Online payment aggregator Razorpay Software Pvt Ltd is focusing on its offline and international business ahead of its initial public offering, top executives said Mint.
“In India, the offline market is much bigger and that is our big push,” said co-founder and CEO Harshil Mathur. In August 2022, Razorpay entered the offline segment by acquiring Ezetap.
The company expects offline payments, which account for around 15% of Razorpay’s revenue, to grow to about 30% over the next three years.
Sound boxes, QR codes, tap-to-pay terminals and point-of-sale are some of the services that payment companies offer in offline mode. Razorpay launched several such products recently. Among them is DigiPOS, a new machine that will help customers browse offline offers just like they can on online platforms.
Razorpay is launching its own payment equipment. Until now, it had marketed POS machines and payment equipment in partnership with banks, under the latter’s branding.
“Offline payments have not seen much change compared to online payments and are almost a decade behind,” said Rahul Kothari, chief operating officer, Razorpay. The company also plans to target large merchants who use POS machines instead of speaker boxes to increase their brand presence.
Razorpay is expanding its presence in Southeast Asian countries, including Singapore. “We are in the process of applying for a license, but we will work with a partner to start providing our services (in the region),” he said.
Razorpay, which arrived in Malaysia in 2022, has seen its revenue in the region grow by 30% month-on-month, CEO Mathur said, adding that “it translates to 400% year-on-year growth.”
According to Mathur, real-time payments are just starting to emerge in markets like Malaysia, and Razorpay and other players are well positioned to capitalize on them. “(Those countries)… are basically trying to replicate what UPI did, we can replicate our success in those markets as well. We already have the products that work well for real-time payments and we know which industries benefit from that,” he added.
Kothari said the next geography to target after Southeast Asia would be the Middle East. The company is in the process of developing in the region.
“From an overall strategy perspective, we would be looking at licensing across multiple geographies,” Kothari said, adding that it will help the company develop integrated processes for cross-border transactions for import-export traders, especially in India.
Razorpay has applied for a cross-border payments (PA-CB) license with the Reserve Bank of India. So far, companies like Cashfree Payments, BillDesk, and Amazon Pay, among others, have received the license from the RBI.
Razorpay plans to go public in the next two to three years.
Razorpay’s journey so far
Founded in 2014 by Mathur and Shashank Kumar, the Bengaluru-based company last raised $375 million in 2021, led by Lone Pine Capital, Alkeon Capital, and TCV, with participation from existing investors such as Tiger Global, Peak XV Partners, among others. Razorpay has so far raised over $740 million in funding.
The company has also set aside $150 million to $200 million, which it will have to pay in taxes in the United States as it returns its corporate headquarters to India ahead of a possible listing here.
The company faced a setback when the RBI barred it from onboarding new merchants on its platform until December last year, when it obtained the payment aggregator license from the regulator.
After a gap of about seven months after obtaining the license, the company has completed onboarding traders who had requested its services. Kothari said the company has onboarded 150,000 new traders out of the roughly 500,000 who showed interest during the ban.
The company’s revenue increased by 54% to ₹2,279 crores in FY23 from ₹1,481 crore in FY22, while it reported a flat net profit of ₹7.3 crore. While Razorpay is yet to report its FY24 numbers, Kothari said the onboarding of new merchants is expected to show a positive impact on revenue for the fiscal year.
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