Tag: Razorpay

Bank, card firms receive 2 million auto-debit mandates after RBI order, BFSI News, ET BFSI

Banking & Finance

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Banks and card networks have received nearly two million auto-debit mandates after the Reserve Bank of India (RBI) made it mandatory from October 1 to take prior consent of a customer before debiting their accounts.

Most of the recurring payments are linked to credit cards, while such a facility is not available in most places for debit cards.

In August, total credit card transactions stood at 19 million, and debit card transactions at 358.5 million. In value terms, credit cards were at Rs 77,732.94 crore and debit cards at Rs 64,351.52 crore.

The readiness

State Bank of India, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank have implemented the recurring payment framework for their customers.

Canara Bank, Punjab National Bank and Standard Chartered Bank are making necessary system changes to allow e-mandates based transactions.

Service providers such as Razorpay, Billdesk, PayU have come up with solutions to help card issuers, customers, and merchants to register their mandates on their customised platforms. BillDesk has set up SI Hub, PayU has created Zion while Razorpay has set up MandateHQ.

RBI’s auto-debit rule

Under the new auto-debit rules that kicked in on October 1, there are no automatic recurring payments for services like recharge, utility bill as the additional factor of authentication (AFA) has now become mandatory.

To ensure safety and security of card transactions, the central bank had, in December last year, directed all banks that processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.

However, non-readiness of some of the players had forced the RBI to extend the deadline on recurring payment till September 30. The rule is applicable to all types of recurring payments like utility bills, phone recharge, DTH and OTT, among others.

As per the guidelines, banks will send a one-time password (OTP) to customers for payments above Rs 5,000.



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Razorpay launches card tokenisation solution in partnership with Mastercard, RuPay and Visa

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Fintech platform Razorpay has announced a new tokenisation solution for businesses in India to enable their end-customers to continue experiencing the convenience of saved card transactions, now with added security and in compliance with RBI guidelines.

The solution termed ‘Razorpay TokenHQ’ is a multi-network Card-on-File (CoF) Tokenisation solution that will work across all major card networks including Mastercard, RuPay, and Visa.

Almost the entire base of five million businesses using Razorpay’s services will be ready to support tokenised card transactions.

RBI guidelines

Earlier this year, the Reserve Bank of India had issued a new set of guidelines that disallow businesses, payment aggregators, and acquiring banks from storing customers’ credit/debit/prepaid card information. The new guidelines allow only card networks and card issuers to store customer card information, and sanctions businesses to use tokens for offering saved card experience during online payments.

Benefits of tokenisation

COF tokenisation is the process of turning sensitive cardholder data into a string of randomly generated numbers called a “token”, which has no meaningful value if breached. All stakeholders are required to ensure full compliance with the tokenisation framework by 31st December 2021.

Also see: NPCI launches NTS platform for card tokenisation

In absence of tokenisation, customers will have to enter their card information manually, every time they transact online. This can be an inconvenience to customers and increases the chances of error in entering data leading to transaction failures.

“Tokenisation, as a technology solution bridges this inconvenience gap and enables customers and businesses to sustain “business as usual”, by converting customer card information into a coded “token”,” Razorpay said in an official release.

Homegrown solution

Shashank Kumar, CTO and Co-founder, Razorpay, said, “The RBI has been making great strides to enhance the security and convenience of digital payments in India. Newer regulations offer tremendous opportunities for us to innovate and develop localised solutions that work well for Indian businesses. Tokenisation is one such regulatory development, and Razorpay TokenHQ is a homegrown solution that will enable businesses to continue to offer seamless payments while ensuring individuals have control over their card data.”

He further added, “There are over 950 million debit & credit cards in India and this number will only grow given the rise of non-cash transactions in India’s hinterlands. We hope to see a lot of developments in building smart, secure fintech solutions for businesses and their end-users in the times ahead.”

Available for all businesses

Razorpay TokenHQ will be available for all businesses as well as merchants using other payment gateways. Merchants can use Razorpay’s solution to tokenise cards and route payments using their existing payment partnerships.

Also see: Coming soon, new framework for offline digital payments

Merchants with customised setups can start integrating Razorpay TokenHQ through APIs.

