are able to grow their business & earn their trust.

Become a Razorpay Partner today!

Understanding the New Age Ways of Business Banking

business banking

Banking is the most fundamental form of managing finances. Whether your use is personal or official, you rely on banking and its services. And, if you have a business of your own, you definitely know the importance of business banking. Today, we’ll take a look at business banking and understand the new age forms of using these services. 

What is business banking?

Business banking is the process of a third party managing your company’s finances by providing loans, credit, savings, and current accounts that are especially designed for businesses instead of individuals.

Business banking helps keep your funds safe while providing you with a clear view of your business’s financial health. You also get additional perks that you won’t receive with a personal account.

Methods of business banking

Business banking can be carried out in a few ways.

A physical branch – This is the traditional way of business banking where are your transactions will be processed at a branch.

Online banking – This method of banking has become increasingly popular because of the ease it provides to the customers.

In online banking, neobanking and open banking have opened up a whole new avenue of services that primarily focus on experience while providing your business with the best possible solutions for money management. Let’s take a closer look.

What is neobanking?

It is a type of digital bank that does not have any physical branches. Unlike a traditional bank that has a branch at a specific physical location, a neobank is entirely digital and online.

Think of a neobank as a cluster of financial service providers who cater to today’s tech-savvy consumers. Without a license of its own, a neobank leans on bank partners to provide bank licensed services to its customers. 

How does neobank help with business banking?

Often, businesses have to deal with tedious, never-ending processes that involve disbursals and payments. These processes result in hours and hours of manual efforts due to buggy software, complex infra systems, and many other reasons. This complexity may further grow into fiddly money movement views. 

Business banking via neobanks helps solve all these problems.

  • Account creation is a breeze since neobanks are completely online; they don’t have a storefront. All it takes are a few minutes and a couple of simple steps on a smartphone
  • With friendly UI, you can provide the best user experience to your customers
  • Business banking with neobanks helps take your business to any part of the world
  • Neo-apps help manage your finances by providing you with an overview of your expenses and a savings goal that matches your needs
  • You can save 10x time because of reduced manual effort and instant payouts
  • Make, track, control, and analyse all forms of money movement, all from a unified platform
  • You can also track and manage money movement to vendors, customers, employees, and more, with the in-depth Financial CRM 
  • Use APIs that are easy to deploy and integrate banking into payments and accounting infrastructure
  • Make informed, impactful business decisions with off-the-shelf analysis on payouts mode 

Neobanks also provide current accounts since they support higher volumes of transactions. 

Read more: Everything You Should Know About Neobanking

What is open banking?

Open banking involves sharing financial information digitally and securely, with customers’ approval. The use of APIs enables third-party developers to build services and applications around a financial institution. This drives speed while keeping costs low when compared to traditional systems. 

A combination of rich bank data and disruptive fintech results in financial products that provide both businesses and customers with the best of both worlds.

How can you improve your business banking with open banks?

The utilisation of APIs by banks has become very progressive all around the world, and for good reasons. With API banking, innovators have more flexibility to provide the best features and services to streamline financial services, thereby creating a surge of competition and innovation in fintech products.

Use cases for API banking

The most common use-case for API banking is payouts.

Lending: In the last year, the consumer lending industry saw a meteoric rise. And, with increased competition, the speed at which loads are processed became a top priority.

Today, RazorpayX has helped many lending companies reduce the average time to process a loan from 3 hours to 30 seconds.  

Gaming: Gaming is an industry in which instant gratification reigns supreme – winners want to claim their prize instantly. 40% of the real-money gaming industry in India uses RazorpayX to disburse winnings to their users.

Open banking provides solutions for all your business banking needs.

