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 are 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.

Manage Working Capital Efficiently with 100% Visibility in Settlements

razorpaysettlements

Working capital is more than just a financial metric. It is the fuel that allows companies to run their day-to-day business operations. Its management, or mismanagement, can have a very direct impact on a company’s financial health and operational success.

For businesses that accept payments online, working capital is a function of incoming settlements from their partner payment gateways. As a result, a lack of visibility in settlement timelines can end up creating a plethora of  challenges for companies. Some of these include:

  1. Lack of clarity around settlement timelines: Wondering when their payments will get processed can keep businesses worried and make it difficult for them to manage working capital efficiently
  2. Expected settlement amount: Knowing how much they are going to be paid is a crucial piece of information for companies to plan their day-to-day operations
  3. Settlement status on the transaction page: It is important for businesses to know which transactions have already been paid for and which are still pending
  4. International payments: Answers to questions regarding the settlement cycle of their international payments and service fees on the same are crucial for businesses
  5. Route settlements: Companies organized in a parent/child network or partner network should not find it very difficult to keep a track of how much each entity will be paid and by when

Settlement UX changes

To equip our merchants with the armor to handle these challenges, we’ve made the following UI/UX enhancements on the Razorpay dashboard:

Transparency on upcoming settlements 

  • The amount and date for your next settlement will now be visible on your Home page, Transactions page & Settlements page
  • This is the go-to metric for businesses of any size to quickly assess when their next settlement will happen and how much will they be paid

Settlement cycle in the ‘My Account’ section

  • New to Razorpay and want to check what your default settlement schedule is? This information is readily available on the dashboard. No need to reach out to the support team
  • Want to start accepting international payments? Check your international settlement schedule through your dashboard to better manage your cash flow

 

Settlement status for each and every transaction

  • No more confusion on which transaction you have received payment for and which is still pending
  • This feature also provides visibility on service fees paid to Razorpay

The above changes will significantly enhance visibility on settlements and provide our merchants with the information they need to efficiently manage their working capital. 

An essential quality of a payments solution is the ability to scale to meet the growing demands for our customers. Transparency in settlements is another endeavour by us to give you the best payments infrastructure.

Are you ready to simplify the way you accept online payments? Sign up on Razorpay if you haven’t and leave all your payment worries to us!

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

Digital Payments in Delhi Grew by 235% in 2019 – The Era of Rising Fintech

Here we are with our 4th edition of ‘The Era of Rising Fintech’!

2019 was particularly a good year for fintech. Many innovations contributed to India becoming one of the most advanced countries in terms of digital payments. With the new year kicking in, we wanted to bring you a few insights on how India carries out digital transactions. 

As Razorpay oversees enormous volumes of digital transactions from all over the country, we were able to derive these insights based on how Indian businesses accept payments from their customers. Further, we also analysed how Indian consumers transact. 

All findings in this report are based on digital transactions made on the Razorpay platform from January 2018 to December 2019.

Here are a few nuggets:

  • Demand for digital payments have been at a consistent rise – 338% from 2018 to 2019
  • Bangalore was the most digitised city in 2019 with a contribution of 23.3% of the total digital transactions carried out in the year, followed by Delhi and Hyderabad at 10.4% and 7.4% respectively
  • UPI overhauled netbanking, cards, and other digital payments in September 2019, becoming the most preferred payment mode in India for the very first time
  • UPI also saw the highest growth at 885% in 2019 from 2018

Growth of digital payments in India

We enable payments of over 800,000 merchants from all over India. We studied all the P2M (Person to Merchant) transactions made in 2018 and 2019 throughout the country. Here are a few points that are mention-worthy.

  • Karnataka pitched in the majority of digital payments in both 2018 and 2019, at 30.7% and 24.6% respectively
  • After Bangalore (23.3%), Delhi (10.4%) and Hyderabad (7.6%) were the most digital payments friendly cities in 2019
  • In 2019, UPI exceeded its previous contribution at 38%, eating into cards’ share while credit and debit cards collectively contributed 46%
  • Google Pay’s reign continued through 2019 at 59%, becoming the most preferred UPI app of all time
  • Top sectors in 2019 were food and beverage (26%), financial services (12%), and gaming (8%) industries
  • Lending, mutual funds, and insurance were the top three verticals in the financial services industry, contributing 83%, 9%, and 8%

The Era of Rising Fintech – Delhi edition

In our last report, we focused on Hyderabad and its growth towards becoming one of the advocates for digital payments. Our star for the 4th edition is Delhi. 

