Fintech unicorn Razorpay has acquired TERA Finlabs, a consumer credit and risk assessment start-up. Launched in 2018, TERA Finlabs is an Indian subsidiary of a UK-based digital lender, GAIN Credit.
The acquisition comes against the backdrop of Razorpay’s foray into the SME lending space (small and medium-sized enterprises) in 2019. The fintech company launched Razorpay Capital to address SME liquidity and cash flow issues , offering instant settlements and business loans.
TERA Finlabs has designed personalized credit products to make consumer loans benefit both lenders and customers. The main advantage of TERA is its AI-powered risk and loan management platform. This acquisition will help Razorpay strengthen its capabilities in credit underwriting, data-driven risk management and capital solutions.
Harshil Mathur, CEO and Co-Founder of Razorpay, said: “The TERA FinLabs team has exceptional industry knowledge in credit underwriting and risk management and we see immense value in the core capabilities of TERA Finlabs lending infrastructure. Together, we look forward to solving the new working capital issues faced by MSMEs. “
TERA will bring its entire technology stack, risk management capabilities and integration solutions to create and activate a line of credit for Razorpay’s merchant network. Razorpay Capital and TERA Finlab plan to meet the credit needs of more than 10,000 companies in India by next year.
In India, banks are reluctant to provide business loans to start-ups and new SMEs because of the risks associated with new business models for start-ups. Razorpay Capital aims to provide an accessible lending solution to these small, underbanked businesses. Many fintech start-ups like CapitalFloat, LendingKart, Paytm and MobiKwik have also targeted this market opportunity. The Covid-19 pandemic has had a huge impact on small and medium-sized businesses, reducing their income and pushing them to adapt to a digital world.
Pradeep Rathnam, co-founder and CEO of TERA Finlabs, said: “Over the past 16 months, SMEs have started to show rapid growth with their digital adoption. And that has created an opportunity for significant disruption in the lending industry – integrated credit is one of those innovations that I’m sure will transform this space.
Founded by Mathur and Shashank Kumar in 2014, Razorpay claims to currently experience 40-45% month-over-month growth and a TPV (total payment volume) of $ 40 billion. Prior to TERA Finlabs, Razorpay acquired Thirdwatch, an artificial intelligence-based company that helps reduce return-to-origin (RTO) fraud losses in e-commerce, and Opfin, a management software company. wages.