With the advancement of technology and the internet, fintech sectors grabbed a golden opportunity to transform online payment systems in India! One such example is “Razorpay.”
It is an internet-based financial solution provider that offers a simple payment gateway platform. The target consumers of Razorpay are start-ups and SMEs. The founders of Razorpay, Shashank Kumar and Harshil Mathur realized that the online payment system was quite troublesome for SME businesses and other e-commerce platforms.
Therefore, they created and launched Razorpay in 2014. Their prime objective was to allow the business entities to gain access to all the modern methods of payments. Do you know Razorpay is India’s most valuable fintech firm (for now) with a valuation of $7.5 billion? It reached this milestone with its potent and productive business model. Today we will throw light on the “Razorpay Business Model.” Here it goes!
The key components are-
- Working Strategies
- Revenue Sources
- Marketing Strategies
Let’s begin with the first part of Razorpay business model! With a reliable system, and robust mechanism of logistics and financial compliance, Razorpay became one of the leading online financial solution providers in the B2B space. The working strategies of Razorpay are described below-
As you know, Razorpay is a popular payment gateway provider that enables businesses to accept and process online payments from their customers. Its prime objective is to make online transactions easier for business firms. For that very purpose, it provides access to several online payment methods for business entities such as-
- Credit Card
- Debit Card
- Net Banking
It also supports many e-wallets in India-
- Jio Money
- Airtel Money
- Free Charge
- Ola Money
Products on Razorpay Dashboard
You can handle the payments for your business through Razorpay’s dashboard. It is applicable for both web and mobile applications. The dashboard contains various products such as-
This smart payroll software is created to manage and automate employee salaries. It automatically calculates and disburses salaries after calculating leaves and statutory deductions. You can also provide employee insurance to cover pre-existing diseases, dependents, and maternity.
It helps you to accept online payments from customers across the desktop, mobile web browser, Android, and iOS. Also, you can use Razorpay payment links to collect payments from multiple channels like email, Whatsapp, SMS, etc.
You can shop for gold coins in Razorpay and exchange them from the respective jewelry stores. The making charges of coins will be discounted from the jewelry amount. It has a lifetime buy-back guarantee. However, the price can change based on the terms and conditions.
It is the most appreciated platform that disburses payments in a one-to-many model. With the Razorpay route, you can split payments between third parties bank accounts to manage settlements, refunds, and reconciliations.
Razorpay Smart Collect
It enables you to create customer identifiers. These identifiers are quite similar to the bank accounts where they can transfer the payments. With the verified customer identifiers, you can accept large payments via NEFT, RTGS, and IMPS.
With this, you can automate recurring billing payments using APIs and manage them via the Razorpay dashboard. Also, you can send notifications to customers regarding subscription-related activities via webhooks. (Note: Webhooks are the automated messages sent from apps when something happens in them.)
It aids you to send invoices to your customers and accept payments straight away. It contains various information like the name of the ordered products or services, quantity, billing cycle, price breakup, information about the customers, etc.
It is a lending platform with which you can overcome the financial challenges of your business. You will get quick settlements and collateral-free loans through it.
These products handle multiple tasks like cash flows, disbursement of money, and automating e-fund transfers. Collecting scheduled payments, etc. Apart from these products, Razorpay supports businesses by providing instant loans. These loans help those businesses to resolve the issues related to cash flows.
Some of the key strategies that Razorpay uses to enhance its services are-
- User-friendly platform: Razorpay has designed its platform to be user-friendly. You can easily navigate the payment gateways to simplify the financial hurdles of your business. Also, you can integrate the payment gateways of Razorpay into your business website or app.
- Diverse payment options: Razorpay offers multiple payment options to customers, including credit/debit cards, net banking, UPI, and more. With this, businesses can cater to a wider audience and increase their conversion rates.
- Security: Razorpay is PCI DSS Level 1 compliant, meaning, it adheres to the highest standards of security. This helps businesses protect the sensitive financial information of the customer. Thereby, it builds trust among the clients and customers.
- Customizable checkout: Razorpay allows businesses to customize their checkout page to match their branding and style. This feature creates a seamless checkout experience for customers. Also, it can increase conversion rates.
- Analytics and insights: Razorpay provides detailed analytics and insights into the transactions of your business. Eventually, it helps you to track the revenues, identify trends, and make data-driven decisions to grow your business.
- Developer-friendly APIs: Razorpay provides developer-friendly APIs and documentation to easily integrate the payment gateway into the website or app of the business.
