PhonePe Ends It’s Partnership With Payment Aggregators Such As Juspay, Says ‘Conflict Of Interest’

PhonePe, the digital payments company, is apparently ending all third-party partnerships and integrations with payment aggregators, including Juspay, a SoftBank-backed payment orchestration platform.

PhonePe has informed its merchants that direct integrations will now be available for all of its payment methods, according to media. Payment orchestration platforms allow online merchants to handle various bank agreements with a single payment gateway.

With this, the digital payments giant will now seek to build a “direct and end-to-end” relationship with merchants, reducing its need on third parties such as Juspay. Discontinuing such cooperation will also allow PhonePe to own the whole value chain, from transaction origination to ultimate payment.

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According to Economic Times, citing a letter sent by PhonePe to merchants, the fintech major’s decision to cut ties with third-party players is motivated by the desire to create a full-stack payments service with “better end-to-end control over transaction success rates for its merchant partners”.

In the letter, PhonePe also stated that many of these third-party players have become payment aggregators, resulting in a “conflict of interest”.

“We do not cooperate with any third-party routing platforms. “We will only provide direct integration to our customers,” a PhonePe official informed Entrackr.

According to insiders, roughly 15% of PhonePe’s payment gateway volume is being processed through Juspay, which might have a direct impact on the payment orchestration platform’s business.

“This is a big amount (total payment value, or TPV) for Juspay. If other payment gateways follow PhonePe’s lead in building merchant ties, Juspay may lose a large percentage of its revenue, according to one of the sources.

A Juspay spokeswoman told ET that PhonePe’s decision to end its third-party cooperation will have a “negligible impact” on the payment orchestration platform’s operations.

The development occurs at a time when fintech businesses across the board are aggressively expanding their capabilities, resulting in overlap with players they previously served. This is primarily due to the Reserve Bank of India’s (RBI) giving payment aggregator licences to an increasing number of businesses.

Furthermore, many payment aggregators have adopted or are developing in-house payment orchestration systems to handle the whole value chain of the user journey.

At the center of it all is India’s burgeoning fintech business, which is expected to be worth $2.1 trillion by 2030.