Fintech unicorn Razorpay ventured into the offline market with its acquisition of Ezetap last month for $200 million, its biggest so far. In December last year, the company became the most valuable fintech startup in India, with a valuation of $7.5 billion.
In an interview, Razorpay’s chief executive Harshil Mathur said the company will continue to make small acquisitions but large deals will be minimal, at least this financial year, as it stabilizes its purchase of Ezetap. He also said Razorpay has no plan to compete with consumer-focused fintech players like PhonePe, but will instead seek growth from B2B businesses. Edited excerpts:
Which major growth areas do you plan to target, now that you are venturing offline?
We’ll continue to be a B2B (business-to -business) payments operator, and we do not plan to compete with any of the consumer-end fintech operators such as PhonePe and the like. Our core business will always be around enterprises to accept payments. Now, we’re venturing into enabling businesses to allow banking and credit on their sides, so we plan to be a part of the entire financial life cycle of a business. We have the largest number of internet businesses in the country onboarded with us, and now with Ezetap, we’re also venturing into the offline market.
Would Razorpay look to expand their B2B credit offerings?
We are focusing a lot on this sector right now, even though 65% of our gross transactions presently happen through unified payments interface (UPI). We already enable a lot of business credit on our platform, and that’s where we can see how businesses get affected in terms of using cash, versus credit.
A business operating today can see that they get better and easier access to credit if they use digital payment services, as opposed to cash. We still won’t offer credit ourselves. But, we’ll enable credit offerings to businesses by partnering with lenders and banks.
Would this see you make acquisitions as well, going forward?
We have made a number of acquisitions in the recent past, with the Ezetap acquisition being the biggest one. Right now, our focus is to stabilize this. There will be small acquisitions that we will do, which you’ll keep hearing about from us. Large ones will be limited at least right now, for this financial year.
Even though we’re very well funded, the closing aspect of a large acquisition takes a lot of work to integrate. For example, Ezetap has 300 employees, whom we are integrating into our system. Getting them all assimilated and giving them the right direction is very important, and we don’t want to spread ourselves too thin in the process of making acquisitions.
Since you mentioned Ezetap, how big is the offline market for a payments platform?
In terms of the sheer size, the offline market is bigger today—in terms of volume, spread of the market, the number of merchants, and so on. The online market has a faster growth pace, but the offline market is larger in size.
We eventually want to be agnostic to whether a business is online or offline. Ventures today don’t think about the online-offline divide.
Take Croma, for instance—as a business, they operate in both online and offline formats, from where customers make purchases. We don’t want to limit our services to either of the two formats, so we want to enable it across the journey.
