Razorpay Push To Power SMB Finserv

Indian mobile wallet company Razorpay announced its latest acquisition: TERA Finlabs, an artificial intelligence (AI) -based risk technology SaaS platform. TERA, a Bengaluru-based startup, provides technology, risk and capital solutions to enable innovative integrated financing solutions for businesses. The purchase marks the third such acquisition of Razorpay to gain a deeper foothold in the B2B financing world following the exit of Razorpay Capital in 2019.

“In India, banks are reluctant to provide commercial loans to startups and new SMEs because of the risks associated with new startup income models. Through our lending platform, Razorpay Capital, we have worked to address these cash flow issues, making it easier for businesses to access finance and grow, ”said Razorpay CEO and Co-Founder. Harshil Mathur said in a statement, by the Economic times. “And as we move forward on this journey, an acquisition like this fits perfectly with our vision to develop affordable, bespoke lending solutions for small, underbanked businesses in all industries so they can transform and disrupt digitally. “

Small and medium-sized enterprises (SMEs) in India have been hit hard by the COVID-19 pandemic, as have SMEs around the world, as forced storefront closures have forced high-speed digitization as a requirement for businesses that looking to get out on the other side. But digital upgrades aren’t free, which means small businesses have faced costly upgrades to digitize their offerings to consumers just as their revenue streams have been slashed by the economic effects of the downturn. pandemic.

While the forced closure and repositioning has been a burden on SMEs around the world, Indian SMEs have been hit harder than most. India has been challenged by the delay in vaccine distribution and the more contagious Delta variant of the coronavirus, which raged through the population in early 2021, peaking in late May. To date, COVID-19 has killed more than 400,000 Indian citizens, or about 10% of the 4.1 million deaths from COVID-19 worldwide.

In a world of entrepreneurs hit hard by the pandemic, Indian entrepreneurs have endured some of the harshest headwinds and face a long road to recovery. Razorpay’s plethora of moves in 2021 are all part of a single strategy – to give these small businesses access to the tools and financing they’ll need if they hope to weather the storm.

The case has just been concluded

TERA’s AI-powered risk technology SaaS platform is designed to extend traditional consumer lending models with personalized lending products to make consumer lending affordable for clients and simultaneously profitable for lenders. This platform will allow Razorpay to expand the range of products it can extend to SME borrowers hit hard by the pandemic, the company’s persistent plan for the past 18 months. FinTech had previously launched products such as cash and credit advance solutions with instant settlements during foreclosure to help small businesses overcome cash flow problems created by foreclosure.

The acquisition of TERA, according to a declaration, is aligned with Razorpay’s strategy of financially supporting micro, small and medium enterprises (MSMEs) by developing core competencies in capital solutions, credit underwriting and data-driven risk management.

“MSMEs have long been an underserved market. However, over the past 16 months, they have started to show rapid growth with their digital adoption. And that has created an opportunity for significant disruption in the lending industry – integrated credit is one of those innovations that I’m sure will transform this space, ”said Pradeep Rathnam, co-founder and CEO of TERA Finlabs. “There wouldn’t have been a better time than now to partner with Razorpay and its technological capabilities to support MSMEs. “

Extension of payments

The acquisition comes after a year of explosive growth driven by the pandemic for Indian FinTech, first launched in 2014 by Mathur and Shashank Kumar with the mission of “making online payment accessible to all businesses”, whatever their size.

“Five years ago, when Harshil and I moved to Bangalore to start Razorpay, the startup ecosystem was still nascent and was less than ten years old,” Kumar said. “For most businesses, accepting payments online was a major struggle and it was a stumbling block in India’s digitalization campaign.

Since its inception, however, Razorpay’s ambition has grown significantly beyond accepting payments. Last October, when the company first achieved unicorn status with a billion dollar valuation, it began to speak avidly about its ambitions beyond payments, noting that it is a company. payment, but has always focused on offering broader financial solutions for SMBS. The company also hinted at plans to expand its reach with more in-depth technology products and solutions.

In February, Razorpay announced a partnership with Mastercard that would allow Indian startups and SMEs to integrate technology into their operations and accelerate digitization while maintaining business continuity and preparing for alternatives to cash payments. . The announcement follows Razorpay’s launch of a platform last December designed to help SMEs connect with third-party businesses with tools and capabilities they may need, such as health insurance.

Razorpay saw its valuation triple to $ 3 billion in April after a $ 160 million Series E funding round. These funds were intended to expand the company’s corporate banking platform, RazorpayX, to create a suite of personalized product offerings on a new technology stack “to further enhance convenience and security” in their digital banking offering.

Since its introduction in 2019, Razorpay has rapidly grown to include more than 10,000 companies. In addition, its transaction volume has grown “multiplied” over the past 12 months, given the pressures put on the Indian economy by the pandemic.

“We believe there is an urgent need to develop new banking technologies that meet growing demand. We therefore plan to use these funds to further expand our range of banking and lending products in order not only to provide a better experience for businesses and their clients, but also to contribute significantly to the growth of our partner businesses ” , said Mathur.

This latest acquisition is clearly part of this path of expansion as, according to the statement, Razorpay Capital using the technological capabilities of TERA Finlab will be able to advance its offerings to meet the credit needs of more than 10,000 companies in India. by next year.

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NEW PYMNTS DATA: STUDY PUTTING LOYALTY AT THE SERVICE OF SMALL BUSINESSES – UNITED KINGDOM EDITION

About the study: UK consumers see local purchases as essential for both supporting the economy and preserving the environment, but many local High Street businesses are struggling to get them in. In the new Making Loyalty Work For Small Businesses study, PYMNTS surveys 1,115 UK consumers to find out how offering personalized loyalty programs can help engage new High Street shoppers.

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