PhonePe has informed its merchants that all of its payments solutions will now be offered via direct integrations and not through third-party players
With this, the digital payments major will now be able to own the entire value chain, right from origination of the transaction to the final settlement
Juspay said that PhonePe’s decision to discontinue third-party partnership would have “negligible impact” on the payment orchestration platform’s business
Digital payments giant PhonePe will reportedly discontinue all third-party partnerships and integrations with payment aggregators, including SoftBank-backed payment orchestration platform Juspay.
PhonePe has informed its merchants that all of its payments solutions will now be offered via direct integrations, Entrackr reported. For the uninitiated, payment orchestration platforms enable online merchants to manage multiple bank partnerships via just one payment gateway.
With this, the digital payments major will now look to establish a “direct and end to end” relationship with merchants and trim the dependence on third parties such as Juspay. Discontinuing such collaborations will also help PhonePe own the entire value chain, right from origination of the transaction to the final settlement.
The report, citing sources, said that nearly 15% of PhonePe’s payment gateway volume is currently being processed through Juspay, which could have a direct bearing on the payment orchestration platform’s business.
“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,” one of the sources was quoted as saying.
Meanwhile, Economic Times, citing a letter sent by PhonePe to the merchants, said that the fintech major’s move to cut ties with third-party players is led by the consideration to create a full-stack payments service with “better end-to-end control over transaction success rates for its merchant partners”.
PhonePe also said in the letter that many of these third-party players have become payment aggregators, which has led to a “conflict of interest”.
“We are not working with any third party routing platform. We will only offer direct integration to our customers,” a PhonePe spokesperson told Entrackr.
Commenting on the development, a Juspay spokesperson told ET that PhonePe’s decision to discontinue third-party partnership would have “negligible impact” on the payment orchestration platform’s business.
The development comes at a time when fintech startups across the board are rapidly scaling up their offerings, leading to an overlap with players they were earlier servicing. This has primarily come on the back of the Reserve Bank of India (RBI) granting payment aggregator licences to more and more players.
On top of that, large payment aggregators have either deployed or are building their own payment orchestration systems in-house to control the entire value chain of user journey.
At the heart of all this is the growing Indian fintech market, which is projected to become a $2.1 Tn opportunity by 2030.
