Payment gateway provider Razorpay has launched ‘Optimizer,’ an AI-powered payment routing system designed to combat transaction failures and boost transaction success rates. This innovative platform has the potential to save businesses from annual losses of over ₹7,000 Crores due to transaction failures.
Razorpay Optimizer employs artificial intelligence (AI) and machine learning (ML) to analyze over 2 million data points across 300 parameters from past payment transactions. It uses this data to determine the optimal Payment Gateway (PG) for each transaction in real time. By doing so, it significantly reduces the number of failed transactions caused by server downtime or service degradation among any PG. This approach helps businesses not only avoid substantial transaction failure costs but also increase revenue by up to 10%.
In India, digital payments experienced a significant growth of 13.24% in FY’23, according to the RBI Index. However, Indian businesses still face a 30% revenue loss due to failed transactions. Failed transactions often lead to customers abandoning not only the product but also the entire website. Approximately 33% of these failed transactions are never retried.
Various factors can contribute to transaction failures, including network errors, incorrect OTPs, authorization failures, server downtime, and risk assessments, among others. When businesses manage multiple payment gateways, integration and maintenance costs rise, leading to lower success rates and customer drop-offs. Compliance and regulatory issues further complicate the process.
Razorpay Optimizer aims to address these challenges by empowering businesses to make better payment routing decisions, ensuring consistently high transaction success rates, reducing integration efforts, saving time and resources, and extending optimized-for-cost routing decisions. The platform integrates with over 100 payment integrations across Payment Aggregators, Payment Gateways, UPI, Banks, and other payment methods.
Khilan Haria, SVP & Head of Payments, Product at Razorpay, said, “Optimizer is born from our relentless payment innovation, leveraging insights from one billion+ transactions. Powered by AI and advanced Machine Learning, we’re not just meeting today’s needs; we’re creating a future-ready payment infrastructure for India that can handle a scale from 5,000 transactions per second (TPS) to 10,000 TPS daily by 2024.”
During the beta phase of its launch, Pavan Divakar, Vice President of Engineering at Homelane, commented, “Optimizer enabled us to work with 4-5 multiple gateways, each configured for various payment modes, improving checkout unification. Dynamic routing allowed us to set, edit and update transaction logic on various payment gateways based on continuous monitoring of gateway performances, and save money where we could.”
Razorpay aims to facilitate ease of business by providing efficient and scalable solutions. Looking ahead, the company plans to automatically enable all innovations on the Optimizer platform, ensuring businesses benefit seamlessly from advancements without the need for technical coding or manual updates.
