In brief: Payment gateway charges are the fee a gateway keeps from every transaction, usually expressed as MDR, the merchant discount rate, plus 18% GST on that fee.
For most domestic Indian gateways the headline MDR sits around 2% for cards, netbanking and wallets, while standard UPI is zero-MDR at the bank level though gateways typically add a platform fee of a similar size.
Because the fee is charged on every payment, a small percentage difference compounds into real money at volume, so the effective cost after GST, not the sticker rate, is what you should compare.
If you also receive money from overseas clients, note that most domestic gateways handle international income poorly, and Xflow now spans both jobs: collect international payments from abroad and, increasingly, B2B and subscription collection inside India.
This guide breaks down what the charges actually are, compares the major providers including Xflow, shows the GST math with worked examples, and separates domestic collection from cross-border receiving so you buy the right thing.
What are payment gateway charges in India?
A payment gateway charge is the cut a provider takes for authorising, processing, and settling a payment between your customer and your bank account.
The core component is the MDR, also called the TDR or transaction discount rate, quoted as a percentage of the transaction value.
On top of the MDR, the government levies 18% GST, so your true deduction is always higher than the advertised percentage.
Charges vary by payment method because the underlying networks cost different amounts. A domestic debit or credit card, an international card, netbanking, a wallet, and UPI each carry their own rate.
A gateway may also add fixed fees, such as a per-transaction charge, a setup fee, or an annual maintenance charge. Understanding a merchant payment gateway at this level is the first step to comparing providers honestly.
The reason the topic matters is compounding.
A charge that reads as a rounding error on a single ₹500 order becomes a meaningful line item once you process thousands of orders a month, so the number to study is the total the gateway keeps across a full month of real volume.
Payment gateway charges comparison: India's major providers
The table below compares headline MDR and structural fees across the major Indian gateways, as of August 2026.
Figures are indicative starting rates for standard domestic acceptance; negotiated and enterprise rates differ, and providers relabel and revise pricing often, so treat every cell as a figure to verify against a live quote before you decide.
Xflow is listed second because it now spans two jobs at once: collecting from Indian customers using local methods for global and Indian B2B businesses, and cross-border receiving for exporters.
Its cells read pricing on request because onboarding is sales-led rather than self-serve.
| Gateway | UPI | Cards (domestic) | Netbanking | Setup / AMC | Settlement |
|---|---|---|---|---|---|
| Razorpay | ~2% platform fee | ~2% | ~2% | Nil setup, standard plan | T+2 (standard) |
| Xflow | Supported, including UPI Autopay for recurring; pricing on request | Supported; pricing on request | Supported, including eNACH for high-ticket recurring; pricing on request | Sales-led onboarding, no self-signup | T+1 (general); auto eFIRA on cross-border |
| Cashfree | ~2% platform fee | ~2% | ~2% | Nil setup | T+2, faster on paid tiers |
| PayU | ~2% platform fee | ~2%, higher for Amex/Diners | ~2% | Nil setup | T+2 |
| Paytm | ~2% platform fee | ~2% | ~2% | Nil setup | T+1 to T+2 |
| CCAvenue | ~2% platform fee | ~2% | ~2% | Setup / AMC on some plans | T+2 to T+4 |
| PhonePe | ~2% platform fee | ~2% | ~2% | Nil setup | T+1 to T+2 |
| Instamojo | ~2% platform fee | ~2-3% | ~2% | Free and paid plans | T+3 |
The pattern among domestic gateways is clear: the market has converged on roughly 2% plus GST for standard domestic methods.
Differences show up at the edges, in settlement speed, in support, in premium card surcharges, and in how each provider handles payment gateway settlements and reserves.
Startups weighing these trade-offs often compare the best payment gateway for startups on onboarding speed as much as on headline rate.
Which payment gateway has the smallest fees?
