Razorpay acquires Bengaluru financial risk tech company TERA Finlabs

It is Razorpay's third acquisition in almost three years and follows its foray into Business to Business lending.

Fintech firm Razorpay has acquired TERA Finlabs, a Bengaluru-based startup that provides technology, risk and capital solutions to businesses, for an undisclosed amount.

TERA Finlabs, the Indian subsidiary of UK digital lender GAIN Credit, was launched in 2018 to expand its global footprint in digital lending.

Razorpay said in a statement it had acquired TERA Finlabs is aligned with its strategy of financially supporting MSMEs by building competncies in capital solutions, credit underwriting, and data-driven risk management.

It is Razorpay’s third acquisition in almost three years and follows its foray into the Business to Business (B2B) SME lending space with the launch of Razorpay Capital in 2019. Razorpay Capital provides business loans and instant settlements to meet liquidity and cash-flow challenges of SMEs.

In 2018, Razorpay acquired Thirdwatch (an Artificial Intelligence-driven company that helps reduce Return-to-Origin (RTO) fraud losses in e-commerce) in 2018 and Opfin (a payroll management software company) in 2019. Razorpay has reported a 40-45 per cent growth, month-on-month.

The company has achieved $40 Bn TPV (Total Payment Volume) and aims to further solidify its position as one of India’s largest full-stack fintech companies Razorpay currently powers payments for over eight Mn businesses including the likes of Facebook, Airtel, Ola, Zomato, Swiggy, Cred, ICICI Prudential among others and is all set to reach 200 million customers by 2021.

Harshil Mathur, chief executive officer (CEO) and co-founder of Razorpay, said India banks are wary of providing business loans to startups and small businesses. Razorpay aims to solve these cash flow challenges. “The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management and we see immense value in TERA Finlabs.”

Small businesses have struggled to arrange short-term funding to meet expenses, as their lenders have responded cautiously. To tap that demand, Razorpay has products that provide instant settlements and solve cash flow problems.

Pradeep Rathnam, CEO and co-founder of TERA Finlabs, said MSMEs were an underserved market. “There couldn’t have been a better time than now for us to join hands with Razorpay and its technological capabilities to support the MSME segment,” said Rathnam.