Fintech Shift: Paytm Drops Juspay, Adopts Direct Transaction Model

Paytm has announced its decision to discontinue using third-party payment orchestration platforms, including Juspay, and will transition to direct transaction processing. This shift follows similar moves by fintech firms such as Razorpay, PhonePe, and Cashfree Payments, marking a growing industry trend toward reducing reliance on intermediaries.

In a communication sent to merchants, Paytm stated that starting April 1, 2025, transactions will be processed exclusively through Paytm Payments Services Limited (PPSL). Merchants were advised to migrate before the deadline to prevent disruptions.

"We appreciate your trust in PPSL as your payments partner. Our priority remains providing an optimized and efficient payment experience. To further enhance these services, PPSL will process transactions directly and will no longer support transactions routed via Juspay from April 1, 2025," Paytm informed merchants in the email.

Juspay, widely used by retailers, integrates multiple payment gateways (PGs) and optimizes routing to improve transaction success rates. By determining which PG to use for each transaction, Juspay enhances efficiency across payment platforms.

However, PG firms seeking to expand their services amid tightening margins argue that Juspay’s routing engine influences merchant choices, potentially directing transactions toward specific providers.

On March 24, Juspay announced the open-sourcing of its payment routing engine, Hyperswitch, as part of a broader initiative to give merchants greater control over transaction routing. Despite this, concerns persist among PG firms over transparency in Juspay’s routing process.

Juspay, which holds a payment aggregator license, is also reportedly in discussions with investors for a $150 million funding round. Industry players believe this could bolster Juspay’s market position and intensify competition.