The 'delusional' optimist: Harshil Mathur on Razorpay's journey, challenges

Lunch with BS: Mathur takes Ajinkya Kawale and Shivani Shinde through the payment aggregator's journey, its challenges, his vision for it, and where his optimism comes from

“There are many things to pick from, but one can only choose a few,” says Razorpay cofounder Harshil Mathur, flipping through the menu at the chic pan-Asian restaurant, By the Mekong, in Mumbai. It is evident that he’s not referring to the food choices before him.

 

Gazing out from the 37th floor of the St Regis Mumbai, he takes in a neighbourhood he once navigated as a 20-something fintech founder over a decade ago, setting up meetings with bankers for potential partnerships.  

This was when, amid the clutter of problem statements to choose from across hot sectors — ecommerce, ride hailing, crowdfunding — Jaipur-born Mathur and his cofounder, Shashank Kumar, zeroed in on the one force that could virtually power every enterprise: Digital payments. 

 

This was long before ‘fintech’ became mainstream, and even before the Unified Payments Interface, or UPI, India’s now-ubiquitous real-time payments system, existed. The country was just stepping into its digitisation drive. 

Before we get talking, and once he’s done scanning the menu, we move to the second order of business: Picking an Indo-Chinese speciality. We decide to go vegetarian.  

For appetisers, Mathur’s favourite is a hot-and-sour soup; we order a lemon corn vegetarian variant. We also ask for a batch of steaming hot edamame truffle dumplings, and a radish cake on the side.

 

The main course will later arrive as a hearty bowl of udon noodles in a fiery dragon chilli sauce. This will be accompanied by a stir-fried portion of Asian green veggies glossed with a hot garlic dressing.  

Mathur prefers to cool the anticipated wave of spice with a chilled glass of Mumbai masala soda. 

Not listed on the menu, however, is the one thing he voraciously consumes: A hearty dose of “delusional optimism”, the startup head’s favourite staple, and a phrase he repeats more than once over the afternoon. 

“There is delusional optimism in every startup. Even if nothing is going well, there is a sense of optimism that we will do it,” he says. “But, did we imagine we would become a multi-billion dollar business with 3,000 people? Of course not,” he says, his face lighting up.  

The question, though, is: Is this mindset limited to the founders, or does it shape everyone who joins the fintech? Mathur turns to an old memory for the answer.  

The company was hosting one of its earliest sales offsites. In those days, the incumbents were pushing payments volumes several notches above Razorpay’s. In his address, the then head of sales reminded the team that despite their progress, they still couldn’t match the industry’s heavyweights.  

“That irked me,” says Mathur. “He wasn’t wrong since he was the sales head and more structured (in thoughts). It was my delusional optimism that we would do it, even if I didn’t know how,” adds the 34-year-old who does not believe in setting small goals. The result? Razorpay is today among the country’s largest payments aggregators in a space that includes PayU, BillDesk, Cashfree Payments, and Infibeam Avenues, besides others. 

The ‘delusional optimism’, he clarifies, “isn’t random optimism”. True optimism, he says,  must be backed by a superior product, a solid team, and innovation that runs ahead of the market even if scale remains distant during early days. That, he defines, can be the biggest advantage for any startup. 

Mathur seasons our conversation with easy anecdotes with the kind of flourish writers and readers would relish. By now, we are halfway through our soup, which is getting cold by the minute. 

 

The staff restores the spread with the dumplings and the radish cake, which is surprisingly flavourful.  So, what’s the next thing on the burner for us to pick up? Competition and regulation? He meets both without any hesitation. 

Mathur recounts the Yes Bank moratorium, a moment when Razorpay — then powering merchants through the bank — woke up to find years of progress suddenly at risk. 

“We sat down, we figured out what to do, we called every single customer who was impacted, and told them what the issue was, and how we were dealing with it,” he recalls. That testing time, Mathur believes, gave the company an opportunity to develop a deeper relationship with its customers.  

