A new startup called Razorpay is hoping to surf the tidal wave of eCommerce projects rocketing through India these days by making it easier for startups and major players to add payments to their services package.
Razorpay has a very "Stripe-like" approach to payments as it provides its business partners a simple interface for taking payments. The company's APIs make it relatively simple to add payments with a few lines of code - which in turn makes it easier for consumers to choose between methods (credit card, debit card or bank transfer tend to be the most popular methods in the nation).
The special Razorpay sauce, however, is that it is an India-made and India-focused product - in a nation where taking online payments can best be described at times as Kafkaesque. ECommerce payments in India tend to require a lot of paperwork, bureaucratic red tape and wait time, often in a process that needs to be done region-by-region.
The hassles prevent most Indian companies from accepting payments online. The highly bureaucratic process also keeps international payment companies from moving into the Indian market for disruption. Stripe isn't there at all, and PayPal reports challenges.
Razorpay, like so many startups, was born out of two founders with a pain point. Shashank Kumar and Harshil Mathur wanted to start a business and realized that a) they needed a payments gateway and b) that was going to be a huge hassle.
“We thought, we can do something about this, not just for ourselves but for others,” said Mathur.
The good news for Razor is they don't face big competition from established players like Stripe did - but that comes with the downside of having to teach their marketspace about what their service is, as opposed to emerging to just compete.
“Really, the payments ecosystem in India is still in the pre-PayPal space,” said Kumar. “What we are doing is more like jumpstarting rather than disrupting.”
And India has some unique issues - pay cards are simply not big and cash on delivery for online sales is considered the norm. Fees are also an issue, with many services taking commissions “in the double digits,” noted Kunar. Razorpay currently has two options: one at 2 percent and the other at 2.5 percent per successful transaction, with different features and fees associated with each.
Razorpay’s main product was built while its founders were sill in India but traveled with them in a streamlined form when the pair moved to California to be part of the Y Combinator.
Though Razor's founders credit YC with giving them “a different view of the world, and more exposure,” they also affirmed, “we plan to go back to India after the program ends and set up in Bangalore.”
That will be returning at a possibly ideal time. The country’s online payments volume is currently doubling every two years and is forecasted to be the world's third biggest eCommerce country - after the U.S. and China.