  • Have more transparency, knowledge, and options when it comes to managing your finances, and find a tailored solution that fits your business case 
  • With real-time capabilities, get enhanced visibility of cash flow, cash position, and more, across currencies
  • Reduce administrative hurdles with regard to managing your finances like applying for a business loan, checking your creditworthiness, and more
  • Be in control of your data as you decide how to use it or who gets to access it
  • Set targets on savings and expenditure, ration your finances logically while being able to account for each and every financial activity
  • Have a single view of all your finances while being able to control, track, and analyse all financial movements, all in one place

RazorpayX – business banking experience like never before

With RazorpayX, businesses can manage their entire financial operations and make timely payouts using our sleek dashboard or robust API.  Businesses like CureFit, MPL, Dunzo, and others use RazorpayX to make payouts at scale via API while keeping costs low.

This also helps them ensure their customers and partners are happy. RazorpayX Current Accounts takes business banking further by including all standard banking services like debit cards, accounting statements, cheque books, and more.

Conclusion

Surely, you’d want to manage your business’s money better, with more control and efficiency. Neobanking and open banking can help streamline and automate your business banking at scale.

UPI Steals the Thunder in 2019!

2019 was a big year for fintech, especially payments. We saw the rise of many innovations that led India on its journey to becoming one of the most advanced countries concerning digital payments. And, UPI is certainly an innovation that comes to mind when we think fintech.

With the festivities in the air, we wanted to mark the beginning of the new year with a recap of all the cardinal developments of UPI in 2019, along with some noteworthy insights.

Razorpay oversees payments from numerous merchants like IRCTC, Swiggy, BookMyShow, and 8 lakh+ partner business. We’d like to quickly mention that we’ve considered P2M (Person to Merchant) UPI transactions to derive the insights in this report, all of which are based on the transactions made on the Razorpay platform

UPI in 2019 – a snapshot

2019 was a remarkable year for UPI. We saw many use cases for the payment mode, observed growth in its adoption and analyzed volumes of UPI transactions throughout the year to bring these insights to you.

  • For the first time ever, UPI overhauled cards (debit & credit) in September and became the most preferred payment mode 
  • The most loved UPI app in all of India was Google Pay, displaying colossal adoption and growth rates of 337.73%
  • Karnataka was the most digitized state through 2019, contributing the highest chunk of digital payments from all over India
  • Bangalore recorded the highest number of UPI transactions from all over India
  • Food and Beverage (29%) industry saw the most number of UPI transactions in 2019, followed by Financial Services  (12%), and ravel industries (11%)

The upsurge of UPI

UPI was innovated by NPCI (National Payments Corporation of India) in 2016 to help Indian consumers make payments in real-time. What started as a mobile-first P2P (Person to Person) payment mode, quickly evolved itself to become the preferred merchant first platform. 

We looked through the UPI transactions made over the years. Here are some findings.

UPI transactions 2019

From its innovation in 2016, UPI set foot into 2017 with a bang. Considering all the UPI apps providing cashback, scratchcards, and other offers to promote adoption, the payment mode grew 95 times from 2016. We also saw several players competing to become the most used UPI app, which we will get to in a bit.

When we thought it couldn’t possibly get any better than the 95x growth from 2016 to 2017, 2018 saw 48 times the growth in 2017. 

Although the offers provided by the UPI apps played a sizable role, we cannot rule out the change in consumer behavior in recent years. Consumers preferred online payments to be quick, easy and immediate. Compared to other payment modes, UPI was far simpler to use. 

The authentication process was straightforward, and the best part – consumers didn’t have to carry anything specific (other than their phone, of course) or remember long numbers. The ease of carrying out a UPI transaction was far more satisfying. 

At the beginning of 2019, most offers turned into ‘better luck next time.’ But that didn’t slow UPI down one bit. The year noticed ten times the growth from 2018, still making a massive impact since the payment mode was widely used all over the country.

The ascension of UPI in 2019

Now, let’s take a look into some numbers that show how UPI performed throughout 2019.

growth of UPI

UPI had already gained a firm ground as it made into 2019. In the JFM quarter, the payment mode experienced an uptick of 128% from the previous quarter in 2018. Next, as it made its way to the AMJ quarter, the growth percentage increased by 71% from JFM. 

At 26% growth in JAS from the previous quarter, UPI displayed steady growth throughout, venturing into OND with a propelling growth of 36%.