Using Razorpay TokenHQ, businesses would be able to create, process, delete and modify tokens for online card payments with customers’ consent.

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Recurring card payments to be hit from next month, BFSI News, ET BFSI

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MUMBAI: Some cardholders might see standing instructions for payment on their credit card fail from next month. These could be for subscriptions with online content platforms, edtech companies or standing instructions for online advertisement payments. Some of these merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for recurring payments through cards though the deadline is less than a week away.

According to sources, around 75% of the banks have put in place the technology to meet RBI’s directive. However, there are some banks and merchants who are still in wait-and-watch mode. Banks are writing to customers, warning that some transactions may fail: “Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transactions) given at merchant website/app on HDFC Bank credit/debit card, unless it is as per RBI-compliant process.” The bank has recommended that customers use its bill-pay option for utilities or pay on the biller’s website using OTP.

According to Razorpay, which processes close to a third of all recurring payment transactions, a dozen banks have already put in place the new setup where even for repeat payments the bank will alert the customer a day in advance and also provide them with a link to discontinue the mandate. “In the short term, there may be some disruption but, in the long term, this move by the RBI can take growth in recurring payment mandates off the charts,” said Razorpay chief technology officer and co-founder Shashank Kumar.

Kumar says the RBI directive addresses two key issues. Earlier, discontinuing a standing instruction to a merchant could be extremely cumbersome with some asking for a letter to be sent by post asking to discontinue the subscription. Second, debit cards were a grey area and recurring payments were done largely in credit cards. Incidentally, even after October 1, international mandates will continue as neither banks nor the RBI has jurisdiction over international billers.

“There are 900 million debit cards in India and their inclusion could increase the market multifold,” said Kumar. According to Kumar, by empowering customers to stop the payments at any time, the RBI has increased the confidence level. This could also make online education or entertainment more affordable as the availability of this facility will encourage providers to have a monthly debit model rather than recover annual fees.

Besides requiring banks to alert customers, the RBI has capped automatic debits at Rs 5,000 per month. This would mean that billers, like insurance companies, with large instalments, would need to increase the frequency to enable auto-debit. In the case of utilities, many online payers use their bank’s bill payment platform for standing instructions and will have no impact.



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Recurring card payments to be hit from next month, BFSI News, ET BFSI

Personal Finance

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Some cardholders might see standing instructions for payment on their credit card fail from next month. These could be for subscriptions with online content platforms, edtech companies or standing instructions for online advertisement payments. Some of these merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for recurring payments through cards though the deadline is less than a week away.

According to sources, around 75% of the banks have put in place the technology to meet RBI’s directive. However, there are some banks and merchants who are still in wait-and-watch mode. Banks are writing to customers, warning that some transactions may fail: “Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transactions) given at merchant website/app on HDFC Bank credit/debit card, unless it is as per RBI-compliant process.” The bank has recommended that customers use its bill-pay option for utilities or pay on the biller’s website using OTP.

According to Razorpay, which processes close to a third of all recurring payment transactions, a dozen banks have already put in place the new setup where even for repeat payments the bank will alert the customer a day in advance and also provide them with a link to discontinue the mandate. “In the short term, there may be some disruption but, in the long term, this move by the RBI can take growth in recurring payment mandates off the charts,” said Razorpay chief technology officer and co-founder Shashank Kumar.

Kumar says the RBI directive addresses two key issues. Earlier, discontinuing a standing instruction to a merchant could be extremely cumbersome with some asking for a letter to be sent by post asking to discontinue the subscription. Second, debit cards were a grey area and recurring payments were done largely in credit cards. Incidentally, even after October 1, international mandates will continue as neither banks nor the RBI has jurisdiction over international billers.

“There are 900 million debit cards in India and their inclusion could increase the market multifold,” said Kumar. According to Kumar, by empowering customers to stop the payments at any time, the RBI has increased the confidence level. This could also make online education or entertainment more affordable as the availability of this facility will encourage providers to have a monthly debit model rather than recover annual fees.

Besides requiring banks to alert customers, the RBI has capped automatic debits at Rs 5,000 per month. This would mean that billers, like insurance companies, with large instalments, would need to increase the frequency to enable auto-debit. In the case of utilities, many online payers use their bank’s bill payment platform for standing instructions and will have no impact.



