PhonePe: PhonePe ends pact with Juspay, stops third-party integrations for merchant payments

This will also allow PhonePe to offer an integrated payment experience to its merchants from origination of the transaction to the final settlement.

While PhonePe has been offering the direct integration service for quite some time now, going forward the company will stop all third-party integrations, a person in the know said.

The development was first reported by digital news publisher Entrackr.

Responding to ET’s queries, a PhonePe spokesperson confirmed the development.

“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. Going forward, we would offer our solutions to merchants through direct integrations only,” the spokesperson said.

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This comes at a time when a bunch of large payment aggregators have either built, or are building, their own payment orchestration systems in-house. Payment orchestration is a system through which multiple bank partnerships are managed through one payment gateway by an online merchant. The platform routes these transactions through the right aggregator depending on higher success rates.

“As platforms scale up they try to build complete control over the payment journey, hence payment orchestration gets built out eventually as any payment aggregator scales up,” said a founder of a payments startup which operates in the same space.

Softbank-backed Juspay is also expanding into the payment aggregation space, having recently secured the payment aggregator licence from the Reserve Bank of India. It could end up competing with the likes of Razorpay, PhonePe, Cashfree — brands it was servicing earlier.

On December 14, 2023, ET had written how Juspay was building a full-stack payment system to process payments for OCEN (Open Credit Enablement Network), and other business payment use cases. Juspay cofounder Sheetal Lalwani had told ET then that he would not directly compete with other payment aggregators.

“Over the years, we have collaborated and established a great working relationship with our PA partners for our payment orchestration platform…we will continue to work in this manner to make it a win-win for our merchants and PA partners,” he had said.