We pooled in the transactions carried out in Delhi during 2018 and 2019 and inferred these insights.

  • Digital payments in Delhi saw a huge spike at 234.97% from 2018 to 2019 
  • In 2019, cards were mostly preferred for digital payments at 64% over netbanking and UPI 
  • UPI contributed 12% of the total digital transactions made in 2018, but saw a rise in adoption and usage in 2019 at 20%
  • Google Pay was the #1 UPI app in Delhi throughout 2018 at 39%, as well as 2019 at 50%
  • Amongst wallets, Ola Money (27%) was mostly used, followed by Amazon Pay (25%)

What we can expect in 2020

We, at Razorpay, love numbers. Over the years, we have spent long hours analysing numbers to draw insights, patterns, and trends. And, based on data and research, here’s what we can look forward to this year.

Trust is something fintech did not immediately win over from Indian consumers. But, with innovations that have made payments easier and much more secure, we believe more and more consumers will trust fintech, resulting in more innovations in 2020. 

We predict that this trend will continue in 2020, where UPI will thrive as the most preferred payment mode.

We also believe tokenisation of cards will cause the next big wave this year, helping credit card frauds go down. Also, consumers and businesses will become more aware of what neobanking is and how it can simplify financial operations. 

We can also expect the potential launch of next-gen NEFT that can lead to a higher degree of automation and features that conform to the global standards.

End of the line

India is becoming one of the leaders in fintech and digital payments. While tier 1 cities contributed to this growth, we are very excited to see tier 2 and 3 cities jumping on the bandwagon. 

Let’s meet again in our next edition of The Era of Rising Fintech, with insights about a whole new city!

fintech report razorpay delhi

Turnover of Over Rs 50 Crore? You Now Need to Accept Payments Using RuPay & UPI

The Indian government’s push for a digital economy is very much real. In the past couple of years, we have seen numerous endeavours from the government to drive the adoption of digital payments. The recent removal of MDR charges on transactions done using UPI and RuPay is a case in point. 

Coming on the heels of this move, the Central Board of Direct Taxes (CBDT) released a notification under Section 269SU that aims to increase the use of UPI and RuPay for business-to-business (B2B) payments. And why not? UPI has grown by leaps and bounds in the consumer payments space. Google Pay, PhonePe are now common household names and synonymous with P2P money transfers. It makes sense that the convenience and speed of UPI payments be utilized by businesses as well.

Hence, as per the government’s latest notification, businesses with gross receipts of more than Rs 50 crore need to provide the facility to their customers of making payments through UPI, UPI QR codes and RuPay debit cards. 

Here’s the circular for your reference.

Source: IncometaxIndia.gov.in

This notification under Section 269SU came out from the Central Board of Direct Taxes on 30th December 2019. It set the deadline of 31st January 2020 for businesses to install this facility into their systems. The penalty for not meeting this deadline has been set as a fine of Rs 5,000 per day from 1st February 2020 onwards.

The nitty-gritty of the notification is that the rule has to be followed by businesses where the turnover exceeds Rs 50 crore in the immediately preceding fiscal year. Besides any electronic payment modes you may already have, every applicable business needs to mandatorily also support:

  • Debit card powered by RuPay
  • Unified Payments Interface (UPI) (BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

UPI and RuPay are both properties of the National Payments Corporation of India (NPCI). Apart from promoting digital payments within the country, the government also aims to increase the adoption of state-sponsored payment infrastructure through the adoption of UPI and RuPay.

As mentioned earlier, UPI has seen immense rise in usage all through 2019. It contributed to 37.7% of all digital payments through 2019 on the Razorpay platform. While most of this contribution came from the B2C space, we believe that UPI has great usability in the B2B space as well.

How to accept B2B payments in UPI and RuPay

Coming back to the CBDT notification, with the 31st January deadline looming, the best way for businesses to fulfill the notification would be by integrating with a payment platform like Razorpay.

A payment gateway is a system that is designed to handle end-to-end payments. A payment gateway, when integrated with a business’s website or app, allows the business to accept domestic as well as international payments through all electronic modes. This includes netbanking, credit cards, debit cards and the notification’s requirements of UPI and RuPay. 

