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Razorpay’s neobanking offerings and Payments Button have also recently witnessed substantial growth
India-based payment fintech Razorpay has raised US$100 million in Series D funding, marking its entry into India’s unicorn club, the company announced yesterday.
The round was co-led by Singapore’s sovereign wealth fund GIC, and Sequoia Capital India, and saw participation from the startup’s existing investors Ribbit Capital, Tiger Global, Y Combinator and Matrix Partners.
The funding makes Razorpay India’s newest unicorn company, according to a company blog authored by Razorpay Co-founder Shashank Kumar. This puts it in the league of the companies such as Byju’s, Zomato, and OYO, who are also incidentally enterprise clients of the company.
The company is also India’s first operational neobank to have attained unicorn status, according to the blog.
Razorpay is a 2014-founded fintech startup that provides enterprise clients with multi-channel digital payments and banking solutions.
The company’s 800,000+ clients include big tech names Facebook and Google, popular online encyclopedia Wikipedia, sizable Indian businesses such Jio, Zerodha and Hotstar, and SMEs and startups such as Khatabook, OkCredit or Meesho, in addition to services for freelancers as well.
According to Crunchbase data, Razorpay has raised $224.7 million in funding so far, including a $75 million Series C round led by Sequoia and Ribbit Capital, and a $18 million venture round, both raised last year.
The company blog noted that its latest digital payments product, a Payment Button that lets business owners accept payments straight from their websites, has been its fastest-growing product so far.
It added that its neobanking solution RazorpayX has been able to cater to over 10,000 businesses within twelve months of its launch, processing payroll, corporate expenses, and other payouts amounting to billions of dollars.
Razorpay is part of India’s young but growing digital payments landscape
Kumar attributes the company’s growth to a need for financial technologies that can help Indian businesses cope with the demands of the digital economy, a need that has been exaggerated by the global pandemic.
“The financial technology used by businesses today is fundamentally broken and not suited to the mobile era,” Kumar noted in the blog. “As a digital business, entrepreneurs and business owners want to work with a mature financial software that goes beyond being merely transactional. Today, businesses want a singular hub for all financial operations.”
“With [COVID-19] causing a potential paradigm shift in the way commerce happens in the country, we are seeing multiple new demographics of businesses looking to move online and start leveraging Internet and mobile technology,” he also said.
There has been a major policy-level shift toward digitalization, ease of doing business, and homegrown entrepreneurship in India, such as through the Make In India initiative or the Digital India program.
However, the wheels for a push toward digitalization were put into motion much earlier, when the Indian government had announced its demonetization plan in 2016. The move resulted in liquidity issues that persisted for several months, forcing businesses to transition to digital payments.
As a result, several fintech products have been introduced to the country, including mobile-based payment apps, Buy Now Pay Later solutions and emerging neobanking alternatives.
Moreover, apart from leading to a severe cash crunch for startups and SMEs in the past months, COVID-19 also prompted wider adoption of digital payments in India on account of its nature as a contactless payment mechanism.
The subcontinent is now expected to account for 2.2% of the global digital payments market by 2023.
“Despite the tremendous growth we’re witnessing in the digital payments ecosystem, online payments still barely account for a meagre 3% of Indian economy. So yes, there’s a long way to go,” Kumar noted in the blog.
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