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Effitrac Solutions partners RazorpayX to empower MSME customers, BFSI News, ET BFSI

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Effitrac, an end-to-end business process technology SaaS platform that helps small and medium businesses to optimize their time, money, and resources, on Wednesday announced its partnership with RazorpayX.

RazorpayX is a new-age business finance platform from Fintech giant Razorpay. The banking platform will empower Effitrac customers with payout links, book-keeping in autopilot mode, automated TDS, and give them access to capital services when needed through Effitrac’s Neobooks. Businesses can even integrate with Razorpay payment gateway to accept the incoming payments.

“The partnership with RazorpayX will help our customers open a fully accessible digital current account, like a bank. With a hassle-free transaction experience, seamless book keeping and highly secured easy user interface, business owners can focus on growing their business rather than worrying about digitalizing their financial processes. RazorpayX will improve the capabilities of our Neobooks and will make it a one-stop solution to meet all business transaction needs of such businesses,” Logesh Velusamy, Founder & CEO of Effitrac, said.

He said neo-banks are a boon for MSMEs in India for its simple account-opening procedures, low-cost, user-friendly interface, and unified solutions to monitor the money movement from vendors to customers. It also will help them drastically reduce their time consumed in financial tasks including, reconciliation, monthly compliance payments, checks and approvals, sending/receiving money, and recording transactions.

The Coimbatore-based company is the technology growth partner for over 500 MSME clients and helps over 30,000 users across 13 verticals. Effitrac said it is on track to reach one million MSMEs in three years and that the association with RazorpayX aligns with the company’s goal of being a technology growth partner to every MSME in the country.



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Digital transactions grew 80% in last 250 days: Razorpay report

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Digital transactions have grown by 80 per cent during the 250 days between November 30, 2020 to August 6, 2021, based on transactions held on the digital payments platform Razorpay.

The financial solutions company on Monday released the ninth edition of ‘The (Covid) Era of Rising Fintech’ report with insights about digital payments in the last 500 days up till August 6, 2021.

August 6 marked 500 days of the pandemic since the national lockdown was first announced, starting March 25, 2020. The report based on transactions held on Razorpay platform between the first 250 days (March 25, 2020 to November 29, 2020) and the next 250 days (November 30, 2020 to August 6, 2021).

The report provides a detailed view of the evolving FinTech ecosystem, the digital spending patterns of consumers and an analysis of how different sectors and payment modes performed during this time, when businesses and life were hit by Covid, the company said.

Every sector and payment mode had been negatively impacted at the start of the pandemic and online payments declined by 30 per cent in early 2020

Multiple sectors have shown significant signs of recovery.

Businesses, especially from tier-2 and tier-3 cities have been a major boost for digital payments exhibiting a growth of 40 per cent from the first 250 days to the next 250 days.

While the metropolitan cities continued to show growth, businesses & consumers from places such as Jammu, Ahmedabad, Shimla and Coimbatore witnessed a growth of 195 per cent, 87 per cent, 49 per cent and 30 per cent, respectively

Additionally, the demand for payment options like Buy Now Pay Later (BNPL) has also increased, registering a growth of 220 per cent so far.

With increased digital adoption amid the pandemic, small businesses are also expected to increase investment in digital technologies in 2021. Affordable payment options such as Buy Now Pay Later (BNPL) have seen an increased preference which is expected to rise and increase transactions for SMBs, the report said.

The Services industry, that is the likes of home services such as carpentry, plumbing and more, has also increased adoption of digital payments with transactions increasing by 138 per cent.

The digital transactions by Freelancers and Homepreneurs saw a growth of 69 per cent during the last 250 days.

Digital transactions in Social Commerce grew by 65 per cent while Direct-to-Consumer (D2C) businesses witnessed a growth of 87 per cent during the last 250 days as compared to the first 250 days of the national lockdown.

Harshil Mathur, CEO and Co-Founder of Razorpay said, “The last 500 days haven’t been ordinary as almost every person and business has realised the need for digital awareness and presence. Fintech companies like us, banks, investors, government and regulators have worked hard during the last 16+ months to speed up digital innovation and adoption amongst consumers and small businesses.”

