Razorpay’s New Feature Aims to Reduce the Pain In OTP-Based Payments

Razorpay, the Bengaluru-based converged payments solutions company, has announced a bunch of new products including a simple-sounding yet effective tweak to the checkout experience. Razorpay has worked with banking partners to bring the OTP page to the merchant's website. This means that there's one less point of failure in the checkout process and faster completion rates for transactions.

“This is a complete shift in the way payments are done on our platform,” [Razorpay] co-founder Harshil Mathur tells Gadgets 360.“You can do the complete transaction on the merchant page itself. You can enter the OTP itself on the merchant page.” The company has been able to convince banking partners to make this happen, but the next step would be to explore alternatives to SMS-based authentication. Everyone hates waiting to get that OTP SMS, and there are faster alternatives in the market such as TOTP (time-based OTP via apps such as Google Authenticator and 1Password).

“The implementation (of alternative OTP methods) part is trivial,” Mathur adds. “The bigger task is to convince their (banks') risk and compliance guys that it is just as secure, if not more than SMS-based OTPs.”

He adds that convincing the banks that Razorpay is capable of handling the OTP page is a big step because the likes of Flipkart and Amazon already have this feature.

“Why shouldn't a small merchant get that done? We have gone to these banks and worked with them to create that experience,” he explains. This feature is part of Razorpay Flash Checkout, which can also remember your payment preferences and place your preferred method of payment at the top the next time you visit a store page.

Another major announcement is the launch of RazorpayX, which is an intelligent layer over the boring old corporate banking dashboard. Mathur says personal banking dashboards have gotten better over the years but in terms of design corporate account dashboards are still stuck in the 90s. RazorpayX is a business banking platform that works on top of banks' dashboards to allow you to collect payments, handle full-fledged payouts such as disbursement of salaries, and much more.

“We asked ourselves how can we answer simple questions like ‘how much runway do you have?' RazorpayX adds an AI layer on top of your bank account, generates unique and actionable insights on top of your account,” says Razorpay co-founder Shashank Kumar.

This platform has interesting use cases for businesses. It can tell startups how long they can stay afloat. For merchants, it can track the payment history of various vendors and highlight those who've been erratic with payments. Mathur says this could make it easier for SMEs to get loans and perhaps even increase their credit limits because via the Razorpay dashboard, it's much easier to see whether a business is making enough money to be able to repay a loan.

At the moment RazorpayX is launching in pilot with some banking partners that Mathur declined to name. By the end of this year, the company says it will make this information public. It hopes that small businesses use this platform and at the moment the company hasn't decided on pricing.

A subset of RazorpayX is X Club, which is a platform for founders and entrepreneurs. This came to fruition because Razorpay felt it got access to an entire community of mentors and fellow entrepreneurs at the US-based startup accelerator Y Combinator, but there was nothing like that platform for India. The co-founders described it as a “safe space where you can ask difficult questions about running a business”. It will also help startups connect with accelerators via X Club.

Finally, Razorpay Capital, the company's lending arm is now launching publicly. This will make it easier for SMEs to get loans. As mentioned earlier, this sector finds it difficult to get loans due to a lack of reliable accounting data, but Razorpay plans to fix that via insights from RazorpayX. “Right now we are now at a loan dispersal rate of $30 million and we expect to take it to $100 million by March 2019,” says Mathur.