The Story of Razorpay: From College Friends to Fintech Revolutionaries

In 2014, two young engineers, Harshil Mathur and Shashank Kumar, found themselves at a crossroads. Both alumni of IIT Roorkee, their friendship and collaboration began in the university’s innovation lab, SDSLabs, where they bonded over a shared passion for technology and problem-solving. After graduation, life took them to different continents: Shashank to Microsoft in the USA, Harshil to Schlumberger in the Middle East but their connection remained strong, fueled by late-night chats and side projects that kept the entrepreneurial spark alive.

A Frustrating Problem Sparks an Idea

The turning point came when the duo tried to build a crowdfunding platform for a social cause. What should have been a simple process setting up an online payment gateway turned into a nightmare. They faced endless paperwork, exorbitant setup fees, and a barrage of demands from existing payment gateway providers: proof of operational history, physical office addresses, security deposits, and more.

As they dug deeper, they realized this wasn’t just their problem. Across India, startups and small businesses were struggling to accept payments online. The digital payments ecosystem was fragmented and intimidating, especially for those without deep pockets or established reputations. At that time, there were only about 21 million credit cards in a country of 1.3 billion. Clearly, the existing US-centric payment solutions weren’t going to work for India’s unique needs.

Building Razorpay: The Early Days

Determined to solve this, Harshil and Shashank set out to create a payment gateway that was simple, affordable, and secure something built for startups and SMEs, not just the big corporations. Their vision was to democratize payments, making it as easy for a small merchant to accept money online as it was for a large enterprise.

The beginnings were humble: the first Razorpay team was just 11 people, all living and working out of a single apartment, hustling day and night to build a prototype and convince banks to partner with them. Investors were skeptical over 100 of them rejected the idea, doubting whether two young engineers could disrupt a sector dominated by established giants. But Harshil and Shashank refused to give up, driven by the conviction that India’s digital economy needed a better solution.

Breakthrough and Growth

Their perseverance paid off when they were accepted into the prestigious Y Combinator accelerator in 2014, which gave them both funding and validation. With this boost, Razorpay launched its first product: a clean, developer-friendly payment gateway that allowed businesses to accept payments through cards, net banking, UPI, and wallets, all with a simple API and transparent pricing.

The product struck a chord, especially among startups and SMEs who had long been ignored by the incumbents. Razorpay’s dashboard made it easy to track payments, manage refunds, and integrate with both web and mobile apps, removing much of the friction that had plagued online payments in India.

Expanding the Vision

As Razorpay grew, so did its ambitions. The founders realized that payments were just one part of the financial puzzle for businesses. Indian SMEs also struggled with managing payouts, accessing credit, and handling banking operations efficiently. This insight led to the launch of RazorpayX (a neo-banking platform) and Razorpay Capital (a lending arm), transforming Razorpay from a payment gateway into a full-stack financial solutions company.

Today, Razorpay serves over 8 million businesses—including household names like Zomato, Swiggy, and Cred—and has become a symbol of India’s fintech revolution. The company reached unicorn status in 2020 and is now valued at over $7.5 billion, with a team of more than 3,000 people driving innovation from its Bangalore headquarters.

Legacy and Impact

The story of Razorpay is one of grit, vision, and relentless focus on solving real problems for the underserved. Harshil and Shashank’s journey from college friends to fintech pioneers is not just about building a successful company—it’s about empowering millions of Indian entrepreneurs to participate in the digital economy, leveling the playing field, and redefining what’s possible in financial technology.

“One of the most critical things that define a business trajectory is whether its product serves the underserved or not.”
— Harshil Mathur.

Their narrative is a testament to the power of perseverance, customer obsession, and the belief that even the biggest challenges can be overcome with the right mix of innovation and determination.

Insights from Razorpay’s Journey

Razorpay’s rise is rooted in a deep empathy for the everyday struggles of Indian entrepreneurs and a relentless focus on solving their pain points. The founders, Harshil Mathur and Shashank Kumar, were themselves startup founders who experienced firsthand the challenges of accepting digital payments in India. This personal connection drove them to create products that were intuitive, developer-friendly, and tailored to the unique needs of Indian businesses, from mom-and-pop shops to tech unicorns. Their product-first mindset and willingness to tackle complex flows like payroll and vendor payments set them apart in a crowded fintech market.