The best part about the Razorpay Payment Gateway is the ease of integration. With well-documented SDKs, RESTful APIs and support for popular plugins, getting onboard with Razorpay Payment Gateway will be a breeze to help your business meet the government’s deadline.

Features of Razorpay Payment Gateway:

  • Quick onboarding and integration
  • Developer-friendly APIs and plugins
  • PCI-DSS Level 1 security
  • Support for all payment modes 

The other options that your business can explore are Razorpay Payment Pages and Razorpay Payment Links. Payment Pages allows you to build a custom-branded page to showcase your brand, products and services, and accept payments on the go. 

Features of Razorpay Payment Pages:

  • No coding required
  • Go live in minutes
  • Meet your brand guidelines
  • Create a memorable URL

razorpay payment pages

With Payment Links, your business can send individual links to customers through email, SMS, chatbots and messengers. The recipient has to just click on the link to make the payment.

Features of Razorpay Payment Links:

  • Customise to your brand guidelines
  • No coding required
  • Automate through powerful APIs
  • Get started instantly 

razorpay payment links

Both Payment Pages and Payment Links support all payment modes, including the ones stipulated in the notification, that are supported by our Payment Gateway. If integrating with the Payment Gateway would be difficult before 31st January, then the best bet for your business would be to set up a Payment Page and fulfill the government’s ask in a matter of minutes. 

The CBDT notification under rule 119AA has come into force under the Income Tax Act from 1st January 2020. If your business exceeds the turnover of Rs 50 crore, you should get the facility to accept UPI and RuPay payments right away. Write to us at enterprise@razorpay.com to expedite the process through our banking partners.

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.

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

UPI Continues a Strong Game, Albeit a Slight Drop in November

UPI november data Razorpay

UPI has become somewhat of a default payment mode for most people in India. In the last few months, UPI recorded the highest number of transactions, overhauled cards, and other payment modes, and became the most preferred one. If you’re interested to find out what happened in November, hang on tight. 

With 800,000 businesses onboard, Razorpay oversees huge volumes of P2M transactions every day from an umpteen number of businesses like BookMyShow, IRCTC, Swiggy, and more. To gather insights, we have only considered P2M transactions of UPI.

Note: All insights in this story are based on transactions held on the Razorpay platform

UPI transactions in the last 6 months

Like we mentioned earlier, UPI has been climbing up bagging the most number of transactions. But in November, UPI saw a slight dip as compared to October, although it was almost on par with September in the number of transactions (saw a growth of 39.56% growth from August to September). 

UPI november data Razorpay

UPI vs other payment modes

Although UPI didn’t see as many transactions, it still remained to be the most favored by Indian consumers.

2

  • UPI contributed to 42.61% of the total number of transactions that were carried out on the Razorpay platform
  • Cards made a comeback from the previous month by contributing a bigger chunk of payments at 41.87%
  • The third most popular payment mode amongst Indian consumers was netbanking, at 10%

UPI app-wise contribution

Since UPI was the preferred payment mode in November, let us understand how some of the UPI apps contributed.

UPI november data Razorpay

  • Again, Google Pay was the number 1 player in the market, contributing to 56.61% of the total UPI transactions
  • PhonePe held its position from the previous month by handing out 26.26%
  • PayTM was next in line at 6.96%

UPI apps – a closer look

Contributions aside, let us jump in to understand how much our UPI apps grew in November.

UPI november data Razorpay

  • Unlike before, the ICICI UPI app showed the highest growth in November, at 8.47%, followed by Axis and HDFC UPI apps at 6.24% and 5.17% respectively
  • Google Pay although being the most used UPI app, fell by 19.15%
  • PhonePe and BHIM also took a downward plunge by 3.92% and 3.99%

UPI transactions – a geographical split

As always, we wanted to see where all the UPI transactions came from. Here’s what we found.

UPI november data Razorpay

  • 29.92% of the total UPI transactions made in November came from Karnataka
  • Maharashtra contributed 13.98% while Delhi and NCR pitched in 7.9% 

While we are still looking into where UPI transactions, let us take a look at the tier-wise split.

Will UPI make a comeback next month?

UPI has been at the forefront of fintech innovations, pushing a great deal of digital payments in the last few years. The impact UPI has made is huge, reaching so many people from across India and enabling them to make digital payments.

Let’s dive deep next month and draw new insights from the transactions on our platform.

See you then!