Exclusive: PhonePe ends ties with Juspay and other third-party routers

Digital payments platform PhonePe has decided to discontinue its partnership with payment orchestration platform Juspay, according to three sources familiar with the development.

PhonePe will now offer payment gateway solutions through direct integrations. “The move is aimed to establish a direct and end to end relationship with merchants, instead of any third party platform like Juspay,” one of the sources said on condition of anonymity.

PhonePe has started informing its large customers through emails and alerts. Entrackr has reviewed a copy of email sent to several merchants.

"Based on these considerations, we have decided to offer our payment gateway solutions through direct integrations only. As India's leading digital payments company, PhonePe is committed to bringing innovative products faster to our merchants, and we believe we will be able to do so more effectively when our solutions are directly integrated with merchants,” reads an email sent by PhonePe to its customers.

Confirming the development to Entrackr, a PhonePe spokesperson said, “We are not working with any third party routing platform. We will only offer direct integration to our customers.”

SoftBank-backed Juspay provides payment processing technology, supporting offline payments with flagship products like Juspay Safe, HyperSDK, Express Checkout, and UPI in a Box.

According to sources, around 15% of PhonePe’s payment gateway volume is currently being processed through Juspay. Razorpay and Cashfree also have orchestration platforms, but they are smaller compared to Juspay.

"This is a significant figure (total payment value or TPV) for Juspay. If other payment gateways follow PhonePe's lead in strengthening relationships with merchants, Juspay could potentially lose a significant portion of its business," said the person mentioned earlier in the story.

PhonePe has pulled the plug from the Juspay ecosystem, and we learnt that several payment gateway businesses are considering moving from the orchestration platform. This shift could definitely impact Juspay’s “payment platform integration” biz, which accounted for over 88% of its total revenue in the fiscal year ending March 2024.

Juspay also confirmed the development and said, “PhonePe has communicated that they are discontinuing engagement with all Orchestration platforms, including Juspay.” Addressing concerns about potential pullouts from other payment gateways, the firm added, “There are no such discussions underway, and any speculation is unfounded...”

Globally, standalone orchestration platforms have not emerged as a significant business. In markets like the US, payment majors such as Stripe and Adyen have integrated payment orchestration features into their platforms, choking the demand for standalone solutions. So far, Juspay has demonstrated that orchestration platforms can work, but it will be interesting to see how it navigates challenges.