We have seen a recent spate of payments and other financial services in the U.S. that target not only small businesses but startups specifically. An example is Brex and another is Bento for Business. Even banks such as Wells Fargo and Silicon Valley Bank have been pushing into the startup space as a key sub-segment opportunity now for some time.
The same is happening in India, and this piece from Tech Crunch describes one of those strategic moves. RazorPay is a 2014 payments startup out of Bangalore and recently announced several new services, including a new corporate card for small businesses and using alternative credit decision methods versus the more traditional sources commonly used by banks.
‘All of these services are solving some major challenges faced by tens of millions of businesses in the country. Even as startups are increasingly getting acceptance in Indian homes, banks in the nation are still wary of offering some financial services to them. Most “unprofitable” startups today can’t get a corporate credit card from a bank in India, for instance…For its corporate credit card, Razorpay will assess other factors such as the flows and collections to determine who is eligible, the Bangalore-based startup’s founders — Harshil Mathur and Shashank Kumar — told TechCrunch in an interview.
At the same time, the company announced a new current account (U.S. terminology is checking account or DDA) as part of a digital banking platform play. Payroll services is an example of the dashboard offerings. As a non-bank provider, RazorPay partners with chartered institutions for deposit and card issuing account-based services. The bank mentioned in the article is RBL Bank.
‘Razorpay also announced it is launching current accounts service. “While personal banking ecosystem in India has scaled tremendously in recent years, business banking is still old school,” said Mathur. “Most processes are still manual, and there is no communication among your invoice, payroll, booking systems. People have to deal with spreadsheet files.”….To solve this, Razorpay has built a neo banking platform. “As a business, if you want to create a current account bank with a bank, we take care of it. Everything — your transactions, and payables — happens on Razorpay’s platform and you can manage them through a single dashboard,” he said.’
Perhaps the most intriguing part of the announced services is what sounds like a personal and business ‘request for pay’ offering, which the article indicates is real-time. Since RazorPay is connected to Unified Payments Interface (UPI)—a real-time payment system developed by National Payments Corporation of India—we see how this can happen. However, the piece also indicates a cross-border capability, so it is not clear to us if real-time is part of that feature or not… we can’t be sure how that would work and would require a briefing to know for certain.
‘Razorpay may have an answer. The company has launched a service that will allow individuals or businesses to create and send a link through text or email to their clients and receive payment in real-time. When the client clicks on the link, a payment gateway loads up that supports a range of paying options. “We support 100 currencies, so a person can have their money delivered from any country,” Mathur said. Another startup — Bangalore-based Instamojo — offers a similar functionality.’
In any event, lots of fun stuff is happening in the land of variety, which has been on a mega-drive around financial digitization now for the past 5 plus years.
Overview by Steve Murphy,Director, Commecial and Enterprise Payments Advisory Service at Mercator Advisory Group