Fintech Unicorn Razorpay Acquires Ezetap In A Cash-And-Equity Deal Of $150 Million

In a cash-and-equity deal, fintech unicorn Razorpay bought Ezetap, launching it into the offline payments market. Sources claim that Razorpay paid $150 million for the purchase, of which $100 million will go to shareholders of Ezetap in cash distributions. Some of Ezetap's investors, including technology investor Chamath Palihapitiya's Social Capital and early-backer Prime Venture Partners, would also receive Razorpay shares as part of the agreement, the sources said.

According to one of the sources, Razorpay may invest an additional $50 million in the provider of offline payments after the acquisition in order to expand the offline business. Through the integration of its online and physical payment options, the acquisition will enable Razorpay to provide an omnichannel payment solution. The Ezetap team will work with Razorpay to run its offline payments division.

According to Shashank Kumar, co-founder and managing director of Razorpay, "We believe that payment firms will be much more omnichannel and we have seen that with the Unified Payments Interface (UPI)." "So, offline was a significant component for us after being on the online side all these years. We will be able to provide a better experience thanks to the consolidation, which will enable all payment flows�both offline and online�to be governed by a single technology stack.

With access to Ezetap's offline stack, Kumar claimed Razorpay will have a better understanding of the transactions recorded by offline merchants, enabling it to offer better financial services products and bigger credit limits while managing end-to-end cash flows.

This is one of the greatest acquisitions for the eight-year-old company Razorpay, which began as a provider of payment gateways before expanding into newer financial service products including neo banking, payroll administration (RazorpayX), and credit disbursements, is this one (Razorpay Capital). Razorpay's card tokenization stack, "Razorpay TokenHQ," which it introduced in October of last year in collaboration with major card networks Mastercard, Visa, and RuPay, would also benefit from the acquisition.

Abhijit Bose, the current head of WhatsApp India, and Bhaktha Keshavachar founded Ezetap in 2011. Ezetap provides point-of-sale terminals and solutions to offline retailers as well as a payments platform to allow retailers to offer loyalty and incentive programmes to their customers. With 500,000 point-of-sale touchpoints, including retailers like Amazon and BigBasket, Ezetap currently handles over $10 billion in annual transactions through its platform. On the other hand, the annualised transaction payment value processed through Razorpay's payment gateway is close to $80 billion.

According to Harshil Mathur, co-founder and CEO of Razorpay, "we will be exploring other integrations around NFC (near-field communication) payments right now, as well as developing reward programmes for our merchant partners in the near future. Both our payments business and Ezetap's operational break-even point have been reached. This led us to select Ezetap over alternatives.�

The acquisition intensifies the rivalry between Razorpay and rival Pine Labs, which entered the online payment gateway market with the October 2017 launch of "Plural." Razorpay will also expand into newer customer loyalty and rewards categories as a result of the purchase.