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India has made digital payments as simple as scanning a QR code. The next opportunity lies in using payments to connect consumers with relevant financial products and help businesses address the challenges of growing online. At TechSparks 2026, Deep Agrawal, Head of Payments at PhonePe, and Khilan Haria, Chief Product Officer at Razorpay, joined Madanmohan Rao, Research Director at YourStory, for a panel discussion titled ‘Beyond transactions: Solving financial inclusion with contextual money’. The discussion covered how payments are becoming part of a wider digital experience, from improving transaction success rates to helping merchants attract and retain customers. Beyond payments: What do users and businesses need? Agrawal said digital payments have become part of everyday life for more than 500 million UPI users, who use the system to send money to friends, pay electricity bills, shop online, and make payments at stores. However, the next challenge is to bring another 500 million people into the digital payments ecosystem while helping existing users access financial products beyond payments. For businesses, accepting payments is only the first step. Haria said Razorpay’s experience working with millions of small and medium businesses has shown that merchants face several challenges once they have the infrastructure to collect payments, including attracting customers, improving conversions, and encouraging repeat purchases. “Over the years, we’ve learned as we’ve worked with millions of these SMBs. The larger problem sometimes goes beyond payments. Payments is what I now call the core infrastructure that SMBs need to set up their digital commerce or online business. But beyond that, the struggle most businesses go through is ‘how do I get demand? How do I maximize retention? How do I uplift conversion?’” he said. Razorpay initially addressed some of these requirements through products for payroll, salary disbursements, and vendor payments. However, conversations with merchants showed that businesses needed support beyond managing money. They also needed help building and growing their online operations. Haria said helping more small businesses establish an online presence and succeed in digital commerce could contribute to the growth of India's digital economy. Using transaction data to improve payments Every digital transaction generates information that payment platforms can use to better understand customer needs, identify risks and improve the payment experience. Haria discussed Razorpay's transaction-led foundation model, Vulcan 5.2, which is designed to understand what he described as the language of payments. According to Haria, each transaction contains nearly 3,000 attributes. By analyzing these, the model can predict missing information, assess the likelihood of fraud, and determine whether a transaction is likely to convert. This can help businesses identify suspicious transactions, reduce risks, and improve the chances of converting potential buyers into paying customers. Haria explained that conventional machine learning typically involves identifying patterns, developing hypotheses, and training models around them. Transformer-based models, however, can identify smaller patterns that may be difficult to detect through conventional approaches. At PhonePe, machine learning is being used to make payments more reliable. Agrawal discussed an internal model called Kill Switch, which predicts whether a transaction is likely to succeed. It considers factors such as bank response times and recent transaction success rates to assess the likelihood of a successful payment. “Consumers don't really care whether a transaction fails. What they care about is it should not go into a pending state,” Agrawal said. “In this model, we tell the customer even before they initiate the transaction that your bank is probably down, come back and do the transaction later.” Agrawal said this approach helps build trust and encourages users to return to the platform. Transaction context can also help payment platforms recommend financial products based on customer needs. For example, a customer booking an international flight through PhonePe may benefit from a travel insurance recommendation. For someone who travels only within India, a bus booking may be more relevant. Agrawal said PhonePe uses guardrails in its algorithms to avoid recommending products that are not relevant to individual customers. Razorpay: From AI assistants to autonomous agents Razorpay is also using AI to help merchants manage everyday business operations. Haria discussed two initiatives, Ray and Agent Studio, designed to make business support and automation more accessible. Ray is an AI assistant that functions as an account manager for businesses. While larger customers typically have dedicated account managers, providing similar support to smaller merchants has been difficult to scale. Ray aims to address this gap by allowing merchants to explain their problems through WhatsApp voice notes or messages in plain English, without navigating complex dashboards and consoles. Agent Studio goes further by allowing businesses to use autonomous AI agents for specific tasks. These include recovering abandoned shopping carts, representing merchants in disputes, confirming cash-on-delivery orders and verifying delivery addresses. Haria said Razorpay had 12 agents live, with 600 brands using them, including some that use multiple agents. The company plans to increase the number of agents to 100 over the next six months and eventually reach 100,000 businesses using them. PhonePe: Bringing more users into digital payments Agrawal also discussed how AI-powered tools could help bring more people into the digital payments ecosystem. He highlighted the challenges faced by feature-phone users, many of whom live in smaller towns and rural areas or are beginning to participate in the formal economy. Feature phones have several limitations, including the inability to receive software updates over the air. Users may also need assistance with processes that are familiar to more digitally experienced consumers. To address these challenges, PhonePe has introduced voice bots that help users with tasks such as linking bank accounts and setting up UPI PINs. PhonePe is also working to make it easier for micro and small merchants to start selling online. Building a website using platforms such as Shopify or WooCommerce can be expensive and complicated for young entrepreneurs. PhonePe's SmartPages product aims to simplify this process by allowing merchants to create a checkout page, list products, and start selling without hiring a web developer or subscribing to a more complex platform. India's digital payments ecosystem has made everyday transactions easier for millions of people. The next opportunity, according to Agrawal and Haria, lies in using that infrastructure to address a wider range of consumer and business needs. From improving payment reliability and providing relevant financial products to helping merchants manage operations and reach customers, contextual payments and AI could extend the role of payment platforms beyond transactions.
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