What is Razorpay? How India’s B2B Fintech Processes $180 Billion Annually

Razorpay is India’s dominant full-stack payments and business banking platform, processing an annualised total payment volume (TPV) of $180 billion across more than 12 million merchants. Co-founded in 2014 by IIT Roorkee alumni Harshil Mathur and Shashank Kumar, the Bangalore-headquartered company has grown from a developer-friendly payment gateway into a sprawling fintech operation that now accounts for roughly 55% of India’s online payment gateway market. Valued at $9.2 billion following its June 2025 Series G round, Razorpay reported revenue of Rs 3,783 crore (approximately $450 million) in FY25 — a 65% year-on-year jump that’s caught the attention of IPO watchers across Mumbai and beyond. The company’s product suite spans payment acceptance, neobanking, payroll, and merchant lending, making it one of a very small number of Asian fintechs that’ve built genuine platform depth rather than chasing a single transaction layer. For anyone tracking digital finance in India, Razorpay isn’t a payments company that bolted on banking. It’s a banking company that happened to start with payments.

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How does Razorpay make money?

Razorpay’s revenue engine runs on three interconnected pillars, each feeding the others with data and distribution.

Payment Gateway remains the core. Every time a customer pays an Indian merchant online — whether through UPI, credit card, net banking, or wallet — Razorpay clips a transaction fee, typically 2% for domestic card payments and lower for UPI-based flows. The gateway processes payments for 65% of India’s e-commerce platforms (CoinLaw, 2026), and its Smart Routing technology uses machine learning to optimise success rates across payment methods and issuing banks. Magic Checkout, the company’s one-click checkout product, claims a 22% reduction in cart abandonment — a figure that translates directly into higher merchant GMV and, consequently, higher fee income for Razorpay.

RazorpayX, the business banking and neobanking arm, has become the company’s fastest-growing segment. The platform handles current accounts, vendor payouts, tax payments, and automated compliance workflows. More than 50,000 businesses now use RazorpayX, which processes $30 billion in annualised transaction volume and accounts for 5% of all digital money transfers in India (Business Standard, 2025). Over 40,000 businesses use RazorpayX Payroll specifically. Two years ago, payments contributed 90% of total revenue; that figure’s now dropped to 75%, with RazorpayX and adjacent services delivering the remaining quarter.

Razorpay Capital completes the trifecta. Because Razorpay already sees a merchant’s real-time transaction data, it can underwrite working capital loans with minimal paperwork and rapid disbursement. The lending model mirrors what Stripe Capital and Square Loans have built in Western markets, but it’s tuned to India’s MSME landscape — where traditional banks routinely decline small businesses that lack conventional credit histories. This data-driven lending loop is the strategic play: more merchants processing payments means better underwriting signals, which means more loans disbursed, which means deeper merchant lock-in.

Why do Indian businesses choose Razorpay over Stripe?

Stripe entered India with strong global brand recognition and developer tooling that’s widely regarded as best-in-class. But Razorpay’s dominance in the domestic market comes down to three things: local payment method coverage, speed of onboarding, and full-stack depth.

India’s payments landscape is unlike any other market in the world. UPI alone processed 16.6 billion transactions in a single month (March 2025, NPCI data), and any gateway that can’t handle the full spectrum of UPI variants, IMPS, NEFT, net banking, and EMI options across dozens of issuing banks will lose merchants to one that can. Razorpay’s infrastructure was built India-first, not India-adapted. That matters when you’re dealing with the Reserve Bank of India’s evolving compliance requirements, where 2025 Master Directions now mandate 100% data localisation and merchant due diligence processes that foreign-architected platforms struggle to retrofit.

Stripe operates across 46 countries and supports 135+ currencies, making it the obvious choice for Indian businesses with significant international revenue. But for the overwhelming majority of Indian SMEs and mid-market companies — the ones generating revenue domestically — Razorpay’s deeper local integration, vernacular-language support, and bundled banking products create a switching cost that Stripe hasn’t yet matched. The 55% market share figure speaks for itself.

How big is Razorpay’s merchant base?

Razorpay has onboarded more than 12 million merchants, with a 94% retention rate that suggests genuine product stickiness rather than promotional lock-in. The merchant base spans solo entrepreneurs running Shopify stores through to large enterprises like Airtel, HDFC Bank, and IRCTC.

