Moving forward, the Walmart-backed firm will focus on direct integrations with merchants to streamline its payment processes and provide an end-to-end service. This shift aims to enable PhonePe to handle the entire payment journey, from transaction initiation to final settlement, without relying on third-party platforms. According to a source familiar with the development cited by economictimes.indiatimes.com, the company has already been offering direct integration services but will now phase out third-party partnerships altogether.
In a communication to its partners, PhonePe highlighted two primary reasons for the change. First, it aims to deliver a full-stack payment service, giving it greater control over transaction success rates. Second, it views third-party payment orchestration platforms increasingly acting as payment aggregators, which it considers a potential conflict of interest.
A PhonePe spokesperson explained that their priority is to ensure optimal transaction success rates for merchants, and they achieve this consistently through direct integrations.
Juspay, meanwhile, issued a response emphasising that it works directly with merchants to provide various payment-related solutions, including checkout, tokenization, analytics, and payment routing. A spokesperson from Juspay noted that this decision is unlikely to significantly impact its operations. Juspay also reassured that its existing merchant collaborations would remain unaffected.
Competitive landscape and industry trends
The decision comes as major payment aggregators increasingly develop in-house payment orchestration systems. These platforms allow online merchants to manage multiple banking partnerships through a single payment gateway, optimising transaction routing based on success rates.
Juspay itself is expanding into payment aggregation, having recently obtained a licence from the Reserve Bank of India. This move positions it to compete with brands it previously serviced, including Razorpay, PhonePe, and Cashfree.
In December 2023, Juspay announced plans to develop a full-stack payment system to support initiatives such as the Open Credit Enablement Network (OCEN) and other business use cases. At the time, company officials stated that Juspay’s focus was on collaboration with payment aggregator partners, describing the goal as fostering mutually beneficial partnerships for merchants and payment providers.
