Technology for MSMEs: The new solution provides businesses with an Escrow trustee, in partnership with Axis Trustee Services, who are vetted and on-boarded by RazorpayX. It also offers merchants an Escrow account to route funds they are receiving on behalf of end beneficiaries to ensure the right tax treatment and reporting.
Technology for MSMEs: Online payments solution company Razorpay’s neobank arm RazorpayX on Tuesday launched ESCROW+ solution to help merchants with smooth money transfers and avoid compliance issues as in certain industries, receiving funds in a current account is not an ideal solution for a business. This is because the entire money in the account doesn’t belong to the business.
These businesses either receive funds on behalf of others or operate under a partnership model in which funds from another business entity are in their current account to manage operations. This complicated money flow could lead to a foreseen compliance issue causing hefty penalties for businesses, the company said in a statement.
The new solution provides businesses with an Escrow trustee, in partnership with Axis Trustee Services, who are vetted and on-boarded by RazorpayX. It also offers merchants an Escrow account to route funds they are receiving on behalf of end beneficiaries to ensure the right tax treatment and reporting.
“With verticals such as gaming, co-lending, peer-to-peer lending, and marketplace & e-commerce facing hurdles in terms of compliance and payments, we wanted to extend a solution that will address their pain points while focusing on what we have always done – making money movement simpler, compliant, and worry-free,” said Ayush Bansal, Vice President and General Manager, RazorpayX & Razorpay Capital.
The ESCROW+ account, said company, is the second type of account that RazorpayX will be offering as part of its business banking suite, in addition to current accounts.
The solution initially will be available for businesses in gaming, marketplace & e-commerce, co-lending, and P2P-lending industries, and later will expand to other industries.
“Together, we are not only committed to ensuring compliance for our customers but also offering a seamless end-to-end money transfer automation directly from Escrow accounts,” said Deepa Rath, Managing Director & CEO, of Axis Trustee Services.
Launched in November 2022, RazorpayX has so far served over 45,000 businesses. In the three months since its beta launch, the service enabled 15 firms to bring Rs 350 crore in annualized run rate (ARR) to India. Additionally, it launched RazorpayX Digital Lending 2.0, a digital lending solution for NBFCs and fintech to assist them in complying with digital lending guidelines.
