Razorpay To Shift Base To India By Year End; Eyes IPO In Next Two Years

Digital payments major Razorpay is looking to shift its headquarters to India from the US by 2024 end, cofounder and CEO Harshil Mathur told Inc42, while also revealing plans around the company’s potential public listing. 

Mathur said the fintech firm is in the process of seeking necessary regulatory approvals in the US and India to redomicile to India, and the process is likely to be completed by the end of the year. 

“We are committed to incorporate in India and this should not take more than 12 months. We also welcome the increased regulatory scrutiny in India which will give much needed clarity to founders and startups in the fintech ecosystem to operate,” the Razorpay chief said.

He added that regulations are aimed at balancing fintech innovation with risk and that RBI interventions such as card tokenisation, the regulatory fintech sandbox are actually specific asks by the fintech industry which have been accepted by the regulators.

As with several other unicorns, such as PhonePe, Groww and Zepto, the reverse flipping of Razorpay is in line with the company’s IPO plans. “We are looking to list on stock exchanges in the next two years. So it makes sense that we incorporate our business in India going forward,” Mathur added.

The CEO claimed that Razorpay is not just focussing on profits for the IPO, but it would also be a key part of the company’s plans in the long run. While currently Razorpay’s payment business is profitable, the fintech company also has a non-payment business where it is trying to reduce the losses. 

As per reports, Razorpay is planning to reverse flip through a merger of its US and India entities which could also result in the fintech major coughing up $300 Mn in taxes to the US government.

Razorpay reported a standalone operating revenue of INR 1,481 Cr in FY22, up 76% year-on-year (YoY), while its net profit increased 20% to INR 7.3 Cr. However, the company is yet to file its financials for FY23. 

The payments startup reported a 60% growth in its point of sale devices business in FY23 following the acquisition of Ezetap (Razorpay POS) in 2022. Razorpay POS is said to have witnessed a 40% growth in total payment volume (TPV) from April to October 2023 compared to the corresponding period of the previous year. 

Thanks to this growth, Razorpay has achieved a milestone of $150 Bn in total payments volume annually, the company claimed in a statement during its FTX Razorpay event on Friday (February 23).

The fintech company has raised over $740 Mn till date. Its last major round came in December 2021 when it raised  $375 Mn from Lone Pine Capital, Alkeon Capital and TCV and others at a $7.5 Bn valuation.

Razorpay’s New Product suite 

Besides performance updates across its many products, Razorpay also announced new products targeting D2C brands, ecommerce marketplaces, small online and offline merchants as well as large enterprises.

For instance, Razorpay Payments Gateway 3.0 is an AI-enabled payments service for customers which the company claims reduces instances of financial fraud during online transactions, and expedites the payments process, while improving retention for its customers. 

The Bengaluru-based payments company is also offering trust badges to certain merchants on the basis of the checkout experiences offered to customers. This should ensure that customers do not abandon carts if they are apprehensive of fraud or other mismanagement.

Further, Razorpay’s dynamic QR code is an enterprise-focussed product through which the company is targeting retail chains, restaurants and other enterprises with an UPI-first interface.

Mathur said that despite the prevalence of QR codes and sound boxes among smaller merchants, large enterprises still rely on card-based payments for transactions.

 “Changing this behaviour is important since UPI is the first choice of digital payments in India. This will become a regular revenue stream for us too since we will sell these QR codes and even offer these for subscriptions. Notably, a card PoS device costs 3x as much as QR code and this will reduce costs for businesses,” Razorpay cofounder Shashank Kumar said.

The fintech firm has also partnered with tech giant Google and Open AI for its payments and payroll business. The company launched RAY which it claims to be India’s first AI assistant for payments, payouts, payroll, vendor payments verticals.

“AI continues to be the backbone of our product stack. We are using Google and Open AI models to track user behavior for faster checkout experiences, better conversion rates for merchants, and even reimbursing our clients who are victims of payment frauds. We have seen 95% accuracy while trying these models,” CEO Mathur added.

Razorpay CEO told us that over the course of time the fintech firm will hold conversations with Indian firms developing large language models in India for personalisation in the payments experiences for merchants and end users.