PhonePe, the Walmart-backed company, is shifting to a model focused on direct integrations with merchants and ending its partnership with Juspay. This move is designed to streamline its payment processes and offer a complete end-to-end service. By controlling the entire payment journey—from transaction initiation to settlement—PhonePe will no longer depend on third-party platforms. Sources cited by economictimes.indiatimes.com revealed that while PhonePe has already been offering direct integration services, it plans to phase out third-party collaborations entirely.
PhonePe shared two main reasons for this change with its partners. First, the company aims to provide a comprehensive payment service stack, which would give them greater control over transaction success rates. Second, PhonePe views third-party payment orchestration platforms increasingly acting as payment aggregators, which could lead to a potential conflict of interest.
A spokesperson from PhonePe explained that the company’s priority is to ensure optimal transaction success rates for merchants, which they consistently achieve through direct integrations.
In response, Juspay emphasized its continued work with merchants to provide various payment solutions, including checkout, tokenization, analytics, and payment routing. A Juspay spokesperson reassured that the decision would not significantly affect its operations, and existing merchant relationships would remain intact.
This shift comes as payment aggregators are increasingly developing in-house payment orchestration systems, allowing online merchants to manage multiple banking partnerships through a single gateway. These systems optimize transaction routing based on success rates.
Juspay is also expanding into payment aggregation, having recently obtained a license from the Reserve Bank of India. This positions the company to compete directly with other players such as Razorpay, PhonePe, and Cashfree.
In December 2023, Juspay announced plans to create a full-stack payment system to support initiatives like the Open Credit Enablement Network (OCEN) and other business applications. The company stated its focus would be on collaboration with payment aggregator partners, aiming to build mutually beneficial partnerships for merchants and payment providers.