Payments is akin to a utility service like electricity. Its efficiency is invisible, but the moment the system goes down, everybody is up and demanding it be restored immediately.  

In December 2022, for example, the banking regulator paused the fintech from onboarding new merchants. Razorpay could still serve its existing clients, but the restriction put a speed bump on its rapid growth route.  

It was a year before the Reserve Bank of India (RBI) lifted the pause.  

Mathur recalls with pride that during the embargo period, close to 100,000 merchants still signed up, and completed their KYC (know your customer) requirement and due diligence, despite knowing that Razorpay couldn’t serve them yet. After the RBI’s approval, about 80,000 of them converted into clients, he says.  

“There is no startup that doesn’t have challenges,” he says. “What makes a startup successful is its ability to be agile during those challenges. That’s the reason we are successful today.” 

The company hopes to carry that agility to international markets. It has set up shop in Singapore and Malaysia through the acquisition of Curlec. 

 

The main course of noodles and vegetables arrives, as does the promised next leg of our conversation on regulation and competition. 

The intensity of the competition has decreased from the time they launched, Mathur says. “When we started, the space 

was unregulated. Anyone could get into it; so there were 100-200 players. Now, we require about 60 licences.” 

Payments is a tech problem; finance is an enabler. Mathur continues to stand by it. In this case, then, is there a need for regulation to catch up with tech innovation?  

Mathur’s short answer is: It’s clearly not as easy. He believes that the central bank’s approach is right: “A regulator cannot frame rules for something that does 

not exist.” 

One, regulators are tasked with protecting users, while also promoting innovation. Two, startups are pushing ahead at breakneck speed, even as they work to build the right safeguards, he says. It’s like a tug of war. 

 

“When you begin, you see regulations as some kind of a ghost,” he explains. “That is a myopic approach, and we have learnt from it...  

If you want to build at scale, you must expect regulations.” 

His view is that fintech founders can pre-empt regulation and avoid major disruptions, while helping shape the rules through a proactive approach.  

Regulators like the RBI have, after all, shaped the Indian fintech ecosystem, opening up commercial opportunities for companies through separate licensing regimes such as payments aggregation for cross-border payments.  

Mathur believes initiatives like question-answer sessions with the regulator every few months further present opportunities to

work with it.  

Now, coming to the IPO question. “Around 2028,” he says, candidly. “It’s a natural, logical step. Every founder I’ve met who has gone public says life’s much better than being private.” 

An IPO is also a sign that the company can sustain itself independently. But Mathur’s vision for Razorpay is that it become an institute. “... which means that a company can run without the people that started it,” he says. 

That is, however, still some time away. For now, he is busy with the latest challenge on the block: Artificial intelligence (AI). It is something he’s driving himself. “I can leave everything else to my leadership (team), and not get into day-to-day things like closing a client or quarterly results,” he says. But, this one “is so urgent, critical, and life threatening that it has to be done right.” So, he says, he cannot leave it to somebody else. 

 

He takes us deeper into it, revealing that he has a two-member team — people who are “really good at AI” — reporting to him directly on everything related to it: Sourcing problems, building solutions, and deploying them.  

The team’s name sounds like the title of a sci-fi: AI Hacker Pod. 

 

That’s not all. Razorpay is building a culture of flipping the script on hackathons. Instead of developers, company leaders also have to use AI to build solutions. At Razorpay, the chief marketing, financial and human resources officers, and even the legal head, have to prove their mettle by developing something with AI.  

“Teams that use AI will exceed people who don’t,” he says. “We are producing 30-40 per cent more output in the same engineering team because of AI.” 

On the personal front, the big change is that he now takes a day off: Sunday. “I also married about two years ago,” he says, breaking into a smile.

 

We toy with the idea of ordering dessert, but abandon it since the appetisers and mains have done a fine job — as has, it appears, Mathur whose “delusional optimism” has realistically allowed a utilitarian startup idea to scale.