These companies are targeting the export-import payments opportunity as their next major growth frontier, even as venture-backed startups like PayGlocal, Skydo and Xflow have raised capital from global investors to build exclusively for the sector.
This comes at a time when generating revenue from core payments business in India is under strain with Unified Payments Interface (UPI), the most popular domestic payment mechanism, continuing to remain free under the federal mandate as New Delhi seeks to cut down on paper money.
“Our cross-border payments business has grown 700%, currently we get around 10 to 15% of our overall revenues from international payments,” said Reeju Datta, cofounder, Cashfree. Bengaluru-based Cashfree received the cross border payments licence from the Reserve Bank of India only in 2024.
Similarly, payment giant Razorpay said that it is focusing on global merchants who are selling in India and want to offer the full-stack payments feature to their Indian consumers.
Harshil Mathur, chief executive officer, Razorpay said that the company works with global giants like Airbnb. Any Indian trying to book an Airbnb in any country worldwide will be paying via Razorpay, he said.
“Our team worked for six to eight months to take this feature live on Airbnb, they had many customer requirements and we could fulfil all that,” Mathur told ET.
On February 17, Razorpay announced that they have partnered with AI-coding platform Replit for all their India payment requirements.
Similarly Anirban Mukherjee, chief executive officer of PayU, which is backed by Dutch investment group Prosus, has reported “strong momentum” on its cross-border business. The company is focusing majorly on this segment as the future growth opportunity working with few of the large global brands to support their payment needs.
Challenging Banks
With these large payment firms focusing on cross-border payments, the idea is to grab market share from banks who dominate the sector. With a growing number of ecommerce-first Indian brands selling products and services outside India, the opportunity in cross-border payments is opening up. Industry insiders said. The central bank is also trying to push banks to modernise their cross-border networks to keep the legacy players relevant in these changing times. On April 9, RBI issued fresh guidelines to banks to speed up inward cross-border payment settlements.
“Software services being sold by Indians to the world, global ecommerce from India and AI-led services are few of the major markets that are opening up and cashfree is going after those areas,” Datta said.
AI-related businesses could be as much as 70% of the overall cross-border flows, he added.
Another segment being targeted by these players are Indians settled abroad trying to make payments in India. The use cases are myriad from ordering groceries for parents to buying medicines, to travel bookings.
A founder who operates in this sector told ET that unlike domestic payments where margins are very thin, exporters and global businesses are ready to shell out a higher charge for payment settlements but they need very high uptime, no payment failures and a fully compliant payment solution.
“More than the pricing conversations here are around tax compliance, up-time of the services and customised products, so even if volumes are lower the revenue generation is higher,” the founder added.
While there is no doubt that the Indian export-import market is growing very fast, RBI has given licences to 68 players to operate as payment aggregators and out of that more than 30 players have the cross-border licence as well, resulting in a lot of clutter in the space.
The likes of Skydo, PayGlocal, Xflow are focused on the cross border space only. They have received investments from large funds like Peak XV Partners, Elevation Capital, PayPal and General Catalyst.
“A new-crop of startups were getting built in India to focus on cross-border, but with the existing players getting aggressive these early-stage startups could feel margin pressure,” said a senior executive at a digital payments firm.
Razorpay’s Mathur believes that when it comes to large global brands prominent domestic payment brands have an advantage. They need very dedicated services around tax compliance, enabling all payment formats from auto-pay to recurring payments to cards, which means brands often prefer to work with large players, he added.
Additionally with the crisis in the Gulf countries raging on, many cross-border startups focused on goods exports are suffering from delays in payment schedules which have impacted their volumes.