Exclusive: Inside Razorpay’s larger plan with consumer lending, PPI and NBFC license

It’s true that consumer lending and financial services are the only way to make money for payments companies in India. While Paytm and Phone are yet to launch lending products for users, several startups including EarlySalary, KrazyBee, ZestMoney have been exploring the segment for a while.

Razorpay also intends to foray into consumer lending. According to three Entrackr's sources, the company that is still limited to B2B space is foraying into consumer lending. “It plans to have a holistic presence in consumer fintech play with a model which is slated to be a mix of EarlySalary, LazyPay, and KrazyBee,” mentioned sources.

Evangelising consumer lending makes perfect sense for the company, outline two of the three sources, one of whom is a venture capitalist. “Razorpay has a well-placed network of merchants via its payment gateway business. At the same time, it also processes a huge amount of consumer transactions everyday. Leveraging both, it looks to build a lending focused closed-loop ecosystem around digital payments,” added sources.

Sources also reveal that Razorpay is seeking PPI licence to develop wallet, issue smart cards, gift cards, and co-branded credit cards. This was independently verified by Entrackr through amendment of the article of association filed by RazorPay Tech Pvt Ltd. It’s worth noting that Razorpay has three entities Razorpay Software, Razorpay Tech, and Razor Financial.

The company is likely to execute consumer-centric lending play with Razorpay Financial that got registered only last year, reveal sources. “With PPI licence, the firm would be rolling out gift card service so that merchants can easily launch their gifting programmes. This facility is more or less on the lines of Qwickcilver’s offerings,” said sources.

The PPI licence will also be leveraged to launch smart prepaid cards and expense management software meant for businesses. It’s not clear whether Razorpay would also launch consumer-facing wallets like Paytm or PhonePe or not. 

According to documents filed with MCA last year, Razorpay has plans to seek NBFC licence and begin lending across consumer durable loans, personal loans, and gold loans primarily to individuals who possess gold jewellery among others.

Entrackr has reached out to Harshil Mathur, co-founder and CEO Razorpay for inputs on aforementioned contexts. However, he declined to comment on the company's plan in consumer lending and claims that it is too early to comment on anything since the plans are in a nascent stage.

Razorpay’s decision of getting into lending and several other businesses via PPI licence and NBFC licence outline the fact that the company has a massive plan with its recent $75 million investment. Since making money from merchants in the payments ecosystem is tough, Razorpay moves seem obvious.

However, if it does start a consumer-facing wallet service along with gift cards, lending and other payment-related services, it would be competing with giants like Paytm, PhonePe and others where the investment required to fight this competition would grow multifold.