UPI vs other payment modes

While we paid utmost attention to observing UPI, we didn’t forget the other payment modes. Let’s take a glance.

UPI vs other payment modes

UPI was the most preferred payment mode towards the 2nd quarter of 2019, contributing the most number of digital transactions when we compared month-on-month. When we pooled in the data from throughout the year, we observed that cards took precedence over UPI at 45.73%.

UPI was a close contender, taking second place at 37.69%, followed by netbanking at 11.43%.

Since cards and netbanking were close to UPI in terms of volume, we wanted to take a closer look.

UPI vs debit cards

UPI vs debit

  • In JFM, debit cards were preferred over UPI by 0.65% and the trend continued in AMJ, where debit cards were used more than UPI by 0.91%
  • This changed in JAS as UPI became the preferred payment mode over debit cards by 1.44% and took over cards in OND as well by 1.59%

UPI vs credit cards

UPI vs credit

Unlike debit cards, UPI stole the show throughout the year and kicked credit cards to the curb as it transitioned into the most preferred payment mode.

UPI vs netbanking

UPI vs netbanking

Remember the time netbanking was the most convenient way to transfer money? Not anymore! After overhauling cards, UPI stood over netbanking as well, all through 2019.

UPI transactions – a geographical split 

We analyzed the UPI transactions made from all over the country throughout 2019. Here are some highlights.

geographical split

As always, Karnataka claimed its position by contributing the better chunk of UPI transactions made in 2019, at 27.82%. Next up, 15.05% of the total UPI transactions were made in Maharashtra. Andra Pradesh and Telangana pitched in another 11.02%. Further, the NCR region contributed 8.06% of UPI transactions.

This trend remained the same throughout the year as well, when we observed UPI transactions month-on-month.

Now, let’s take a look at a city-wise split.

Again, like many other times before, Bangalore was our #1 contributor as 38.4% of the total UPI transactions were made in the city. Hyderabad followed the lead at 13% while Pune handed in another 9.7%.

NoteQ: Why is Bangalore’s contribution higher than Karnataka’s?

A: The state-wise split is different from the city-wise split. We considered the whole country to provide state-wise data, whereas we considered 15 cities for the city-wise data.

The elevation of UPI apps

So, we learned about how UPI did in 2019. Now, let’s understand how some of our favorite UPI apps fared.

UPI apps growth

Based on all the UPI transactions made in 2019 on the Razorpay platform, Google Pay took center stage as the most preferred UPI app. The app saw a growth of 337.73%, which is very significant, considering the adoption rates.

PhonePe grew the most at 857.22% followed by PayTM at 827.68%, while BHIM app expanded by 108.68%.

Bank UPI apps also showed promising growth throughout 2019. Here’s a look.

UPI bank apps

What’s next for UPI?

UPI has been one of the most promising fintech innovations. It didn’t fail to disrupt the Indian payments space, creating an impact we didn’t anticipate. 

We expect UPI to permanently dethrone cards and netbanking to become the most preferred payment app in 2020. Based on our analysis, we also foresee an ambitious and competitive market for UPI in 2020, where Google Pay may continue its top position. 

Unlike before, Indian consumers are more comfortable using UPI for most digital transactions. We look forward to a paradigm shift towards the consumer confidence towards making larger value transactions via UPI.

We also predict a rising trend in the adoption of UPI in tier 2 and 3 cities.

We’re very excited to continue our analysis on UPI transactions to see new patterns and trends in 2020. 

(Note: All findings are based on the transactions on the Razorpay platform from 2016 to 2019.)

The Fingerhold of Recurring Payments in India

Lately, India has seen an unparalleled expansion of online businesses. With the online commerce industry penetrating the Indian market by 74%, close to 329.1 million people are projected to buy goods and services via online stores by 2020. While consumers have a mountain of options to choose from, the need for more innovative consumption models also arise.

Why?