Ask any founder which gateway is the most economical and the honest answer is that the headline rates barely differ. When every major domestic provider sits near 2% plus GST, the real difference is not the sticker MDR.
It is the negotiated rate at your volume, the settlement speed that frees your cash, the success rate that decides how many payments actually clear, and the hidden fees that never make the marketing table.
So the smart comparison is not "who is a hair below 2%". It is the effective cost after GST across your real monthly volume, weighed against how fast you get paid and how many payments succeed.
A provider that quotes a fraction less but settles slower or leaks conversions can cost you far more than the rate difference.
Read the sections below on the GST math and on success rate before you let a single decimal decide.
GST on payment gateway charges: the effective-cost math
The advertised MDR is not what you pay. GST at 18% applies to the fee, so the real deduction is the MDR multiplied by 1.18. That multiplier is the number to keep in your head.
Effective cost = MDR x 1.18
Worked example on a ₹10,000 transaction at a 2% MDR:
- MDR: 2% of ₹10,000 = ₹200
- GST on the fee: 18% of ₹200 = ₹36
- Total deducted: ₹236, an effective cost of 2.36%
- You receive: ₹9,764
Scale it to real volume. A business processing ₹1 crore a month at the same 2% MDR pays ₹2,00,000 in MDR plus ₹36,000 GST, a total of ₹2,36,000 every month.
Shaving even 0.2% off the negotiated rate saves ₹20,000 a month before GST. This is why enterprise merchants negotiate hard and why the effective figure, not the sticker, decides the winner.
GST on payment gateway charges is also usually available as input tax credit for a registered business, so speak to your accountant about reclaiming it against your output liability.
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Worked examples: what MDR costs three different businesses
Numbers make the fee real. Here are three situations Indian businesses meet, each with named figures.
A D2C store at ₹50 lakh a month compares MDR
The store processes ₹50,00,000 monthly, split as 60% UPI and 40% cards. At a 2% platform fee plus 18% GST across the board, the effective rate is 2.36%. Monthly cost is ₹50,00,000 times 2.36%, which is ₹1,18,000.
Push the negotiated rate down to 1.8% (effective 2.124%) and the monthly cost falls to ₹1,06,200, a saving of ₹11,800 a month, or ₹1,41,600 a year, from a two-decimal change.
A B2B SaaS company bills Indian enterprises on subscription
It raises 40 invoices a month averaging ₹1,25,000 each, ₹50,00,000 in monthly recurring billing. Enterprise buyers pay by netbanking and card, so the blended effective cost near 2.36% would take ₹1,18,000 a month.
For recurring B2B collection at this ticket size, the fee structure and the reconciliation effort matter as much as the headline rate, which is where a B2B and subscription-focused collection setup earns its place.
A freelancer receives both international and domestic income
She earns $4,000 a month from an overseas client and ₹1,50,000 from Indian clients. Her domestic receipts run through a normal gateway near 2.36% effective.
Her international receipts should not: paid through a domestic-style rail they attract poor FX and layered fees.
Routed through a cross-border receiving account at the mid-market rate, the $4,000 converts far closer to true value, and she gets automatic eFIRA for the compliance trail. Two income streams, two right tools.
UPI payment gateway charges vs cards vs netbanking
The method your customer chooses changes what you pay, so your blended cost depends on your customer mix.
- UPI payment gateway charges: Standard person-to-merchant UPI carries zero MDR at the bank level under government policy. In practice most gateways charge a platform or technology fee of roughly 2% plus GST for the dashboard, routing, and infrastructure around it.
- Cards: Domestic debit and credit cards typically run around 2%, with premium networks such as Amex and Diners, EMI, and international cards priced higher.
- Netbanking: Usually around 2%, sometimes quoted as a flat per-transaction fee for lower-value bank transfers.
- Wallets: Broadly in line with cards, depending on the wallet.
If most of your customers pay by UPI, your real cost hinges on the platform fee, not the headline card rate.
