Payment aggregators push back against Juspay Tech's orchestration

Delays, token access hurdles spark industry opposition; open-source move under scrutiny

Operational issues with Juspay Technologies’ orchestration were straining relationships between payment aggregators (PAs) and their customers, prompting aggregators to urge merchants to abandon third-party routing altogether, industry sources said. This comes as Juspay open-sourced its orchestration layer to merchants of all types and sizes last week.

 

PAs allege that Juspay delayed feature rollouts for their merchants, created friction in accessing card tokens across PAs merchants partnered with, and raised concerns about bias in payment routing. This prompted a few players to take the issue to the Reserve Bank of India (RBI) earlier this year.

 

Sources in the know added that tech service providers like orchestration platforms are not directly regulated, causing flare-ups within the ecosystem over the past few months.

 

However, Juspay was authorised to operate as an online PA by the RBI in 2024, raising concerns that its routing software may demonstrate bias toward its newly established offering.

 

Juspay denied these allegations, saying that its payment routing layer was open-sourced last week and that its merchants had visibility into how transactions were routed to their partner PAs.

 

“The whole narrative that Juspay is not transparent and (PAs) feeling that we were routing transactions to our own PA is meaningless. All our merchants already had the data about how each routing happens. Now, our code is out in the open, and we open-sourced it for everybody,” Sheetal Lalwani, co-founder and chief operating officer of Juspay Technologies, told Business Standard.

 

PA firms such as PhonePe, Razorpay, Cashfree Payments, and Paytm have resorted to exclusively working with their merchants, asking them to sever ties with third-party orchestration platforms like Juspay.

 

A merchant’s partnership with a third-party router and a PA is independent of each other. The orchestration layer, which lies between the merchant and multiple aggregator partners, is designed to optimise transaction success rates by routing transactions to PAs that demonstrate better processing times and costs.

 

What led to the mess?

 

“We welcome Juspay open-sourcing the orchestration layer. However, the fact that they open-sourced it immediately shows that the majority of merchants use only the two or three leading PAs,” an executive from a PA company said.

 

The person added that merchants onboarded by the financial technology firm faced challenges in accessing card tokens when they intended to use a specific PA for their transactions.

 

“Juspay was not making it easy for other PAs to access the tokens. These tokens were not interoperable, meaning a merchant could not easily use a different PA to access them. Additionally, merchants wouldn’t get the updated version of a PA because Juspay would not roll out those features. At times, they have even asked for fees to do it,” the executive added.

 

While Lalwani acknowledged that there might have been instances where feature rollouts were delayed due to competing priorities, he maintained that tokens have always been interoperable for a merchant’s PA partner.

 

“Our token is fully interoperable in the sense that if a merchant’s customer stores a token with Juspay, that token is interoperable across every PA for that merchant, and we don’t bind it. If a merchant wants to move out of Juspay completely and transfer tokens, we will not block that move,” Lalwani said.

 

He added that the company has always been in favour of pushing innovative features to merchants.

 

“It would be unreasonable for us not to implement an innovation that a PA provides to our merchants. We may have been delayed — that’s the nature of any enterprise business, especially when you have so many competing merchant priorities. We may not be able to adopt every feature as quickly as they want,” he clarified.

 

‘Deep integration’

 

PAs believe that direct integration with merchants, especially smaller enterprises, enables better payment processing, as a certain level of orchestration happens at the PA level too, without the need for an additional third-party layer.

 

“There’s PA-level orchestration between acquiring banks that may not be visible to the merchant. In that case, two different PAs tied to the same acquiring bank are equivalent to one another. The process may not be visible to the merchant, but companies are working to make it more transparent now,” the payments executive added.

 

With Juspay open-sourcing its orchestration layer, merchants can now directly integrate with a PA by writing the code within their own environment.

 

“With the open-source model, because everything is out in the open, the scrutiny is very high. It raises the bar. For us, open source was a way of getting a lot of feedback,” Lalwani said.

 

He added that the company’s open-source journey for payments infrastructure began three years ago, and the latest announcement is part of a development that has accelerated in India. 

The big picture 

> Payment aggregators (PAs) allege Juspay delayed feature rollouts and created friction in accessing card tokens

> Concerns over bias in Juspay’s payment routing led some aggregators to approach the RBI

> Juspay denied allegations, saying its orchestration layer is now open-source for full transparency

> Major PAs like PhonePe, Razorpay, Paytm urge merchants to cut ties with third-party routers

> PA firms argue direct merchant integration offers better control over transaction routing

> Juspay insists its tokens are fully interoperable and merchants can migrate without restrictions