How Razorpay Cracked Subscription Payments in India

Whether we like it or not, subscription-based payments are here to stay. From food ordering to triathlon coaching, pretty much everyone wants recurring revenue. Accepting these payments online is a big chore in India because here you’re required to authenticate every online payment with a one-time password you get via SMS, or a second password you set with your card provider. This makes you go through this payment process again and again in the case of subscriptions.

Razorpay, an Indian converged payments solution company, recently revamped its portal and added subscription-based payments to its list of features. How did it do that? The same way you can automatically pay credit card bills or repay a loan via equal monthly installments (EMI).

“If you have ever done a credit card payment there is a physical mandate that you can sign and that allows a company to show auto debit. Same concept,” Harshil Mathur, the founder of Razorpay, tells Gadgets 360. “You do the first transaction using OTP and you can give consent that I allow this merchant to charge the customer automatically. It works almost as seamlessly as it does in the US. The only difference is that the first transaction has to be authenticated manually.”

The company did an initial rollout in December last year to see if companies are interested in this feature and they saw a lot of interest. With a waitlist of around 500 merchants who want to implement subscriptions, Razorpay got its answer. At the moment, companies such as CouponDunia, Zoho, and news publication The Ken are among those who have implemented subscription based payments via Razorpay.

“The thing we saw is that per month billing is painful in India," says Mathur. "(Razorpay’s solution) is instrument agnostic and this solves that.”

This is a big move for Razorpay and online businesses in India. “Amazon Prime has shown that Indians are willing to pay for content as long as you add services around it,” Mathur says, to emphasise the importance of this feature. Razorpay’s implementation allows it to take control of subscriptions because it takes your consent for automated payments directly, as opposed to allowing the merchant to do it. This means that if you want to stop a subscription, you call Razorpay directly instead of going via the merchant.

“We came up with this platform where we control the billing, the amount, the cycle. The merchant tells us to charge Rs. 500 per month from a customer, we take the consent directly from the customer, we don’t leave it to the merchant,” Mathur says, explaining that this is also done to combat fraud. “Fraud will affect us more than the merchant. So we’re taking these steps. Before charging customers the next month, we send an SMS and email to inform customers about subscription. If you say you don’t want this, you can contact Razorpay and stop this. That way the customer is always in control,” he adds.

This could also be beneficial to small businesses. A local teacher could be taking tuitions or a coach training you for a fitness goal can use this service for recurring payments online, Mathur suggests. Another big feature of Razorpay’s recent revamp is support for UPI 2.0, but the company is waiting on National Payments Corporation of India (NPCI) to make it live. “UPI 2.0 changes the clumsy process for payment (to merchants). Once you’ve done a transaction with merchant then the next transaction is much smoother,” says Mathur.

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“UPI on P2P (person-to-person payment) is growing and it’s much better than wallets, bank transfers. P2M (person-to-merchant payment) is still slow, primary reason being acceptance is still very low,” Mathur says. “Top merchants haven’t launched support for UPI. We are very bullish on UPI, we are working with companies and banks to integrate UPI.”

Mathur says BharatQR should increase UPI usage in India. It’s a QR code that lets you scan and make payments, just as you probably already have done for Paytm. “BharatQR is interoperable, the same barcode will work for Visa, Mastercard, everything. Even merchants in the offline space are excited about BharatQR,” Mathur says.