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In today’s newsletter:

• Paytm snaps ties with Juspay
• MDR letter sparks Payments Council divide  
• Old SaaS is dead, says Freshworks CEO

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Following the lead of other major payment gateway companies—Razorpay, Cashfree, and PhonePe—Paytm today announced that it is severing ties with payment processing company Juspay.

At the centre of the controversy is Juspay’s payment routing engine, which recommends that merchants use a particular payment gateway for a higher success rate. 

• Most merchants rely on multiple payment gateways (PGs) for processing transactions

• However, PG firms now want merchants to use their respective platforms

Payment gateway (PG) firms cutting ties with Juspay argue that the payment processor cannot be entirely fair and transparent since it also offers its own PG product.

On March 24, Juspay announced that it is open-sourcing its payment router, allowing merchants to integrate the product without requiring Juspay as a direct partner. 

• This effectively white-labels the product for merchants

Meanwhile, merchants want the best payment processing solution and wish to maintain relationships with both PGs and Juspay.

• Currently, more than 80 PGs have received regulatory approval

However, Paytm has given merchants only a week to find alternative arrangements. 

• Other PGs have set a deadline to end their partnership with Juspay by the end of the month

Dig deeper

A good plan with a bad play can still end in a fumble.

Tensions are brewing within the Payments Council of India (PCI) after it sent a letter to Prime Minister Narendra Modi recommending a merchant discount rate (MDR) on UPI.

• Some fintech founders who are PCI members are disappointed, stating that they were not consulted before the letter was sent

While these founders support the idea of MDR, they fear that making a direct appeal to the PM without broader discussion could backfire, given the political sensitivity of the issue.

• Backed by 180 firms, the letter proposed a 0.3% MDR on UPI following a lower-than-expected Rs 1,500 crore incentive

The divide stems from some members favouring discreet MDR talks, believing that they were making progress with the government. 

• The PCI’s public push, however, has sparked debate on whether a more low-key strategy would have been more effective.

Some industry insiders also point to the reduced UPI subsidy as a signal that MDR for large merchants could be introduced soon.

Meanwhile, PCI isn’t the only entity making headlines. A group of members from IAMAI’s Fintech Convergence Council (FCC) has formed a new body to compete for the RBI’s self-regulatory organisation (SRO) license. 

• This comes after the FCC’s unsuccessful bid for the license in 2024, with only FACE securing approval

In other news, BharatPe has something to celebrate. The fintech unicorn achieved adjusted EBITDA breakeven in Q3FY25, with revenue soaring to Rs 1,787.8 crore over the first nine months of the fiscal.

• Fueling this growth is its lending arm, Trillion Loans, whose AUM has reached Rs 1,154.5 crore

Now, BharatPe is going all in—planning to raise its stake to 100% over the next three years as the business scales up.

The future of Software-as-a-Service (SaaS) isn’t what it used to be—AI is rewriting the rules.

At the SaaSBoomi annual event in Chennai, Freshworks founder and chairman Girish Mathrubootham made a bold declaration: "SaaS in its current form is dead."

• He emphasised that companies must embrace AI-driven transformation or risk obsolescence. 

Mathrubootham warned that businesses clinging to traditional software development and sales models will not survive in this evolving landscape.

A key shift Mathrubootham highlighted is the growing dominance of vertical AI SaaS—AI-powered solutions tailored to specific industries.

Unlike traditional horizontal SaaS platforms that serve a broad audience, vertical AI SaaS provides hyper-personalised automation, helping businesses operate more efficiently and competitively.

"If you are not adopting AI, throw away your roadmap," Mathrubootham said.

Also speaking at the SaaSBoomi event, Rajan Anandan, Managing Director at Peak XV Partners, urged founders to leverage AI to build significantly better products while reducing human dependency.

"A $15 million Series A today is the new $5 million Series A from a year or two ago," he added.

Anandan's comments come at a time when startups like Sarvam have raised $40 million, and AI firm Krutrim secured $50 million in funding during their seed stage.

At a time when Indian IT and ER&D firms are going through a rough patch, at least eight mid-tier companies, including LTIMindtree, Happiest Minds, and Cyient, have appointed new CEOs in the first three months of 2025. 

• Around seven of these appointments were external hires, reflecting a trend that follows last year's wave of CEO and CFO transitions at Tier-I Indian IT firms

Industry experts view these leadership changes as a positive sign of a maturing industry adapting to the growing impact of AI.

Dig deeper

• Microsoft unveiled six new Agentic AI agents designed to autonomously assist with critical areas such as phishing, data security, and identity management.
  
  
• Alibaba Group Chairman Joe Tsai warned of a potential bubble forming in data centre construction, arguing that the pace of that buildout may outstrip initial demand for AI services.

You chat, it listens. You vent, it understands. But does ChatGPT make you lonelier? 

• OpenAI and MIT researchers think so. 

A study links heavy chatbot use to social isolation, especially among users who form emotional bonds. 

Find out more

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