Challenges Faced

Regulatory Hurdles: Razorpay faced significant regulatory challenges, including a period when the Reserve Bank of India (RBI) barred them from onboarding new users until they received a full payment aggregator license. This embargo forced Razorpay to focus on building new products while navigating complex compliance requirements.

Skeptical Investors and Banks: In its early days, Razorpay was rejected by over 100 banks and investors, who doubted the viability of two young

engineers disrupting a sector dominated by established players.
Operational Complexity: Managing payments in India is complex, with issues like security, transparency, and trust being major barriers for fintech adoption.
Customer Support and Reliability: As Razorpay scaled, some customers reported issues with delayed payments and unresponsive customer support, highlighting the operational challenges of maintaining reliability at scale.
Thin Margins: The payment aggregator business operates on wafer-thin margins, requiring constant innovation and expansion into new financial products to remain profitable.

Lessons Learned

Stay Focused on Core Problems: Razorpay’s founders learned early on to avoid being distracted by large clients or one-off deals that could derail their focus on scalable solutions for startups and SMEs.
Empathy Drives Innovation: Many of Razorpay’s most successful products, like payroll automation and payment links, were born out of the founders’ own frustrations and a deep understanding of their customers’ needs.
Iterate and Discard: Not every product or feature will succeed. Razorpay’s journey involved building, testing, and sometimes discarding features that didn’t deliver a 10x improvement or solve a real pain point.
Adapt to Regulation: Navigating India’s regulatory landscape is a constant challenge, but Razorpay’s ability to adapt and innovate during periods of restriction (such as the RBI embargo) was key to its resilience and long-term growth.

Product Innovation: Payment links and payroll automation were developed in direct response to the founders’ own struggles and the needs of other startup founders, making digital payments and financial operations easier for businesses of all sizes.
Cross-Border Payments: Razorpay tackled the complex issue of cross-border payments over several years, eventually building one of the best export payment stacks in India, demonstrating persistence and a willingness to solve deep-rooted industry problems.

Customer-Centric Approach: Even when large clients like Flipkart expressed interest, Razorpay chose to focus on startups, ensuring their solutions remained scalable and relevant to their core audience.

Razorpay: Progress Till 2025 and Future Plans

Growth and Milestones

Valuation & Revenue: Razorpay’s valuation soared from $1 billion in 2020 to about $7–7.5 billion by 2025, with annual revenues reaching approximately ₹2,500 crore ($300+ million) and net profits growing significantly in recent years.
Business Expansion: The company evolved from a payment gateway to a full-stack financial platform, serving over 5 million businesses and processing $180 billion in annual payment volume.
Profitability: While Razorpay’s core payments business is profitable, the group as a whole is targeting consolidated profitability ahead of its IPO, with newer verticals like neo-banking and lending still ramping up.
International Presence: Razorpay expanded beyond India into Singapore and Malaysia, with further plans for Southeast Asia, including Thailand, Vietnam, the Philippines, and the Middle East.
Founders’ Recognition: Shashank Kumar and Harshil Mathur became India’s youngest billionaires in 2025, highlighting the company’s meteoric rise and the founders’ impact on the fintech sector.

IPO and Corporate Moves

Public Listing Plans: Razorpay transitioned to a public limited company in early 2025, a key step toward its planned IPO. The company aims to go public in 2026 or 2027, after completing its redomiciling to India and aligning with local governance standards.
IPO Preparation: The company is focused on breaking even at the group level, strengthening compliance, and building readiness for public markets, following the examples of other Indian fintechs like Paytm and MobiKwik

Future plans:-

Revenue Targets: Razorpay is targeting $1 billion in annual revenue by 2030, projecting a 50%+ year-over-year growth rate for the next several years.
Business Mix Evolution: Currently, 80–85% of revenue comes from payments and 15–20% from software subscriptions. The goal is to shift this ratio to 60:40 in favor of higher-margin software and financial services in the next three to four years.
Global Expansion: The company is aggressively pursuing growth in Southeast Asia, aiming to capture $5 billion in payment volume from the region and focusing on real-time and cross-border payments.
Strategic Initiatives: Razorpay is participating in initiatives like Project Nexus, which connects instant payment rails across Asia, to facilitate low-cost, cross-border payments and strengthen its international offerings.
Employee Wealth Creation: The IPO is also seen as an opportunity for wealth creation for its 3,000+ employees, many of whom have participated in ESOP programs since 2018.

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