Razorpay to Paytm: Fintechs realise real money may be in offline retail

Payment gateway startups moved fast to underpin Indian online commerce, and it was mostly a smart bet. But for higher growth, one that can explain mega fundraises, they have started to poke about in offline retail, a vaster market that is limping out of the pandemic.

The pitch is that they will set up payment solutions for both worlds: point-of-sale (POS) terminals or functionally similar devices at physical outlets and tech supporting various digital modes, including UPI. They are particularly wooing omnichannel consumer brands, which need to offer multiple payment options to shoppers across offline and online points.

Razorpay, PayU and Cashfree, which dominate ecommerce transactions, are among the startups hoping to onboard such retailers, said two executives aware of the developments.

The offline business, however, is operations-heavy: you need people on the ground to install and maintain payment machines. This could be a challenge for pure-play software players, which is why some are exploring acquisitions and strategic investments in POS providers. Razorpay, for instance, has held discussions on tie-ups with such companies.

“Possibilities around investments, acquisitions and marketing partnerships are being evaluated,” said the chief executive of a payments company. “The talks are still in early stages.”