In 2014, accepting online payments in India was a nightmare for businesses. Payment gateways were clunky, integration took weeks, settlement was unpredictable, and customer support was terrible. Harshil Mathur and Shashank Kumar experienced this frustration firsthand while building their previous startup. After spending two months just integrating a payment gateway, they realized the problem wasn’t their inability, it was that existing solutions were fundamentally broken.
They shut down their startup and decided to fix payments itself, an audacious move for two college graduates with no fintech experience. The early days of Razorpay payment were brutal. Banks didn’t take them seriously. Regulations seemed impossible to navigate. Getting the first merchant to trust them with their payments felt harder than building the technology. A decade later, Razorpay processes payments for over 10 million businesses, achieved unicorn status with a $7.5 billion valuation, and became the payment infrastructure that powers India’s digital economy.
Building for Developers, Not Corporates
Most payment companies in 2014 were built for large enterprises. They had lengthy sales cycles, complex pricing, and integration processes requiring dedicated IT teams. Razorpay payment took the opposite approach, build for developers who just wanted to add payments to their product quickly. They created comprehensive documentation with code examples in multiple languages, offered plug-and-play libraries, and kept pricing simple and transparent.
The dashboard was designed like a SaaS product, not a banking portal. Clean interface, real-time analytics, easy reconciliation, and features developers appreciated like webhooks, refund APIs, and test modes. Integration that took weeks with competitors took hours with Razorpay. This developer love translated into word-of-mouth growth.
Developer-first approach:
- 2014: accepting online payments in India nightmare for businesses
- Clunky gateways, weeks integration, unpredictable settlement, terrible support
- Harshil Mathur and Shashank Kumar: experienced frustration firsthand
- Two months just integrating payment gateway
- Existing solutions fundamentally broken
- Banks didn’t take seriously, regulations impossible to navigate
- 10 million+ businesses, $7.5 billion valuation
- Built for developers vs. large enterprises
- Comprehensive documentation, plug-and-play libraries, transparent pricing
Community-First Mindset
The company embraced open-source philosophy. They released several tools as open-source, contributed to developer communities, and built credibility beyond just their product. This community-first mindset made Razorpay payment the default choice for India’s startup ecosystem. When YC-funded startups came to India, when college kids built their first SaaS product, they chose Razorpay.
Beyond Payment Gateway
Razorpay could have stayed a successful payment gateway, but founders saw a bigger opportunity. Businesses using Razorpay for payments still struggled with banking, invoicing, vendor payments, payroll, and access to working capital. Razorpay payment decided to solve everything, becoming a complete financial operating system.
RazorpayX, their banking platform, let businesses open current accounts, manage payouts, automate vendor payments, and handle tax payments from a single dashboard. This eliminated the need for multiple banking relationships and manual reconciliation. Businesses could pay employees, vendors, and contractors with a few clicks instead of generating bank files and visiting branches.
Financial ecosystem:
- Dashboard: SaaS product vs. banking portal design
- Real-time analytics, easy reconciliation, webhooks, refund APIs, test modes
- Integration: hours vs. weeks with competitors
- Word-of-mouth growth through developer love
- Open-source tools released, contributed to communities
- Default choice for India’s startup ecosystem
- YC-funded startups, college kids building first SaaS product
- RazorpayX: current accounts, payouts, vendor payments, tax payments
- Single dashboard eliminating multiple banking relationships
Capital and Lending
Razorpay Capital addressed working capital problems for growing businesses. Using transaction data from payment processing, they could offer instant credit lines to merchants without lengthy applications or paperwork. A business processing Rs 10 lakh monthly through Razorpay could access Rs 5 lakh credit within minutes based purely on transaction history.
The lending business created strategic moats. Merchants who took credit from Razorpay payment were less likely to switch payment gateways because their credit line depended on transaction volume. This cross-selling strategy increased lifetime value per customer while solving real business problems.
Navigating Competition and Challenges
Razorpay’s success attracted intense competition. Cashfree, Instamozy, PayU, and traditional players like CC Avenue fought for market share. International giants like Stripe entered India with deep pockets. Paytm and PhonePe, having built massive consumer payment networks, expanded into merchant payments. Razorpay payment faced pressure from all sides.
The company responded by doubling down on product quality and customer service. While competitors spent heavily on sales and marketing, Razorpay invested in engineering and support. They prioritized uptime, maintained industry-leading success rates, and earned reputation for actually helping merchants solve problems.
Competitive response:
- Razorpay Payroll: salary payments, tax deductions, compliance automated
- Razorpay Invoicing: professional invoices with integrated payment links
- Instant credit lines: Rs 10 lakh monthly processing accessing Rs 5 lakh credit
- Data-driven lending: minutes vs. traditional bank loans requiring three years financials
- Merchants taking credit: less likely switching gateways
- Cross-selling increasing lifetime value
- Cashfree, Instamozy, PayU, CC Avenue, Stripe, Paytm, PhonePe: competition
- Product quality and customer service focus
Regulatory challenges emerged as RBI and government increased scrutiny on payment companies. Compliance requirements increased costs and complexity. Razorpay payment had to invest heavily in legal, compliance, and risk management infrastructure. Some smaller competitors couldn’t handle the regulatory burden and shut down or merged.
The Bottom Line
Razorpay payment succeeded by solving a problem so frustrating that founders experienced it themselves, then building a solution so good that competitors struggled to match it. They combined Silicon Valley’s developer-first philosophy with deep understanding of Indian business needs and regulatory environment.
The success formula:
- Invested in engineering and support vs. sales and marketing
- Prioritized uptime, industry-leading success rates
- Support responding within minutes during critical sales periods
- RBI and government: increased scrutiny on payment companies
- Compliance requirements: increased costs and complexity
- Legal, compliance, risk management infrastructure investment
- 2023: reached profitability proving business model works
- $7.5 billion valuation unicorn status
The journey from two frustrated founders to a $7.5 billion unicorn powering millions of businesses shows what’s possible when you obsess over customer problems. Razorpay didn’t win by being first, they won by being better, more reliable, and more helpful. As India’s digital economy grows, businesses building on Razorpay’s infrastructure will collectively process trillions in payments.
