PhonePe has discontinued its partnership with payment orchestration platform Juspay. The Walmart-backed digital payments platform said that it will opt for direct integration with merchants.
Of late, several large companies have received the Reserve Bank of India (RBI’s) nod to operate as payment aggregators. BharatPe got the license in January 2023, Google Pay in December 2023 and Amazon Pay in 2024. The RBI had cancelled the license for Paytm in November 2022, but the company in September this year said they would re-apply for it.
PhonePe had received the license in March 2023.
Many of these payment aggregators are now making their own payment orchestration systems.
A payment aggregator is a payment platform provider, enabling clients to accept payment methods such as debit cards, credit cards, UPI, bank transfers, digital wallets, and e-mandates. A payment orchestrator operates the platform which routes these transactions through the right aggregator, depending on higher success rates.
“As a payment aggregator, one of our core roles is to provide the best in class success rates to our merchants through our solutions. We are able to do it consistently for merchants directly integrated with us and hence have decided to not offer our solutions through any payment orchestration platform,” PhonePe said, in reply to FE’s query.
“Going forward, we would offer our solutions to merchants through direct integrations only,” it added.
Under direct integration, payment data is posted directly from the merchant’s server to the payment gateway’s server. This improves user experience and transaction speed.
Softbank-backed Juspay accounts for around 15% of PhonePe’s payment gateway volume, according to Entrackr. It is among the largest payment orchestration platforms in the country. As of March 31, its payment platform integration business accounted for around 88% of the company’s revenue.
This can be impacted if other payment platforms follow suit and end tie-ups with payment orchestration platforms.
However, Juspay has also acquired the license to operate as a payment aggregator in February this year. Soon, it may start competing with companies it was working with earlier, like RazorPay and PhonePe.