“What makes me really happy is the fact that not a single sector showed negative growth in the last 250 days. This was possible because businesses have recognised the crucial importance of using new payment technologies to support and improve their business growth. The way I see it, I expect this revolution of FinTech to extend from payment innovation to business banking innovation in the next two years,” added Mathur.

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With new acquisition, Razorpay aims to double monthly loan disbursals

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As three fintech majors get ready for an IPO later this year, Harshil Mathur-led Razorpay is betting on its product capabilities to stay competitive. Last week, this Bengaluru-based unicorn acquired an AI start-up, TERA Finlabs, to boost its SME lending vertical — Razorpay Capital.

With this acquisition, Razorpay expects to double its monthly loan disbursals from the current ₹300-400 crore to ₹800-1000 crore by the end of this financial year, co-founder Mathur told BusinessLine.

Razorpay gives out loans to small businesses that are already using Razorpay payments and banking services. The company does not have a lending license in India and it basically acts as a bridge between small businesses and banks, enabling loans for small business owners who might not be creditworthy under the traditional bank underwriting process.

This makes loan underwriting the core proposition of Razorpay Capital. A good underwriting process would mean more earnings for the company with each successful loan disbursal and repayment. And so, the primary reason behind TERA Finlabs’ acquisition was to make Razorpay’s loan underwriting faster and better.

Network

Razorpay claims to have 5 million small businesses using Razorpay’s payment services in various forms. This existing network gives them access to interesting data points on SMEs, such as what kind of customers they have, does the business have customers across the country or just one city, the repeat rate of these customers, and whether the customers use iPhone or Android devices, among other things.

“Some of these data points will be useful for lending, some of them will not. But it takes a lot of effort to arrive at that conclusion. You need to have a team of data scientists and analysts, who will look at all that data, give out certain loans, look at the repayments, NPAs and then create this model again. That is the traditional way of doing it,” said Mathur.

With the acquisition of TERA Finlabs, Razorpay will be able to input all this data into TERA Finlabs’ AI model, and the algorithm will churn out a credit score for each SME. The AI model will then keep iterating based on the success or failure of each loan disbursal. As the company disburses more loans, the AI model keeps getting better.

“To ensure that our risk model becomes stronger over time is a very strong addition to us. If we were to do it ourselves, we would have to spend a lot of time and energy to create that whole team and come up with this AI model. But with the acquisition, we get both the team and product, right on day one,” he added.

Funding history

Founded in 2014 by Mathur and Shashank Kumar, Razorpay has raised a total of $366.5 million from marquee investors like Tiger Global, Sequoia Capital India, Ribbit Capital, Matrix Partners, and Y Combinator. About 10,000 businesses are said to have benefited from the company’s lending vertical till now.

Commenting on the upcoming start-up IPOs and their impact on Razorpay, Mathur said that the entire startup ecosystem is excited about the upcoming IPOs, including Razorpay. He added that if the IPOs are successful, it would eventually boost the valuations and fundraising activity for the private start-ups as well. “But I don’t worry about them (Paytm, MobiKwik) as competition, because we are business first company (B2B), unlike a lot of the other players. I don’t think anyone understands businesses as well as we do,” he added.

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Razorpay acquires TERA Finlabs – The Hindu BusinessLine

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Razorpay on Monday announced its acquisition of TERA Finlabs, an AI-based risk tech SaaS Platform, for an undisclosed amount. 

“TERA Finlabs is a Bengaluru-based startup that provides technology, risk and capital solutions to enable innovative embedded financing solutions for businesses,” it said in a statement. 

TERA Finlabs is an Indian subsidiary of UK-based digital lender GAIN Credit.

Harshil Mathur, CEO and co-founder, Razorpay said, “The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk managementand we see immense value in TERA Finlabs core lending infrastructure capabilities. Together, we are looking forward to addressing newer working capital issues faced by MSMEs.”

TERA will bring its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay’s merchantnetwork. Razorpay Capital along with TERA Finlab expects to service the credit needs of over 10,000 businesses in India by the next year.

This marks Razorpay’s third acquisition and comes following its foray into the B2B SME lending space with the launch of Razorpay Capital in 2019, the statement further said.