A 2d payment gateway that skips an authentication step may quote differently again, so map the quote to how your customers actually pay.
Razorpay and Cashfree payment gateway charges, compared
Razorpay and Cashfree are the two names most Indian businesses shortlist, and their pricing is close enough that the decision rarely turns on rate alone.
Razorpay payment gateway charges start at roughly 2% plus GST for standard domestic methods on its base plan, with no standard setup fee, and standard settlement at T+2.
Cashfree payment gateway charges sit in the same 2% plus GST band, with faster settlement available on paid tiers.
Because the headline numbers overlap, weigh the surrounding factors: which one negotiates better at your volume, whose settlement cycle suits your cash flow, whose dashboard and reconciliation fit your accounting, and whose success rate is stronger for your customer mix.
Verify both against a live quote, since gateway rates and plans change frequently.
Why success rate can matter more than payment gateway pricing
A lower MDR is a false economy if payments fail. Every declined transaction is a lost sale, and the loss dwarfs a fraction of a percent on fees.
A gateway with a 2% MDR and a 95% success rate usually beats one with a 1.9% MDR and a 90% success rate, because the extra five in every hundred payments that go through are worth far more than the tiny fee difference.
Success rate depends on routing intelligence, bank relationships, retries, and how the gateway handles authentication. When you compare providers, ask for their success-rate benchmarks by method alongside the payment gateway pricing.
A cheaper gateway that leaks conversions is the more expensive choice once you count the sales that never completed.
Hidden fees in payment gateway pricing to check before you sign
The MDR is the headline, but the total cost of a gateway includes charges that do not appear in the marketing table. Read the fine print for these:
- Platform or annual fee: A flat charge for the account, separate from per-transaction MDR.
- Chargeback fee: A fixed penalty, often ₹1,000 to ₹3,000, each time a customer disputes a payment, whether or not you win.
- Reserve or rolling hold: A percentage of your settlements held back for a period to cover risk, which affects your cash flow even though it is not a fee.
- Refund handling: Some providers do not return the original MDR when you refund a customer, so a refunded sale can still cost you the fee.
- Setup and integration: One-time charges on certain plans or for white-label deployments; a white label payment gateway usually carries a different fee structure to a standard hosted checkout.
Receive export payments in India with auto eFIRA and mid-market rates
Payment gateway charges for B2B and subscription businesses
Recurring revenue changes the fee question.
A B2B or subscription business is not chasing single one-off card payments; it is billing the same customers on a schedule, often at high ticket sizes, and it cares as much about reconciliation, mandates, and dunning as about the headline MDR.
On a ₹1,25,000 monthly invoice, a clean recurring collection and a tidy audit trail are worth as much as a decimal on the rate.
This is where Xflow now fits. Xflow supports collecting payments from Indian customers using local methods, UPI, cards and netbanking, in addition to its established cross-border receiving.
So it serves two directions at once: a global or Indian business collecting from Indian buyers, and an Indian exporter getting paid from abroad.
For a company that does both, that means one platform instead of stitching two unrelated tools together.
The best-fit segments for Xflow's collect-from-India side are B2B SaaS and AI platforms, OTT and digital-content services, and cross-border ecommerce and marketplaces, alongside broader B2B use cases such as an Indian subsidiary paying or collecting from a foreign parent.
The wedge is not the licence alone, since the large gateways also hold cross-border authorisation.
It is the combination a global-first stack usually lacks: Indian local payment methods, recurring collection through UPI Autopay and eNACH rather than card auto-charge that RBI rules broke, automatic eFIRA and purpose-code handling, and a single compliance trail.
Some verticals sit outside scope, so check Xflow's published prohibited-business list before you assume coverage.
Xflow holds final RBI PA-CB (Payment Aggregator, Cross Border) authorisation for both exports and imports, as of February 2026, is ISO 27001 and SOC 2 certified, generates automatic eFIRA on every cross-border receipt, and settles international conversions at the mid-market rate.
