In a major turn of events, leading payment aggregators Razorpay and Cashfree have severed their partnerships with payment orchestration platform Juspay, four people familiar with the matter told The Head and Tale.

If sources are to be believed then internal discussions are ongoing at PayU too regarding whether to continue with Juspay or not, one of the sources said. However, another source added that PayU is not looking to discontinue the payment processing happening through the payment orchestration platform.

These payment aggregators are expected to communicate the development to their merchant partners shortly.

Confirming the development to us, Razorpay spokesperson said, “Going forward, we will be pausing all integrations through third-party routing platforms. We will offer payment gateway services through our own, direct integrations to our customers. Razorpay has consistently been at the forefront of innovation, delivering cutting-edge solutions to our customers with unmatched speed and efficiency. We believe only through direct integrations, we can ensure our latest innovations reach our customers swiftly and enhance their operations and experiences seamlessly.”

Also, in an email communication to one of its merchants, as seen by The Head and Tale, Razorpay wrote, "As you know, we have been offering our payment solutions to our customers through direct integrations and third-party routing platform. I am writing to inform you today about a change in our approach to our PA/PG integration with third-party routing platforms. We have decided to discontinue our PA/PG support with third-party routing platforms, effective 30th April 2025."

"While we recognize that third-party routers have some utility and cater to certain use cases, they limit our ability to deliver cutting-edge, innovative solutions and a seamless experience backed by top-tier support to our customers. After 30th April, we will no longer support third-party routers. We encourage you to integrate directly with Razorpay for continued uninterrupted payment processing," Razorpay, in its merchant communication, stated while explaining the reasons behind its decision.

In an email response to The Head and Tale query, Cashfree Payments spokesperson said, "We plan to transition away from integrations via third-party routers and orchestrators. This strategic shift will help us better align all transactions with our risk and compliance protocols. By offering direct integration, we can accelerate the delivery of features and offer superior support and merchant experience."

Last month, PhonePe also discontinued processing payments via Juspay in order “to establish direct and end-to-end partnership with its merchant partners.”

"Merchants previously integrated with Juspay to connect to payment aggregators. Now, aggregators are telling merchants to work with them directly," said a senior fintech executive.

"Juspay was becoming increasingly competitive…they redirected traffic to other payment aggregators under the pretext of low success rates. This was another significant factor in the decision to terminate the partnership," another payments official stated.

"PAs are saying that the solutions we have built have better features, are faster, and we want to provide them directly to our merchants without involving any third-party intermediaries. Orchestration is not needed," one of the sources claimed. 

"For example, Juspay provides orchestration between Razorpay and Cashfree. If both aggregators use UPI services from the same bank, such as Axis Bank, the orchestration becomes redundant. Essentially, Juspay is not performing any real orchestration in such cases," he added.

The other reasons the PAs see are data privacy, compliance, and risk management, a payment aggregator official claimed.

In an exclusive interaction with The Head and Tale, Juspay founders Vimal Kumar and Sheetal Lalwani shared their perspective on recent developments, emphasizing that Juspay partners with the merchants. 

"We work with PAs solely to make integrations seamless. We believe in interoperability and cannot dictate merchants’ decisions about direct integrations with specific PAs. There are no contractual arrangements between us and the PAs, so we weren’t informed about their decision—they communicated it to the merchants, who in turn informed us," they explained.

Calling the move "absurd," they added, "Some merchants use Juspay for certain services while maintaining direct integrations with PAs. As a software provider, we cannot control merchants' choices or partnerships. By restricting third-party routers, PAs are denying merchants the freedom of choice. Effectively, it is coming down to saying don't use anyone because ultimately it is affecting their unit economics. They want to lock-in the merchants."

When asked if Juspay anticipates a business loss, the founders took a broader view: "We take a long-term approach and will focus more on merchant education," they said, declining to disclose specific details.

Razorpay and Cashfree have developed their own orchestration platforms, Optimizer and FlowWise, respectively.

The Bengaluru-based fintech, initially operated as a payment orchestration platform, providing a layer above payment aggregators. But it has now also secured a payment aggregator license from the Reserve Bank of India.

However, “its payment aggregator business is still in its early stages,” according to sources.

Historically, Juspay earned a margin of 0.15-0.25% (15-25 basis points) of the payment processing value, which was on par with, or even higher than, what payment aggregators earned.

Currently, Juspay's key revenue streams include payment orchestration and UPI switch services. Over 50% of its total revenue comes from its orchestration business.

The termination of partnerships with Razorpay, Cashfree, and PhonePe -- who together contributed nearly 70-80% of Juspay’s orchestration revenue -- is expected to significantly impact the company.

An industry official remarked, "If major PAs collectively decide to stop working with Juspay's routing platform, it could deliver a significant blow to the company."

Founded in 2012 by Vimal Kumar and Ramanathan RV, Juspay has till date raised $88 million from the likes of Accel Partners, Softbank among others. In FY24, Juspay reported Rs 319 crore in revenue from operations -- almost 50% increase from Rs 213 crore reported a year ago. And, the losses narrowed to Rs 97.54 crore compared to Rs 105.75 crore in FY23. 

Email sent to PayU remained unanswered at the time of publishing this story. We will update the story as and when responses are received.