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Razorpay partners Mastercard to make recurring payments secure

Banking & Finance

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Razorpay, a full-stack financial services company, has partnered with Mastercard to launch MandateHQ, a new recurring payment interface that will help banks comply with the new RBI guidelines on recurring payments.

Banks can adopt this MandateHQ solution in as little as seven days and enable their cardholders make recurring payments across their ecosystem in compliance with the RBI norms, Shashank Kumar, Co-Founder and CTO, Razorpay, told BusinessLine.

RBI framework

It maybe recalled that the RBI had issued a framework for processing e-mandates on recurring online transactions and had made additional factor of authentication mandatory for all recurring transactions below ₹5,000 on debit cards, credit cards, UPI and other pre-paid instruments. All stakeholders are required to ensure full compliance with the framework by September 30.

This RBI directive is applicable to all recurring payments, which were earlier debited automatically from customers cards (credit/debit/prepaid) for mobile, utility, and other recurring bills, as well as subscription payments for different OTT streaming platforms.

Kumar said that MandateHQ platform will help banks with end-to-end mandate life-cycle management, including creating, viewing, updating, cancelling and pausing mandates and processing debits for valid mandates. In addition, the mandate HQ platform will also help banks enable a 24-hour free debit notification via e-mail, SMS and WhatsApp. It will also provide end-users with a portal to manage card mandates, he added.

Indian consumers aim to spend more than APAC post Covid-19: Mastercard survey

“A lot of merchants are moving to digital economy, and our solution will help them charge their customers through debit cards and credit cards via recurring payments. It helps banks comply with RBI norms and enable their customers pay through digital payments. More importantly, it helps the consumers have a transparent view of all the mandates they have registered. With this solution, you as a consumer will always be in control of the mandates you had set up,” said Kumar.

Private banks

He also said that Razorpay is already piloting this solution with three private sector banks, and is in talks with 20 other banks to help integrate this technology into their existing payment infrastructure in the next few weeks.

Kumar also said that products such as MandateHQ will now encourage more businesses to start and adopt subscription-based business models. The new MandateHQ offering will help businesses across a variety of sectors such as insurance, utilities, content, SaaS, lending, and charitable donations, among others, to alter their payment models and introduce subscriptions, thereby delivering better value while sustaining revenue growth, he added.

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Now, Indian crypto exchanges hit by payment processors pullout, BFSI News, ET BFSI

Personal Finance

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Just as they were breathing easy with the Reserve Bank of India clarifying that banks can do due diligence of crypto clients, Indian crypto exchanges have been hit by another hurdle.

With the RBI reiterating that it does not favour cryptocurrencies, major payment gateways have pulled out hitting transactions.

Customer complaints have inundated all India’s key exchanges as the pullout by major payment gateways, including Razorpay, PayU and BillDesk has hit transactions, according to social media and users.

The options

Options being resorted to including tying up with smaller payment gateways, building their own payment processors, holding back on immediate settlements or offering only peer-to-peer transactions.

At least two exchanges have tied up with smaller payment processing firm, Airpay, as its larger peers have cut ties.

Some crypto exchanges, such as WazirX, are forced to stick only to peer-to-peer transactions on certain days, while others, such as Vauld, allow bank transfers with manual settlement as they hunt for a payment processor, backing up settlements.

Smaller payment gateways have not proved very successful in executing high volumes of transactions, leading to failures that have resulted in a flood of user complaints.

Others, such as Bitbns, have built their own basic payment processor, allowing some essential transactions since the systems do not require prior approval from the Reserve Bank of India, the central bank.

A grey area

Despite the boom, cryptocurrencies are in a grey area in India, with the Reserve Bank hostile towards it and the government unsure about its prospects.

There is no legislation or regulatory code yet to govern the crypto ecosystem, leading to confusion among customers, businesses and financial institutions providing banking services.

In 2018, the Reserve Bank of India barred financial institutions from supporting crypto transactions, which the Supreme Court overturned in 2020. The government has circulated a draft bill outlawing all cryptocurrency activities, which has been under discussion since 2019.

Last month, the RBI asked banks not to cite its 2018 circular and clarified that banks can do their own KYC for crypto clients. With this, banks are now reassessing the situation, but several banks currently lack the technical expertise to make a supervisory assessment on these transactions.



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