  • Convenience dictates consumer behavior. The ease of simply tapping a button to buy anything from anywhere, at anytime, is simply not beatable
  • Consumers prefer “accessing” something over “owning” it
  • Each consumer wants unique and personalised offerings, where they can tailor their experience
  • Consumers demand flexibility, not only “what” to consume, but also “how”

This has led us to where we are now with recurring payments.

The recurring payments model has a far reaching impact. It creates opportunities for product differentiation, taps consumer segments, and improves customer loyalty. And so, it’s no surprise that its growth is catapulting.

subscriptions data india razorpay recurring payments

Based on recurring payments on the Razorpay platform, here are a few highlights.

subscriptions data india razorpay recurring payments

Earlier in FY18-19, recurring payments began to gain popularity. Based on transactions on the Razorpay platform, there was a 78% growth in Q1 as many businesses got onto the bandwagon. What started out with standing instructions on credit cards soon got extended to debit cards, and in some cases, to netbanking as well. Physical NACH got transformed to eNACH.

All of this led to recurring payments receiving an even better response in FY18-19 growing by 96% in the second quarter of that year. By FY19-20, recurring payments have gained strong ground in India. Although Q1 and Q2 seem to show a smaller growth percentage, the growth is still significant because by then, most businesses were already using a recurring payments model.

Now, we anticipate recurring payments to sprout on all cards and UPI as well, which will further fuel the growth of this mode of payment.

“India is a key part of our international subscription growth.”

– Reed Hastings, CEO, Netflix

subscriptions data india razorpay recurring payments

Government initiatives have also been helping businesses move to the recurring payments model.

RBI opens up recurring payments on cards – A step ahead for digital payments

In September 2019, RBI turned out with a circular to engender the utilization of cards in making recurring payments. The circular says that starting September, buyers will have the option to utilize their cards to make recurring payments to businesses through e-mandate.

The e-mandate and additional factor of authentication (AFA) should be done just once at the hour of the principal transaction. All transactions taking place, later on, will be completed consequently without the prerequisite of rehashed AFA.

RBI has set a cap of ₹2,000 for such transactions and notified that they will be permitted on debit and credit cards, and prepaid payment instruments (PPI) including wallets.

This will empower consumers, just as traders, to significantly profit by getting rid of the issue of authenticating transactions on numerous occasions.

The RBI circular likewise specifies that consumers will be given the aid to set recurring payments for a predefined fixed value or a variable value. To guarantee that the cardholder is protected, they will have the option to determine the maximum transaction value as well.

Further, to defend the interests of the consumers, RBI said that they will get a notification through SMS or email a day prior to when the recurring transaction is to be completed. This notification, carrying details regarding the amount, date and purpose behind the transaction, will enable cardholders to drop the exchange, on the off chance they wish to do so. Obviously, the cardholder can pull back the e-mandate anytime too.

This facility will go far in further advancing digital transactions in the nation. All the more so, consumers won’t be required to pay any additional charges for setting an e-mandate for recurring payments through their cards.

eMandate for netbanking and debit cards

In April 2019, NPCI received final approval by RBI for the full-fledged implementation of eMandate for netbanking and debit cards. NPCI informed all the banks to take immediate steps and implement both eMandate variants within June. While the limit for each eMandate is set at Rs 1 lakh, the organisation is to review the limit.

This facility will allow businesses to greatly improve the customer experience while solving collection-related problems at the same time since eMandate will allow them to take a one-time consent from the customer to debit them subsequently.

UPI 2.0 with overdraft facility

The launch of UPI 2.0 in August 2018 was expected to bring many benefits to the payments landscape. In addition to current and savings accounts, consumers could have also linked their overdraft account with UPI to instantly make their transactions while the benefits of an overdraft account are retained. While the launch has not happened yet, it will be a gamechanger for recurring payments, given the immense popularity garnered by UPI in recent times.

What’s in store for recurring payments

“We believe that the recurring payments model will benefit not only customers, but businesses as well. With rapidly evolving consumer needs, this model will be a game changer for the Indian economy. Benefits like reduced transaction costs, convenience of upgrading or downgrading and reduced amounts of waste from unused assets will drive the adoption of recurring payments.”

