Indian payments and fintech firm Razorpay has acquired TERA Finlabs, a startup involved in providing businesses with embedded financial solutions.

The news was announced by Razorpay through a statement on Monday, wherein the company said, “This acquisition of TERA Finlabs is aligned with Razorpay’s strategy of financially supporting as many MSMEs as possible by building core competencies in capital solutions, credit underwriting and data-driven risk management capabilities. TERA will provide its entire technology stack, risk management capabilities and onboarding solutions to create and enable a credit line for Razorpay’s merchant network.”

Razorpay Capital was launched in 2014, and has become one of the industry leaders in the ever-growing Indian fintech market. It facilitates payments through a number of gateways, from UPI, Netbanking, and Credit and Debit Cards, and that too, with almost all the major banks across the country.

Meanwhile, TERA Finlabs is a Bengaluru-based subsidiary of GAIN Credit, a UK-based digital lender. It provides AI-based risk management softwares, along with customized credit offerings, to its clients, with the aim of making lending more easily reachable for consumers, while also increasing profits for lenders.

Together, the two firms plan on providing their combined services to fulfill the credit requirements of more than 10,000 Indian businesses by next year.

The financial details of the takeover, however, have not yet been revealed. Nevertheless, Razorpay did say that this latest transaction marks its overall third acquisition in a period of less than three years. It had previously taken over Thirdwatch, a company that bases itself on Artificial Intelligence (AI) so as to deliver solutions that help e-commerce firms reduce their return-to-origin fraud losses, back in 2018. Then, in 2019, it acquired Opfin, a company dealing in payroll management softwares.

Harshil Mathur, the Co-Founder and CEO at Razorpay, expressed his views on the acquisition, saying that Indian banks have been rather wary of providing financial support to startups and small-scale or fledgling SMBs, mostly owing to the risks that come along with their revenue models. He further said, “Through our lending platform, Razorpay Capital, we have been striving to solve these cash flow challenges, making it easier for businesses to get finance and grow,” Mathur said. “And progressing in that journey, an acquisition such as this fits perfectly with our vision of developing tailor-made, affordable credit solutions for the underbanked small businesses across industries so they can digitally transform and disrupt.”

Mathur further added that the team at TERA is equipped with a “wealth of domain knowledge,” especially when it comes to risk management and credit underwriting ventures. They also have a strong core lending infrastructure.

Back in April, Razorpay had raised funds worth $160 million through its Sefies E financial round, which had valued it at $3 billion, up from around $1 billion in October last year.