Fintech unicorn Razorpay has acquired Ezetap in a cash-and-equity deal, marking its entry into the offline payments space.
Sources told that Razorpay has paid $150 million for the deal, of which $100 million will be cash payouts 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 a further $50 million in the offline payments provider to further grow the offline business, one of the people said on condition of anonymity.
The acquisition will help Razorpay offer an omnichannel payment solution, linking its online payment offerings with offline.
Ezetap’s team will join Razorpay and will manage its offline payments vertical.
“We believe that payment businesses will be a lot more omnichannel and we have seen that with the Unified Payments Interface (UPI),” Shashank Kumar, the cofounder and managing director of Razorpay, told. “So, after being on the online side all these years, offline was a big component for us. The consolidation will allow for 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 products while managing end-to-end money 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 disbursements (Razorpay Capital).
The acquisition will also help Razorpay better its card tokenisation stack, ‘Razorpay TokenHQ’, which it launched in October last year in association with card network majors Mastercard, Visa and RuPay.
Founded in 2011 by the current WhatsApp India head Abhijit Bose and Bhaktha Keshavachar, Ezetap offers point-of-sale terminals and solutions to offline merchants as well as a payments platform to help merchants provide loyalty and reward benefits to their customers.
At present, Ezetap processes over $10 billion in annual transactions through its platform, and has 500,000 point-of-sale touchpoints, including the likes of Amazon and BigBasket.
On the other hand, Razorpay’s payment gateway processes close to $80 billion in annualised transaction payment value.
“We will be exploring further integrations now around NFC (near-field communication) payments, as well as building loyalty programmes for our merchant partners in the near future,” Harshil Mathur, cofounder and chief executive of Razorpay, told. “Our payments business is breaking even and Ezetap has also been breaking even on an operational level. This made us choose Ezetap over competition.”
The acquisition further amps up competition between Razorpay and rival Pine Labs, which also forayed into the online payment gateway space through the launch of ‘Plural’ in October last year.
By December 2021, Pine Labs had also launched its own card-on-file tokenisation 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 payments 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) earlier this year for a payment aggregator licence.
Recently, even offline payments service provider, MSwipe said that it will launch its own payment gateway service, after it received RBI’s approval to operate as a payment aggregator.
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