razorpay: Fintech unicorn Razorpay acquires Ezetap in a cash and equity deal
Sources told ET that Razorpay has paid $150 million for the deal, of which $100 million will be cash payments to Ezetap’s shareholders.
As part of the deal, some of Ezetap’s investors, including technology investor Chamath Palihapitiya-led Social Capital and early-backer Prime Venture Partners, will also get shares in Razorpay, the sources added.
After the acquisition, Razorpay may invest another $50 million in the offline payments provider to further expand its offline business, one of the people said on condition of anonymity.
The acquisition will help Razorpay offer an omnichannel payment solution, connecting their online payment offering with offline.
Ezetap’s team will join Razorpay and will manage its vertical payments offline.
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“We believe that payments businesses will be much more omnichannel and we have seen that with the Unified Payments Interface (UPI),” Shashank Kumar, co-founder and CEO of Razorpay, told ET. “So, after being on the website for all these years, offline was a big component for us. The consolidation will allow all payment flows (offline and online) to be under one technology stack, helping us deliver a superior experience.”
With access to Ezetap’s offline stack, Kumar said Razorpay will have a better understanding of transactions clocked by offline merchants, leading it to extend higher credit and better financial services, while managing end-to-end cash flows.
This marks Razorpay’s sixth acquisition and one of the largest for the eight-year-old company, which started as a payment gateway provider and later diversified into newer financial service offerings, including neobanking, payroll management (RazorpayX) and credit payments (Razorpay Capital).
The acquisition will also help Razorpay enhance its card tokenization stack, ‘Razorpay TokenHQ’, which it launched in October last year in partnership with card network companies Mastercard, Visa and RuPay.
Founded in 2011 by current WhatsApp India CEO Abhijit Bose and Bhaktha Keshavachar, Ezetap provides sales terminals and solutions to offline merchants as well as a payment platform to help merchants provide loyalty and rewards benefits to their customers.
Currently, Ezetap processes over $10 billion in annual transactions through its platform, and has 500,000 point-of-sale touch points, including the likes of Amazon and BigBasket.
On the other hand, Razorpay’s payment gateway processes close to $80 billion in annual transaction payment value.
“We will explore further integrations now around NFC (near field communication) payments, as well as build loyalty programs for our merchant partners in the near future,” Harshil Mathur, co-founder and CEO of Razorpay, told ET. “Our payments business breaks even, and Ezetap has also broken even on an operational level. This made us choose Ezetap over the competition.”
The acquisition further intensifies the competition between Razorpay and rival Pine Labs, which also moved into the online payment gateway through the launch of ‘Plural’ in October last year.
In December 2021, Pine Labs had also launched its own card-on-file tokenization solution for the industry called ‘Plural Tokenizer’.
Through the acquisition, Razorpay will also enter newer segments of customer loyalty and rewards. Pine Labs had acquired Kuala-Lumpur-based loyalty and cashback platform Fave in April last year for $45 million.
Both Pine Labs and Razorpay were among the first Indian fintech firms to receive in-principle approval from the Reserve Bank of India (RBI) for a payment aggregator license earlier this year.
Recently, even offline payment service provider, MSwipe said it will launch its own payment gateway service, after it received RBI’s approval to operate as a payment aggregator.
