This is the second cross-border offering from Razorpay, which also allows small businesses to accept international payments from foreign customers.
The launch of the new product comes at a time when the regulator stopped Razorpay from onboarding new merchants on its payment gateway product in December last year, and was asked to submit a system audit report as a part of the final authorisation process for its payment-aggregator licence. It had received an in-principle approval from the Reserve Bank of India for its payment aggregator licence in July last year. Other payment entities Paytm, PayU and Cashfree too have been stopped from onboarding new merchants.
Over the past months, Razorpay has been actively trying to diversify its revenue from the core payment offerings. Its lending and neo-banking businesses – Razorpay Capital and Razorpay X – already contribute 25% to its overall revenue. The share of revenue for these products is expected to grow to 40% in the next 12 months.
According to Razorpay’s chief business officer, Rahul Kothari, the forex offering under the company’s digital banking proposition, Razorpay X, would help startup founders reduce the time taken to bring back their funds to almost 48 hours from up to two months in some cases.
“We talk to our business users regularly to understand the problems they face and realised the processes around bringing back funding money to India were broken. New-age businesses were facing challenges in terms of documentation, finding the paperwork complicated. In some cases, it took two months to complete the process for businesses, with fear of penalty from the RBI for not submitting the right documents,” Kothari told ET.
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Through its forex service, Razorpay wants to provide a single-window view to businesses on their inward money movement, while automating the entire documentation process, creating further transparency and reducing anxiety.In addition to forex rates, around 2-4% of the funding amount sometimes gets leaked in administration fees and conversion charges depending on different venture capitalists, Razorpay’s research has shown.
It has also set up a team of dedicated experts for the forex service, to help handhold startup founders through the process.
The payments and digital banking platform has tied up with RBL Bank for the product, to offer competitive forex rates as well open current accounts for these businesses and startups locally.
It looks to monetise the service in the months to come, while the plan at present is to cross-sell multiple existing bouquet of products to new customers opting for the forex offering, Kothari added.
“In our pilots, we have seen that after using the forex service, businesses have also opted for Razorpay’s payroll offering,” he said.
Since it started running pilots for the forex offerings in October last year, the company has already helped 15 startups transfer Rs 100 crore worth of funds back to India. These startups include Virohan that provides vocational training for the healthcare industry, savings platform Tortoise and neo-banking platform Coupl.
The platform looks to scale the offering to 100 businesses by the end of this quarter and help 1,000 startups on an annual basis. It looks to help process Rs 400 crore of funds back to India in the next 12 months.