As a digital payments leader, Bangalore-headquartered Razorpay has always thought of doing things differently and above all solve problems that nobody else has been able to. The company founded in 2014 by IIT-Roorkee alumni Harshil Mathur and Shashank Kumar started off as a payment gateway business model and soon realised new business cases that were unaddressed.
Over the years, the digital payments major has evolved to offer a suite of solutions. Razorpay 2.0 — dubbed as a converged payments solutions was launched in 2017 in a bid to diversify its solutions and evolve into a converged payments platform. Another area the company ventured into was lending with Razorpay Capital which was also in line with its broader strategy to offer the whole breadth of solutions. Over the last few years, the company has seen frenetic growth, has significantly strengthened its engineering team and has a clear winning roadmap.
We caught up with Raju Shetty, VP – Engineering to understand his technological direction at the payment services provider and how he is strengthening the top-notch technology platform at Razorpay. Shetty, who’s ex-Flipkart Director of Engineering and built the data platform from the ground up at the e-commerce major, revealed he navigated a different set of challenges in this domain.
Talking about his earlier experience, he shared that in a typical e-commerce side, you have the supply side and demand side when it comes to getting the systems and processes in place. In the finance domain, one has to deal with the end-to-end experience in one single unit, but at the same time the quantum of things has to be more, he shared emphasising how the finance domain is more complex and intensive. “In the payment’s world, most of the complexities are obfuscated,” he said.
Latest Product Targets 10,000 SMEs
Recently, the fintech major announced analytics-powered Payment Pages solution geared at the burgeoning SME players in India. This solution enables SMEs to accept payments online, even for a business that doesn’t have a website or an app. Businesses can create their own Payment Page and customise it as well. It doesn’t require any API integration or customer support, which means that businesses can start accepting online payments with zero integration and minimum set-up, without any hosting costs, maintenance charges or fixed fees. Interestingly, the beta launch was done with about 700 businesses on board.
Razorpay Is Chasing The $1 Trillion Digital Payments Market
A BCG-Google research estimates the Indian digital payments industry is estimated to touch $500 billion by 2020 and will contribute 15 per cent to the country’s GDP. Meanwhile, another report by Credit Suisse Group AG estimates that the Indian digital payments market will increase five-fold from the current $200 billion to $1 trillion by the year 2023. Given the size and momentum going on in this space, Razorpay, which reportedly has a 10% market share is one of the big names chasing the $1 trillion digital payments market.
Digital Payments Architecture
A typical payments architecture has 3 parts to it — one is the issuer, one is the acquirer and in between is the processor. “The main task is to take the money from the issuing bank and route the money through the processing network and ultimately get it to acquiring part. These 3 different pieces can actually lead to 10 different pieces,” said Shetty. In addition to this, there are certain regulations that a company has to go through before being able to talk to the processing networks directly. This whole transaction happens in less than a few seconds.
In terms of security, Shetty reveals that the security is done in multiple layers and a transaction goes through 5 to 7 layers of security. These security features evolve over a period of time. “We are reasonably proud about our security infrastructure. We actually have two different kinds of programs — one is our own internal security bug bounty program and also an external bug bounty program. We also follow a very high degree of diligence. Our team also does a lot of penetration testing, security code analysis to ensure the basic diligence before pushing the code into deployment. Apart from this, we also follow chaos engineering principles to identify issues and patterns which enable us to go deeper,” he shared.
Current Projects@ Razorpay
Currently, the team is working on identifying fraud detection and identifying risky merchants. In addition to this, other projects include routing optimisation, pricing optimisation and personalization. “The kind of engineering team we have is highly motivated and have amazing pedigrees and we also organise necessary programs for these guys to facilitate an exchange of ideas,” he shared.
UPI Is The Next Growth Engine for Fintech Players
Dubbed as one of the biggest game changers, UPI has grown to become one of the fastest payments mode, outgrowing digital wallets and card payments. As per the Razorpay blog, around 620 million transactions worth over one trillion were conducted in December 2018, up from 30 million UPI transactions in September 2017. Going forward in 2019, UPI 2.0 is pegged to become mainstream and will drive larger transaction volumes.
Razorpay enables UPI transactions via apps like BHIM, PhonePe and WhatsApp. The rate at which UPI is growing is phenomenal. “UPI is one layer above IMPS network and we are giving importance to the quality of the service that we can provide to the merchants. The overall growth of UPI is 7 times in the market in the last one year and even the number of transactions has grown tremendously,” said Shetty.