Razorpay Launches Forex Service For Startups
Monday, 30 January 2023, 16:20 IST
By Team Startupcity
By Team Startupcity
The digital payments platform Razorpay has launched a foreign exchange solution to help startup owners return venture financing earned abroad to Indian bank accounts at competitive exchange rates and automate the compliance procedure in accordance with Indian regulations. This is the second cross-border solution offered by Razorpay that enables small businesses to accept payments from customers abroad.
The launch of the brand-new product coincides with the regulator's decision to suspend Razorpay from adding new merchants to its payment gateway product in December of last year and its request for a system audit report as part of the license's final authorization process. The Reserve Bank of India had granted it an in-principle clearance for its payment aggregator licence in July of the previous year. The onboarding of new merchants has been prohibited for other payment companies Paytm, PayU, and Cashfree as well.
Razorpay has been actively attempting to diversify its earnings over the past few months away from its primary payment services. Razorpay Capital and Razorpay X, its loan and neobanking operations, already provide 25% of its total revenue. In the upcoming 12 months, it is anticipated that these items' revenue share would increase to 40%. Rahul Kothari, chief business officer at Razorpay, claims that the FX programme included in the company's digital banking solution, Razorpay X, will help startup owners shorten the time it takes to get their money back from up to two months to approximately 48 hours.
"We contact with our business users frequently to learn about the issues they have, and we realised that the procedures for returning funding to India were flawed. Modern firms were having trouble with paperwork since they found it to be difficult. Businesses often needed two months to finish the process because they were worried about facing penalties from the RBI if they didn't submit the proper paperwork, according to Kothari.
Razorpay hopes to give businesses a single-window view of their inbound money movement through its currency service, automate the entire documentation process, increase transparency, and lessen fear. In addition to exchange rates, Razorpay's study has found that 2-4 percent of the financing amount can occasionally be lost to administration costs and conversion fees depending on the venture capitalist. To assist company founders through the process, it has also assembled a staff of professional FX service experts.
The payments and digital banking platform has partnered with RBL Bank to offer the services, which includes opening current accounts for these local entrepreneurs and small enterprises as well as competitive FX rates. In the upcoming months, it seeks to monetize the service, While Kothari noted that the current strategy is to cross-sell a variety of current items to new clients choosing the FX service.
"In our trials, we have noticed that businesses have also chosen Razorpay's payroll option after using the FX service," he said. The company has already assisted 15 startups with the transfer of Rs 100 crore worth of capital back to India since it began operating pilots for the FX sales in October of last year. These firms include the healthcare industry training provider Virohan, the savings site Tortoise, and the neo-banking platform Coupl. By the end of this quarter, the platform hopes to scale its offering to 100 companies, and on an annual basis, it hopes to support 1,000 firms. In the upcoming 12 months, it aims to assist in processing Rs 400 crore of funds headed back to India.