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Fintech startup Razorpay on Monday said it has acquired TERA Finlabs, a Bengaluru-based startup that provides technology, risk and capital solutions to enable embedded financing solutions for businesses.

TERA Finlabs is an Indian subsidiary of UK-based digital lender, GAIN Credit.

The company, however, did not disclose the financial details of the transaction.

“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,” a statement said.

Razorpay Capital along with TERA Finlab’s technology capabilities will be able to service the credit needs of over 10,000 businesses in India by next year, the statement said.

Razorpay had forayed into the business-to-business (B2B) small and medium-sized enterprises (SME) lending space with the launch of Razorpay Capital in 2019.

This is Razorpay’s third acquisition in less than three years. Previously, Razorpay had acquired Thirdwatch – an Artificial Intelligence-driven company that helps reduce Return-to-Origin or RTO fraud losses in ecommerce in 2018, and Opfin – a payroll management software company – in 2019.

Razorpay CEO and co-founder Harshil Mathur said in India, banks are wary of providing business loans to startups and new SMEs due to the risks attached to new revenue models of startups.

“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. 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 that they can digitally transform and disrupt,” he added.

Mathur pointed out that the team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk management, and Razorpay sees immense value in TERA Finlabs’ core lending infrastructure capabilities.

“MSMEs were an underserved market for a long time. However, in the last 16 months, they have started to show rapid growth with their adoption of digital. And this has created an opportunity for significant disruptions in the lending sector – Embedded Credit is one such innovation that I’m certain will transform this space,” Pradeep Rathnam, co-founder and CEO of TERA Finlabs, said.

TERA Finlabs’ robust end-to-end platform will enable new businesses to build a scalable and profitable credit business, he added.

Razorpay – which is backed by investors like GIC, Tiger Global, Sequoia Capital India and MasterCard – has been witnessing a 40-45 percent growth month-on-month. It has achieved $40 billion TPV (Total Payment Volume) and currently powers payments for over 8 million businesses, Airtel, Ola, Zomato, Swiggy, Cred, ICICI Prudential and others. It aims to reach 200 million customers by 2021.