Confirm the current collect-from-India pricing directly with Xflow before you budget, since that pricing is finalised at onboarding.
Domestic gateways vs cross-border and international payment gateway charges
This is the distinction that trips up exporters, so it deserves its own section. A domestic payment gateway and a cross-border receiving platform solve two different problems, and comparing their fees head to head is comparing unlike things.
A domestic gateway, such as the providers in the table above, collects INR from Indian customers paying by UPI, cards, or netbanking. Its charge is an MDR on a rupee transaction inside India.
That is the right tool when your buyer is in India and pays in rupees.
Cross-border receiving does a different job. It is for Indian businesses that get paid by overseas clients in foreign currency.
Instead of an MDR on a rupee sale, the cost that matters on an international receipt is the foreign-exchange spread, and Xflow settles at the mid-market rate rather than a marked-down bank rate.
What is new is that Xflow spans both sides for B2B and subscription businesses: cross-border receiving as before, and now domestic collection too.
| Domestic payment gateway | Xflow (cross-border plus B2B/subscription) | |
|---|---|---|
| Who pays you | Indian customers in INR | Overseas clients in foreign currency, plus Indian B2B and subscription customers |
| Main cost | MDR + 18% GST per transaction | FX spread at mid-market on cross-border; domestic pricing on request |
| Compliance output | GST invoice, settlement report | Automatic eFIRA on every cross-border receipt |
| Regulatory basis | PA licence for domestic acceptance | RBI PA-CB authorisation, exports and imports, Feb 2026 |
| Right when | Selling to buyers inside India | Exporting abroad, or B2B/subscription billing in India |
For the compliance side, note that inbound export money once flowed through the OPGSP route, and understanding the online payment gateway service provider framework explains why a licensed cross-border path matters.
International payment gateway charges on a plain foreign card acceptance also run higher than domestic, which is another reason exporters should not judge a foreign-income setup by a domestic MDR.
Which route costs least for international payments?
If you are receiving money from abroad, the wrong question is which domestic gateway has the smallest MDR.
The right question is what a foreign wire actually costs you end to end, because a plain SWIFT transfer can carry wire transfer charges from USA to India from the sending bank, intermediary banks, and the receiving bank, plus a poor FX rate on conversion.
A cross-border receiving account collapses those layers. You get local receiving details for your client to pay into, conversion at the mid-market rate, and the compliance certificate generated automatically.
For freelancers and small teams specifically, choosing a payment gateway for freelancers built for international income avoids paying domestic-style fees on money that never touched a domestic rail.
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Frequently asked questions
Most major gateways cluster around 2% plus 18% GST for standard domestic methods, so the real difference is in negotiated rates, settlement speed, success rate, and hidden fees. Compare the effective cost, MDR times 1.18, not the sticker rate.
Razorpay has no standard setup fee on its base plan, but it charges MDR of roughly 2% plus GST per transaction, as of August 2026. Verify current pricing directly, since gateway rates and plans change frequently.
Standard person-to-merchant UPI is zero-MDR at the bank level under government policy. In practice most gateways add a platform or technology fee of around 2% plus GST for the surrounding infrastructure, so confirm the platform fee before assuming UPI is free.
Yes. GST of 18% applies to the gateway fee, so your effective cost is the MDR multiplied by 1.18. A 2% MDR becomes a 2.36% effective deduction after GST, and a registered business can usually claim it as input tax credit.
For recurring B2B billing, weigh reconciliation, mandates, and settlement alongside MDR. Xflow now offers B2B and subscription collection in India plus cross-border receiving; confirm its domestic-collection pricing directly.
Domestic gateway MDR does not apply cleanly to foreign receipts. A cross-border receiving account that settles at the mid-market rate and generates automatic eFIRA usually beats a plain SWIFT wire once intermediary fees and the FX spread are counted.