– Harshil Mathur, CEO, Razorpay

Razorpay offers a full range of payment solutions for Recurring payments which include – recurring on cards, on bank account via eMandate or eNACH and Physical Mandate.

Interesting use cases for recurring payments on the Razorpay platform

 

recurring payments subscriptions trend data razorpay

Explore Razorpay Subscriptions.

2019 – The Year That Was for Razorpay

2019 year end review razorpay

As 2019 draws to a close, it’s a good time to sit back and relive how the year has been for us. In many ways, 2019 was a big year for not only Razorpay, but the fintech industry as well. 

We have captured how the year was for us in the infographic below, but allow me to talk about some highlights here as well.

  • We served 960k plus businesses on our platform this year
  • IFTA announced us as the most innovative payments startup and we made it to Y-Combinator’s list of top 100 companies as well
  • Our co-founders, Harshil Mathur and Shashank Kumar, brought home the Young Alumnus Award 2019 award from their alma mater, IIT Roorkee
  • Razorpay acquired two businesses this year – Thirdwatch & Opfin 
  • We processed payouts volume worth $3 billion on RazorpayX

Our product portfolio also grew by leaps and bounds, notably:

  • Payment Pages allows businesses to accept payments without a website or app
  • Support for freelancers, consultants and unregistered businesses
  • Current accounts and corporate credit cards on RazorpayX 

Personally, I love the fact that we were able to save transaction time worth nearly 6 years through our card saving feature! And of course, we pulled off the country’s biggest fintech event in FTX 2019.

So yes, 2019 has been an outstanding year for Razorpay. As we set foot into the new decade, we have big plans laid out to help businesses #OutgrowOrdinary. Through our acquisitions, we’ll help e-commerce businesses fight fraud and streamline their payroll processes as well. 

But until then, thank you for your support and faith in us. Here’s wishing you and your business a very happy new year, filled with boundless growth opportunities.

2019 year end review razorpay

How Startups Can Accept Online Payments in India

Starting an online business has never been as lucrative as it is today. The number of startups in the digital space have grown by leaps and bounds over the past couple of years. Some might say it’s a fad, but we believe in the entrepreneurial spirit of India. It’s a great time to start an online business, especially since India is embracing digital payments more and more. 

Startup entrepreneurs usually focus on various business aspects like building an attractive and functional website, ensuring the supply chain is reliable, and more. But apart from these, online businesses should also focus on the best way to collect payments. 

Online digital payments can be accepted by businesses through multiple ways, each with its own set of advantages and challenges. The key channels are:

1) Integrating with a bank’s payment gateway – A payment gateway provided directly from a bank (also called a second party payment gateway) allows online businesses to process payments via debit cards, credit cards and net banking and is supported through platforms such as Visa, Mastercard and American Express, among others. 

From the cost standpoint, businesses will need to pay an initial setup fee and transaction fees or TDR (Transaction Discount Rate), which is a percentage of the transaction value for all transactions processed via the gateway.

While the whole system looks straightforward in principle, integrating with a bank’s payment gateway is often challenging and tedious for startups.

2. Integrating with a third-party payment gateway – An easy and efficient way to process online payments is through a third-party payment gateway. Such payment gateways also collect TDR on transactions while setup costs may or may not be applicable, depending on the solution provider. 

Similar to banks, these gateways also facilitate payments made through debit cards, credit cards and netbanking. In addition to this, many solution providers, like Razorpay, also allow merchants to process digital payments through multiple channels like prepaid digital wallets and recently, even UPI and several digital wallets. This way, online businesses have the agility to accept payments through practically every online digital mode.

While on the face of it, third-party payment gateways seem similar to bank payment gateways, they are in fact far more user friendly, accessible and easy to integrate, especially for first time startups.

