Razorpay: Rejected, Rebuilt, and Now Powers 30% of India's Internet Payments

The Problem

If you were a small business in India around 2013 and wanted to accept payments online, you were in trouble.

You needed to visit a bank. Fill out mountains of paperwork. Wait weeks for approvals. Then hire a developer to integrate a payment system that was clunky, unreliable, and clearly not built for someone like you.

Big companies had the resources to deal with all of this. But small businesses, freelancers, and early-stage startups? They were just left out. Payments were supposed to be the start of doing business, but instead they were a wall blocking it.

Harshil grew up in Jaipur and studied at IIT Roorkee, one of the most respected engineering colleges in India. After graduating in 2013, he landed a job at Schlumberger, a global oil and gas company. It was a prestigious role with a good salary. Exactly what you work toward for four years of engineering college.

He lasted less than a year.

“I love challenges. I got really bored of doing the same nine to six job.”— Harshil Mathur

Shashank had a similar story. He landed at Microsoft after IIT Roorkee. Another dream job on paper. Another person quietly feeling like he was meant to be building something of his own.

The two had been friends since college. When they started talking about building a company together, it did not take long for both of them to quit their jobs and go all in.

Their first real attempt was a payment system for schools. The idea was simple: schools collect a lot of fees from parents, and most of it was still happening in cash or cheques. What if schools could accept payments digitally?

Harshil and Shashank rode around on a motorbike for three to four months, visiting school after school, pitching their product. Out of all the schools they spoke to, one agreed to try it.

One.

It was deflating. They started questioning everything. Was this worth continuing? Should they just call it?

That was a signal. Schools were not the right customer. Startups were.

With a clearer direction, Harshil and Shashank decided to apply to Y Combinator, the famous startup accelerator from Silicon Valley that had backed companies like Airbnb, Dropbox, and Stripe.

Getting into YC is extremely hard. Thousands of startups apply every batch. A few hundred get in.

Razorpay did not get in. Not the first time.

The specific details of the rejection are not public, but what followed tells you everything about how Harshil and Shashank responded. They did not give up on YC. They went back and fixed whatever needed fixing. They applied again.

Getting into YC was a breakthrough. But back in India, there was still a massive problem.

To run a payment gateway, you need banks to partner with you. You cannot process money without them. So Harshil and Shashank went to banks. Over and over again.

They knocked on more than 100 bank doors. They waited hours for meetings. They submitted proposals to 20 or 30 banks. Almost every single one turned them down.

The pushback was not just about Razorpay specifically. Banks simply did not understand fintech yet. They did not see online payments as a serious business. They were not convinced that a small startup deserved to be trusted with their infrastructure.

Then one banker said yes.

He was young, understood startups, and had the vision to see where digital payments in India were heading. He agreed to partner with Razorpay, and that one yes was enough to get the engine started.

Once they had a banking partner and came back from YC with sharper thinking, Razorpay launched properly in 2014 and 2015.

What made it different from every other payment gateway in India at that time was simple: it was built for developers.

Most payment systems in India were built for banks and finance teams. The documentation was confusing. The integration process took days. Pricing was unclear. Customer support was slow.

For a startup founder trying to launch a product quickly, this was a completely different experience. Word spread fast.

Razorpay did not stop at payments.

As their merchant base grew, they started hearing new problems. Businesses wanted to pay their vendors quickly. They wanted to manage payroll. They needed small loans to grow but banks were still slow to help.

Razorpay built for each of these problems one by one.

In October 2020, in the middle of COVID-19, Razorpay raised $100 million at a $1 billion valuation and entered the Unicorn club.

Most people expected the pandemic to slow startups down. For Razorpay, the opposite happened. More businesses moved online out of necessity. Physical payments became complicated. Digital payments became essential. Razorpay was exactly where the demand was going.

Harshil and Shashank became two of India's youngest self-made billionaires, both at 34 years old, according to the Hurun Global Rich List.

Today Razorpay processes more than 30% of all internet payments in India. Over 10 million businesses use the platform. Annual transactions run into hundreds of billions of dollars.

The company is now working on moving its legal home from the United States back to India, preparing for an IPO in the Indian market. For two engineers from IIT Roorkee who once rode a motorbike to sell software to schools, that is not a small thing.

What You Can Take Away From This

The Numbers