Mastercard invests in India’s Stripe, bets on API tech

Razorpay co-founders Harshil Mathur and Shashank Kumar

Payment gateways are the best option for companies that need Indian customers to pay for things online. They aggregate banks, e-wallets, and net banking capabilities into a single platform where customers can use whichever one they want.

A young one that’s been getting a lot of attention is Razorpay. It provides its clients with a few lines of code – known as an API – to integrate into their backend tech, which then allows them to process transactions.

That makes it a little different than the other payment gateways in India. While its competitors require shoppers to move to a completely separate site when they need to pay, Razorpay lets them stay on the same page.

Today, the startup announced that it has raised an undisclosed amount of money from Mastercard. This is the third round of funding that it has secured, after a US$9 million series A round in October and a US$2.5 million seed round a few months before that. Its series A included Tiger Global, Matrix Partners, and a star-studded sheet of angel investors, including e-wallet Freecharge’s Kunal Shah.

It’s also one of the few Indian startups to make it to Y Combinator’s accelerator program and receive its subsequent US$120,000 round of funding.

“Mastercard has got expertise around tools and technologies that will be helpful for us to make payments more seamless,” says co-founder Harshil Mathur.

The startup will enroll in Mastercard’s Start Path program, which accelerates startups for six months and gives them access to Mastercard’s network. The program also encourages startups to build on top of Mastercard’s current tech solutions – a smart move for the financial services giant.

An API world

Razorpay often gets compared to Stripe, an Irish company that’s also gone through Y Combinator. Stripe is a few years ahead of Razorpay and has released a whole suite of APIs that even includes support for bitcoin transactions.

But there’s little chance of Stripe entering India. It’s notoriously difficult for global fintech companies to enter the country and comply with local regulations, so it won’t be hard for Razorpay to fend off outside competition.

The real challenge is within India. Razorpay has several competitors, including CitrusPay, which has raised US$32.3 million across three rounds of funding. There’s also CCAvenue, which is fifteen years old and supports multiple currencies, as well as PayUBiz, which has released an e-wallet used by Indian ecommerce site Snapdeal.

The startup’s use of APIs means it still has a pretty good chance, though.

When I used PayJo’s “Recharge Bot” for Facebook Messenger to top-up my phone last month, I was moved to a PayUBiz payment gateway to pay. I was in an area with poor data connectivity, so it never ended up loading.

If you let your mind wander with Razorpay’s API, things get interesting. Let’s say a messenger app has opened up its tech to allow outside APIs – I could then possibly pay for my top-up in a message. In that vein, I could more or less do everything inside my chat app, from buying clothes from Indian fashion store Koovs to paying for my biryani from Swiggy.

Not ’til the fintech lady sings