Now that we know the basics of the two channels, let us see how one compares with the other:

Second party payment vs third party payment gateway

Second Party PG Third-party PG
Setup costs
One time cost to integrate website with the PG
High setup costs Low/No setup costs
Application process
Includes documentation and approval time for PG access
Lengthy process. Average application and approval cycle is around 3 months Quick approval and online onboarding process. Average time for onboarding is 5-10 days
Documentation
Mode of document submission
Documentation needs to be submitted in hardcopy, making the process cumbersome Paperless submission of documents making the whole process easy and efficient
Technical integration
Ease of integration and mode of integration
Difficult to integrate;requires significant time and effort from the merchant’s tech team Easy and simple integration with minimum coding efforts. Some gateways allow for integration within a few hours
UX
User experience and user interface
Complicated UX with limited or no scope for merchant customization. User friendly and intuitive UX that also allows for merchant related customisation
Issuance of refunds
Handling of customer refunds
A manual refund and verification process is to be followed to issue refunds to customers Merchants can easily refund transactions directly from the dashboard through a click of a button
Card saving
Cards once used by customers are saved automatically for future use
Does not facilitate card saving, hence not optimised for superior customer experience Allows for card saving feature across multiple cards, thus enhancing customer experience that might lead to increased customer loyalty
Risk Engines
System level risk identifiers that aim at curbing fraudulent/risky transactions
Does not provide inbuilt risk engines that reduce the occurrence of online frauds Provides system level risk engines that mitigate the chances of online frauds
Co-branding,
The opportunity to use brand name and brand design for the payment checkout process
Does not allow for any co-branding/brand placement or customization in the payment, checkout process Allows for various levels of customization and brand placement in the payment, checkout process
PCI DSS certification
Official information security standards required for handling online card transactions
Requires merchants to be certified to PCI DSS in order to access the payment gateway Merchants can easily access the payment gateway without individually applying for PCI DSS certification (as the PG acquires the risk involved in the payment process)

Thus, from this comparative analysis, startups looking to accept digital payments should integrate with third-party payment gateway providers given the significant advantages gained at minimum effort.

Accepting payments beyond a payment gateway

Setting up a payment gateway works for online businesses that have a website or an app. But what if you don’t? Does that mean you won’t be able to accept digital payments? Nothing could be farther from the truth.

The Razorpay payment suite offers solutions for businesses to accept payments even without a website or an app. Here’s how.

Get paid instantly with Payment Links

If you don’t have a website or an app, you can easily create a Payment Link from your Razorpay Dashboard and send it to your customers via email, SMS, messengers, chatbot, etc. 

Even with a Payment Link, your customer can choose from a plethora of options to complete the payment. Razorpay Payment Links can be used by businesses without a website, as well as businesses with a website that require an alternate payment method. It is a smart way to collect payment, which comes with features like bulk upload and partial payments.

Check out Razorpay Payment Links

Collect payments with custom Payment Pages

Razorpay Payment Pages allow you to create a custom-branded payment page to build an online store in minutes. You don’t need coding expertise to get your store online in a matter of minutes.

With Payment Pages, you can list multiple products, apply smart purchase controls, meet your branding requirements and track your payments with ease. Payment Pages are used by businesses to sell event tickets and products as well as to collect donations and fees. 

Get started with Razorpay Payment Pages

Complete payment solution for freelancers

You don’t even have to be a registered business to accept payments with Razorpay. We support unregistered businesses, freelancers, consultants and professionals as well. 

With quick onboarding and support for multiple payment modes, freelancers never had it as easy as this to accept payments online. Our support for freelancers and unregistered businesses also enables them to create GST-compliant invoices to get paid instantly.

Signup to accept Freelancer Payments

Processing payments is one of the most integral aspects for online businesses today. It is the critical and final step that ensures the success of a product or service. Thus, in addition to merchant-level benefits, payment solutions should also be end-customer friendly and provide checkout experiences that are intuitive, efficient and secure.

At Razorpay, we provide the entire checkout experience on the merchant page with no external redirects, thus providing not only a quick, cohesive payment experience, but also very low dropoff rates.

In today’s crowded online ecosystem, startups require solutions that are many solutions wrapped into one tight and efficient one. Third-party payment gateways like Razorpay do exactly that.

Further reading: How to Choose the Right Payments Solution