According to three sources familiar with the development, India’s leading digital payments platform PhonePe will be discontinuing its partnership with payment orchestration platform Juspay.
This move is carried out as PhonePe has decided to offer payment gateway solutions through direct integrations. One of the sources said on condition of anonymity, “The move is aimed to establish a direct and end to end relationship with merchants, instead of any third party platform like Juspay.” PhonePe has started informing its large customer base through emails and alerts.
An email sent by PhonePe to its customers reads, "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.”
A PhonePe spokesperson said, “We are not working with any third party routing platform. We will only offer direct integration to our customers.” Furthermore, SoftBank-backed Juspay provides payment processing technology, supporting offline payments with flagship products which include Juspay Safe, HyperSDK, Express Checkout, and UPI in a Box.
According to sources, around 15 percent of PhonePe’s payment gateway volume is currently being processed through Juspay. There are the likes of Razorpay and Cashfree who also have orchestration platforms. However, they are smaller compared to Juspay.
The same person who had requested anonymity stated, "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."
Apart from PhonePe, it is said that several payment gateway businesses are considering moving from the orchestration platform. Accounting for over 88% of its total revenue in the fiscal year ending March 2024, this shift could definitely impact Juspay’s “payment platform integration.
Juspay has also confirmed the same stating, “PhonePe has communicated that they are discontinuing engagement with all Orchestration platforms, including Juspay. There are no such discussions underway, and any speculation is unfounded.”
If we look at the global front, standalone orchestration platforms have not been able to emerge as a significant business. For instance, if we look at the markets like the US, payment majors such as Stripe and Adyen have integrated payment orchestration features into their platforms. This has choked the demand for standalone solutions. Furthermore, Juspay has demonstrated that orchestration platforms can work. However, it will be interesting to see how it navigates challenges, going forward.