The company’s growth trajectory here is worth contextualising. When Razorpay graduated from Y Combinator in 2015 — only the second Indian startup accepted into the programme at that time — it was processing payments for a handful of early adopters. Mathur famously faced over 100 investor rejections before securing seed funding. A decade later, the platform processes transactions for roughly one in every three online businesses in India, and its annualised TPV of $180 billion puts it on track for the company’s stated target of $400 billion by 2030 (Business Standard, February 2025).

The retention rate deserves particular attention. In payments, switching costs are structurally low — a merchant can integrate a new gateway in days. A 94% retention rate at this scale suggests that Razorpay’s bundled product strategy is working: merchants who start with the payment gateway end up using RazorpayX for payouts, Capital for working capital, and Payroll for salary processing. Each additional product raises the cost of leaving.

What’s Razorpay’s lending and neobanking play?

This is where Razorpay’s long-term thesis gets genuinely interesting. The company isn’t trying to be a bank in the regulatory sense — it partners with licensed banks for deposit-taking and lending activities. But it is building the operating layer that sits between businesses and their banking infrastructure, which in practice means it controls the customer relationship.

RazorpayX’s growth to $30 billion in annualised transaction volume, with 85% year-on-year growth, signals that the neobanking proposition resonates beyond early-adopter startups. The platform now offers AI-powered financial tools positioned as a “CFO assistant“ — automating reconciliation, flagging cash-flow anomalies, and generating compliance reports. Ahead of the IPO, Razorpay has been leaning heavily into this AI narrative, framing the business banking arm as an intelligence layer rather than merely a transaction pipe.

On the lending side, Razorpay Capital’s advantage is structural. Traditional lenders assess SME creditworthiness through financial statements, collateral, and credit bureau scores. Razorpay assesses it through live payment data — transaction frequency, average order values, refund rates, seasonal patterns. For India’s vast MSME segment, where an estimated 85% of small businesses lack access to formal credit, this alternative underwriting model addresses a genuine gap.

What are the risks?

The most immediate risk has been neutralised. In early 2025, the Supreme Court dismissed an Enforcement Directorate appeal that had threatened money-laundering proceedings against the company — a legal overhang that could’ve derailed the IPO timeline entirely. With that cleared, the regulatory picture looks considerably cleaner.

But structural risks remain. The RBI’s 2025 Operational Resilience Framework now mandates that payment aggregators maintain transaction failure rates below 0.5% and report any downtime exceeding 30 minutes within 24 hours. These aren’t optional guidelines — they’re enforceable standards that increase operational costs and compliance burden. Cross-border payment aggregators must also maintain a minimum net worth of Rs 25 crore by March 2026, a threshold Razorpay clears comfortably but one that signals an increasingly prescriptive regulatory environment.

Competition is the other pressure point. PhonePe, Paytm, and Juspay all compete for merchant payment volumes. Stripe continues to invest in India. And the UPI ecosystem’s zero-MDR policy on small transactions compresses margins on what’s become the country’s most popular payment method. Razorpay’s margin protection strategy — moving up the value chain into banking and lending — is sound, but it also means the company’s competing on multiple fronts simultaneously.

What’s the outlook?

Razorpay is reportedly targeting a $700 million-plus IPO in late 2026, with Axis Capital, Kotak Mahindra Capital, JPMorgan Chase, and Citigroup shortlisted as advisers (NewsBytesApp, 2025). A listing at or near the $9.2 billion valuation would make it one of the largest Indian fintech IPOs to date and a significant benchmark for the broader sector.

Internationally, Razorpay’s 2022 acquisition of Malaysian recurring-payments startup Curlec provides the beachhead for Southeast Asian expansion, with a stated goal of serving over 5,000 businesses in Malaysia’s digital economy. The company secured its PA-CB (Payment Aggregator: Cross Border) licence from the RBI in December 2025, giving it authorisation for both inward and outward cross-border payment flows — a prerequisite for meaningful international growth.

The IPO will be the defining test. Razorpay’s built something rare in Asian fintech: a platform that genuinely spans payments, banking, and lending with the merchant scale to make each layer reinforce the others. Whether public markets reward that breadth — or punish the complexity — will tell us something important about how investors value full-stack financial infrastructure in emerging markets.