Why Fintechs Are At War With Juspay

After PhonePe, Razorpay and Cashfree, Paytm has reportedly become the latest fintech platform to discontinue all integrations with payment orchestration platform Juspay. With this, Paytm will now look to opt for direct integration with merchants. 

A Moneycontrol report, citing a mail sent by Paytm to its merchants, said that the fintech company plans to only facilitate transactions routed directly through Paytm Payments Services Limited (PPSL) starting April 1. To avoid service disruptions, the company advised the merchants to shift from Juspay to PPSL before the deadline.

Meanwhile, Juspay believes that the move will have no impact on its top line. Speaking with Inc42, the company’s cofounder and chief operating officer (COO) Sheetal Lalwani said that Juspay orchestrator is not a payments intermediary. It is merchants who partner with the company. 

“We are a TSP (technology service provider) to the merchants, similar to how they use the cloud and infrastructure SaaS services. Therefore, the media reports talking about payment aggregators partnering or “ending partnership” with Juspay in this context are factually incorrect,” he added. 

The cofounder said that payment gateways (PGs) moving away from the company will have no impact on the business as it earns revenue from merchants. 

Payment orchestrators connect merchants with PGs. They provide a unified layer for merchants to connect them with the PGs for smooth payment processing. Besides, they also provide services like tokenisation & card vault, recurring payments, unified analytics, among others. 

What’s Causing The Exodus? PGs started severing ties with Juspay after the payment orchestrator received its payment aggregator (PA) licence from the Reserve Bank of India (RBI) last year. After receiving the licence, Juspay launched its PA service, HyperPG, leaving many fintechs apprehensive that Juspay could poach their customers. 

As a result, many fintech platforms began distancing themselves from Juspay, with many reportedly even alleging that Juspay’s routing engine was not transparent enough. 

However, talking to Inc42, Lalwani said that the company’s routing engine, which is a core component of the orchestration platform, has two major workflows – rule-based ordering and dynamic gateway ordering. 

While rule-based ordering works on predefined parameters like cost-effectiveness, geographical preferences and specific gateway reliability, a dynamic gateway system automatically selects the optimal PG in real-time based on dynamic factors such as gateway performance, downtime, or transaction types. 

As per Juspay, over 95% of merchants use rule-based ordering, giving them “full control” over routing traffic by defining rules via Juspay’s routing software based on their business priorities. 

Responding to a question on the PG firms’ apprehensions about them loosing  customers to Juspay’s PA offering, Lalwani said, “There’s nothing wrong with that if done transparently. However, to be clear, we have no interest in growing our PA business—that’s a fact. Basically, they are PAs, so they think we shouldn’t become PA. That’s wrong. The reality is that we’re more focused on being an orchestrator, as we’ve been for 12 years. Before this licensing regime, we ran this platform for a decade. If we wanted to become a PA, we could have done so back then when no licence was required.”

He also hinted that merchants will be locked-in with PGs if they go for direct integration with them. 

Meanwhile, in a bid to further retain merchants, Juspay yesterday announced that it will open-source its payments routing engine to provide merchants with complete visibility and control over their payments infrastructure. 

Why Fintechs Are Opting For Direct Integration With Merchants: The move to integrate directly with merchants may offer a slew of benefits to PGs. For one, they could be looking to offer an end-to-end service to merchants, thereby, owning the entire payments processing value-chain. 

With complete management of the payment process, gateways like Razorpay, Cashfree and PhonePe can keep their data intact and deploy offerings faster.

In line with this, Razorpay launched its payment orchestration platform “Optimizer” in October 2023, while Cashfree Payments unveiled a similar offering “Flowise” in December of the same year. Now, Paytm is transitioning to its own payment processing system starting April 1, 2025. 

Justpay’s Leadership Position: Despite the tug of war between Juspay and other fintechs, the payment orchestration platform continues to be a long-time leader in this space, with 80% of its revenue stemming from payment routing. Juspay processes over 175 Mn transactions daily, surpassing an annualised TPV of $670 Bn. 

Besides its own offerings, Juspay was also pivotal in designing and building the state-backed digital payments platform BHIM in 2016.

On the financial front, Juspay trimmed its net loss by 7.7% to INR 97.54 Cr in the financial year ending March 2024 (FY24) from INR 105.75 Cr in the previous fiscal. Operating revenue zoomed 49% to INR 319.32 Cr in the period under review from INR 213.39 Cr in FY23. 

Lalwani told Inc42 that the company is on track to achieve adjusted EBITDA profitability in the ongoing financial year (FY25).