Fintech Unicorn Razorpay Acquires POS Provider Ezetap
In a cash-and-equity transaction, fintech unicorn Razorpay acquired Ezetap, launching it into the offline payments market.
In exchange for the acquisition, Razorpay has paid $150 million, of which $100 million would go to shareholders of Ezetap in cash. After the acquisition, Razorpay may invest an additional $50 million in the provider of offline payments to help it expand its offline operations.
Through the integration of its online and offline 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 Razorpay co-founder and managing director Shashank Kumar, “We believe that payment firms will be much more omnichannel and we have seen that with the Unified Payments Interface (UPI). So, despite spending so much time online, offline was still a significant part of our strategy. The combination of all payment flows, both online and offline, under one technology stack will enable us to provide a better user experience”.
The purchase will also assist Razorpay in improving its card tokenization platform, “Razorpay TokenHQ,” which it introduced in October of last year in collaboration with major card networks Mastercard, Visa, and RuPay.
Abhijit Bose, the current head of WhatsApp India, and Bhaktha Keshavachar created Ezetap in the year 2011. Ezetap offers point-of-sale terminals and solutions to offline retailers as well as a payments platform to support merchants in offering loyalty and incentive programs to their customers.
Ezetap currently processes more than $10 billion in annual transactions through its platform and has 500,000 point-of-sale touchpoints, including companies like Amazon and BigBasket.
On the other hand, the annualized transaction payment value processed through Razorpay’s payment gateway is close to $80 billion.
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.”
By December 2021, Pine Labs had also introduced Plural Tokenizer, a card-on-file tokenization solution for the market.
In addition to expanding into other customer loyalty and incentives categories, Razorpay will do so through the purchase. In April of last year, Pine Labs paid $45 million to purchase Kuala Lumpur-based Fave, a platform for loyalty and cashback payments.
Pine Labs and Razorpay were two of the first Indian fintech companies to get in-principle permission for a license as a payment aggregator from the Reserve Bank of India (RBI) early this year.
Even an offline payment service provider, MSwipe, recently announced that after receiving permission from the RBI to function as a payment aggregator, it would start its own payment gateway service.