Introduction
As a business owner, you already have a ton of things on your plate. Payment problems shouldn't be one of them. Failed transactions, high charges, or limited payment options can frustrate y our customers, yes, but they also eat into your profits. This is why you need to select the right payment gateway, especially if you're dealing with international customers.
Today, most e-commerce stores, freelancers, and startups need payment collection tools that scale from India to foreign markets.
In this article, we will compare two such popular options - Razorpay vs PayPal. We’ll cover their features, fees, use cases, and security aspects to help you pick the right platform for your business needs.
What is Razorpay?
Razorpay is an indigenous fintech solution and a payment gateway. It helps you accept and manage online payments in one place. It focuses on Indian users and supports payment methods like UPI, net banking, credit or debit cards, and wallets.
You can also send simple payment links to clients, set up ready-made payment pages, and raise GST-friendly invoices—no coding needed. This makes collections easy for small businesses and SaaS companies. Razorpay’s dashboard then helps you track payments, refunds, and settlements in real time, all in one place.
For business banking, it offers RazorpayX. This service helps with overseas vendor payouts, payroll, and automated transfers from one platform. Razorpay is also:
- PCI DSS compliant
- Uses strong encryption
- Follows RBI and KYC guidelines in India
What is PayPal?
PayPal is a global payment platform with over 400 million users across the world. It offers easy cross-border transactions, fraud protection features, and supports 25 currencies. It offers multiple payment methods like PayPal balance and Buy Now Pay Later (BNPL) and offers buyer and seller protection across more than 200 countries.
You can use this payment platform for one-time sales, subscriptions, invoicing, and even peer-to-peer transfers. PayPal also offers easy integrations for Shopify and WooCommerce. And it accepts payments via debit/credit cards, bank, and digital wallets like Apple Pay.
Razorpay vs PayPal: How do their features compare?
Both platforms process payments online. But Razorpay is perfect for local Indian payments like UPI with easy API setup. PayPal, on the other hand, excels in cross-border sales, buyer trust, and global integrations. Here's a Razorpay vs PayPal table to compare key features side-by-side:
| Feature | Razorpay | PayPal |
|---|---|---|
| Payment methods | Supports UPI, more than 50 banks that provide internet services, RuPay, Visa/Mastercard, and wallets. | Supports cards (Visa/MC/American Express), bank transfers, Apple Pay, and BNPL. |
| Currencies | Razorpay’s international cards support more than 130 currencies for global transfers. But it is more of a domestic-focused (INR) payment gateway. | 25 global currencies with auto-conversion. |
| Invoicing | Yes, with webhooks. | Yes, advanced billing plans. |
| API & integration | REST APIs, SDKs (Python/Node/Android/iOS), and Shopify/WooCommerce plugins. | REST APIs, JavaScript SDKs, and Shopify/WooCommerce/WordPress plugins. |
| Dashboards | Offers real-time reports, refunds, and settlements. | Offer sales tracking, disputes, and payouts overview. |
| Fraud protection | Real-time detection, PCI DSS compliant. | Buyer and seller protection, adaptive fraud tools. |
| Mobile support | Android/iOS SDKs. | Mobile app, one-touch checkout. |
What are Razorpay vs PayPal fees?
Razorpay vs PayPal charges differ based on location and payment type. Razorpay keeps the domestic fees low to cater to the local Indian businesses, while PayPal adds costs for global use. Here are the current rates of both the payment platforms:
| Fee type | Razorpay | PayPal |
|---|---|---|
| Domestic (Cards/UPI/NetBanking) | 2% + GST (no setup/monthly fees) | PayPal has ceased domestic payment services in India as of April 2021. |
| International transactions | 3% + GST The FX rates can be around 1% to 2% depending on the banks. | 4.4% + FX fee (this can be around 3% to 4%). |
| Wallets | 2% + GST for most wallets. | No longer applicable for domestic transactions in India. |
| Chargebacks | Free (first 3 years), then charges are levied for a chargeback. These fines depend on the transaction amount and your plan. For standard plans, high-value transactions might have higher penalties. | $20 with processing fees. |
| Currency Conversion | 1% to 2% markup (variable based on banking partners' rates). | 3% to 4% above the base exchange rate for currency conversions to INR. |
| Subscriptions | Same as one-time (on standard plans, though some sources indicate a potential small add-on fee, like 0.5% for specific plans). | 4.4% + fixed fee (standard international receiving rate for business). |
How do settlements differ for Razorpay vs PayPal?