Thus, the working strategy of Razorpay revolves around providing businesses with a user-friendly, secure, and customizable payment gateway. Thus, it helps them to grow and succeed.
This is the most important part of Razorpay business model. Razorpay’s revenue sources are primarily based on providing payment solutions to businesses and charging fees for the services provided. Some of its major revenue sources are-
This is the primary source of revenue. Razorpay charges a transaction fee for every transaction processed through its payment gateway. You need to pay the fees according to the mode of payment and the volume of transactions. Following are the types of fees that you pay for different kinds of transactions-
- Domestic Transaction: For domestic transactions, the fees are charged as per the standard plan i.e. 2% Transaction Charge + 0.36% GST = 2.36% total charge for every transaction.
- International Transaction: International transaction charges are 3.54% per transaction. It is applicable when you use Diner cards, AMEX cards, International cards, Business Credits, etc. Razorpay allows businesses to accept payments from customers around the world.
- Debit Cards: The transaction fee for Debit cards is 1.99%.
- Credit Cards: The transaction fee for Credit cards is 2.99%.
Razorpay offers a range of payment solutions to businesses, including payment gateway, payment links, subscriptions, and more. To avail of these services, your businesses have to pay a subscription fee that depends on your billing cycles. The subscriptions remain active for a maximum of 100 years. A long duration, isn’t it? However, the number of billing cycles depends if you bill the subscription daily, weekly, monthly, or yearly. The plugins like Woocommerce, Magento, and OpenCarts support Razorpay subscriptions.
This feature has been a new and good contributor to Razorpay’s revenue. As you have read above, it helps in the automatic calculation and disbursement of salaries. It includes three types of plans- Pro plan, free plan, and other Payrolls. The Pro plan is the recommended one where Razorpay charges INR 100 per employee per month. For other payrolls, it charges over INR 1500 per month. However, it does not charge anything for the free plan.
API access fees
Razorpay provides APIs that allow your businesses to integrate the payment gateway with your websites or mobile apps. Your business firm has to pay a fee to access these APIs (Application Programming Interfaces). You can accept payments through it by paying a 2% platform fee. However, 18% GST applies to it.
Payment gateway reselling
Razorpay also offers payment gateway reselling services, where businesses can resell their payment gateway to their customers. Razorpay charges a fee for this service too!
Now, coming to the final part of Razorpay business model! Razorpay’s marketing strategies focus on building strong relationships with businesses, providing valuable content to its audience, and partnering with other businesses to reach a wider audience. Some of its major marketing strategies are-
Content marketing (An essential part of Razorpay business model)
Unlike other fintech companies, Razorpay highly focuses on Content marketing. It maintains a blog (owned media) that provides insights and information on the latest trends in the payment industry. Also, it features success stories of businesses that have benefited from Razorpay’s payment solutions. It helps to build long-term relationships with existing and potential customers.
Partnering with businesses
Razorpay partners with various businesses, both big and small, to provide payment solutions. This has helped the company to reach a wider audience and expand its customer base. Some of the major clients of Razorpay are Oyo, Cred, Facebook, Flipkart, Zomato, Goibibo, Swiggy, Airtel, Byju’s, Zilingo, Yatra, etc.
Social media marketing
Razorpay actively engages with its audience on social media platforms like Twitter, LinkedIn, and Facebook. The company shares updates on new products, features, and promotions to keep its followers informed.
Razorpay believes in a “word-of-mouth” hack. It has proved to be super-effective in improving conversion rates and increasing brand credibility. For this purpose, it collaborates with influencers in the fintech industry to create awareness about its products and services. This has helped the company to reach a wider audience and build trust among potential customers.
Razorpay regularly sends out newsletters and promotional emails to its customers and prospects. It efficiently uses email marketing to inform its audience about new products, features, and promotions. It helps in retaining customers and building a loyal customer base.
Events and webinars
Another interesting marketing hack to engage existing customers is to organize “customized webinars.” Razorpay organizes events and webinars to educate businesses about its products and services. The company also partners with other businesses to host joint events, which helps to expand its reach and build relationships with potential customers. It helps them to understand their point of view about the market, products, and services.
Businesses of all sizes ranging from small startups to large corporations can use Razorpay to manage their finances and payment solutions. With a variety of payment modes, Razorpay business model also offers advanced fraud detection and prevention measures to protect its customers. Thus, it is ruling the B2B space of India.