In recent years, the collaboration of fintech companies with banks and NBFCs to enable digital lending has played an instrumental role in furthering the RBI’s vision of financial inclusion, revolutionising last-mile lending. In the second part of Razorpay’s interview with Storyboard18, Rahul Kothari, chief operating officer, Razorpay, discusses how the company has been operating after the Reserve Bank of India lifted its ban on onboarding new customers, industry trends, advertising methods, and more.
What are the industry trends in the fintech landscape and how has Razorpay been tapping them?
Most fintechs are now focusing a lot on creating offerings that are really valuable for businesses and consumers, and that can be monetised better. This is consistent with that ecosystem trend where there is a lack of funding and therefore every dollar you spend has to be thought of very carefully. We are seeing this very seamlessly across all fintech companies—everybody is pushing towards higher revenue or moving towards profitability.
Most companies in India have realised that creating a standalone business by focusing on only one product offering is not sustainable to create a strong business or a strong product hook. A lot of companies are trying to have more bundled offerings. For example, a lot of companies are saying, if we are doing payments, should we be doing, say, lending as well?
For Razorpay, our vision has been very clear that we are not just a payments company. We are a money movement company which makes online-offline payments. There is neo banking, an escrow product, payroll product and a source to pay product. There is a corporate card. So you are able to have a complete platform. In general, it’s a trend that you have to build more products to build a sustainable business and raise the pace by creating the entire end-to-end platform.
How is Razorpay navigating regulatory challenges?
There was an embargo on Razorpay onboarding, which recently got lifted, which means we are navigating it pretty well. Ultimately fintech is the movement of money. And any industry, which is about movement of money has to be regulated, has to be compliant, has to have very high standards to make sure there is no loss to the consumer, there is no fraud, and the processes are adhered to.
We have a very strong focus on compliance and risk. We have esteemed industry partners and senior members who advise them on those, we have very thorough audits and risk checks to make sure we are really compliant.
Now that the entire fintech industry has become so important, for the volumes that go through it, any major compliance issue around that, or fraud/risk can have India ecosystem-level challenges and therefore, having the right kind of regulatory insight and companies to be extremely responsible in terms of making sure they’re compliant is very important and that’s what we are also doing.
How do you approach advertising and marketing?
When we look from an advertisement perspective, Razorpay is in a very different situation or I would say a very different vantage point compared to when you think of consumer companies, like, say, Flipkart, Amazon and Myntra.
When they advertise, their target market is the entire population of India. But our target is probably 10 million merchants or around 10 lakh commercial merchants in India, and therefore it becomes much more narrow and therefore our overall advertising and marketing strategy is very different and very focused.
Our entire marketing strategy is more organic and content driven. It is through ad spends on different platforms such as Google and LinkedIn.
We do not do full advertisement like television, print advertisements; neither do we do above the line ads. Our recent ad campaign is primarily focused via internet channels.
Ours is a business where customers mostly come either by word of mouth or because we know that the Razorpay brand is very strong to provide a service, which means we do a lot of content generation online. Like if you look at the overall page rankings of Razorpay in the payment gateway space or fintech space, we are probably the topmost out there. A lot of our content generation is educative in nature; for example you will find Razorpay creating content on how to start a business, how to start a payment gateway, or how to do your business tax returns.
What insights can you share on Razorpay’s growth and expansion trajectory?
This year, our overall Total payment volume (TPV) was supposed to grow at $90 billion, but we’ve already hit $100 billion. Today, we empower over 10 million businesses, which includes prominent companies such as WhatsApp, Facebook, Swiggy, Urban Company and Zerodha. Overall, Razorpay’s offline business, Razorpay POS, grew by 60 percent in December. Razorpay POS also amounts to 10 percent of overall revenue.
Any comments on the interim budget?
It doesn’t look populist at all. This is more kind of a strong foundation for the next one. I was pleasantly surprised to see this budget focusing on foundations like infrastructure, on long-term plans and those things.
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