Razorpay and PayPal settle funds to your bank at different speeds. Razorpay credits payments in T+2 working days, skipping weekends and holidays. And PayPal sends funds instantly to your PayPal balance. However, it is slower for India via card payments (takes around 1 to 3 days). International transfers also add extra time for currency conversion and verification.
| Aspect | Razorpay | PayPal |
|---|---|---|
| Standard time | T+2 working days. | 1 to 3 business days. |
| Instant option | Yes, with around 0.15% to 0.20% to get the settlement done on the same day. And 0.20% to 0.30% to get the settlement done within 10 seconds, even on bank holidays. | Yes, to PayPal balance (free) and to bank (fee is applicable). |
| Weekends/holidays | Excluded from T+2. (working days do not include second and fourth Saturdays, Sundays, and bank holidays in India). | Counts toward delay (weekends and bank holidays are not considered business days and will delay standard transfer times). |
How is the integrations & developer experience for Razorpay vs PayPal?
Both Razorpay and PayPal plug smoothly into popular e-commerce platforms like Shopify and WooCommerce. Razorpay focuses on Indian developers with local tools, while PayPal offers global API flexibility. So we can see that Razorpay offers fast and focused services for Indian sites. And PayPal handles complex global applications.
| Aspect | Razorpay | PayPal |
|---|---|---|
| Plugins | For Shopify, WooCommerce, and WordPress. | Shopify, WooCommerce, Magento, and BigCommerce. |
| APIs/SDKs | REST, Python/Node/Android/iOS. | REST, JS, Braintree, mobile SDKs. |
| Webhooks | For real-time notification | Comparatively better notification even for disputes. |
| Docs & sandbox | India-focused, detailed documentation and sandbox environments for testing. | Global, detailed and sandbox environment available for testing. |
What are the security & compliance features for Razorpay and PayPal?
Razorpay and PayPal both protect payments with robust encryption and rules. Razorpay meets Indian standards and also covers global laws for compliance, while PayPal exclusively meets compliance and laws for international transactions.
Razorpay follows strict data security practices and is PCI-DSS Level 1, ISO 27001:2022, IEC, and SOC Type 2 certified. It implements TLS encryption, and all Razorpay services are hosted over HTTPS using industry-standard ciphers for security. Razorpay follows industry-standard AES-128-bit encryption for all your data.
PayPal offers 24/7 fraud monitoring and keeps your data secure. It encrypts all your transaction data and guarantees that no financial information is shared or sold by PayPal. PayPal also offers real-time early fraud alerts and immediately notifies you if it suspects your card or transaction information is compromised. You need an eligible Apple or Android device to create a passkey, a phishing-resistant technology used on PayPal.
What are the pros & cons of Razorpay vs PayPal?
Razorpay is suitable for India-first businesses with low fees and local payment methods like UPI. On the other hand, PayPal powers global sales and costs more. Here are some pros and cons to consider:
| Platform | Pros | Cons |
|---|---|---|
| Razorpay | Low 2% domestic fees + UPI/net banking support. Optimized for mobile-first checkouts and UPI. Easy GST invoices and RBI compliance. Strong India integrations (Shopify/WooCommerce) | Needs KYC for setup. Comparatively, less global brand trust. Higher 3% international fees. |
| PayPal | 400 million users worldwide and supports 25 global currencies. Buyer and seller protection for cross-border transactions. Simple plugins and mobile checkout. Offers payment methods like PayPal balance and Buy Now Pay Later. | High 4.4% fees + FX markups Slower India settlements (1 to 5 days) No native UPI for domestic use. Limited support for UPI and Indian payment methods. |
Which is better for your use case?
The choice between Razorpay vs PayPal depends on your business type. India-focused operations largely favor Razorpay's low fees and UPI support, as its international transaction support cannot beat the trust and reach PayPal has developed over the years.
Businesses
If you are a business or an exporter that ships products, then PayPal is a better option as it accepts 25 global currencies, but at a high rate. Razorpay, one of PayPal’s alternatives, is also a good choice, but it works best for India-based online stores selling domestically.
Freelancers
PayPal leads for freelancers with international clients. Clients can pay easily via familiar methods, and you can withdraw to banks globally with buyer and seller protection. Razorpay also offers payment facilities for freelancers, but it lacks PayPal's overseas name recognition.
Startups
Razorpay is a good option for startups in their initial stages. It offers quick setup, APIs, and RazorpayX for payroll. PayPal, with its higher rates, is suitable for global businesses that demand multi-currency billing.
Why is Xflow a better alternative to Razorpay & PayPal for global payments?
Xflow is a cross-border payments collection platform for Indian businesses, exporters, freelancers, and startups dealing with clients overseas. It is better than all PayPal and Razorpay alternatives as it offers zero FX rates, invoicing assistance, and e-FIRA for all payments received to meet compliance.
It has minimal charges, so you can save most of your profits. Plus, it guarantees 24-hour settlement. If you are a business that is using Shopify, Webflow, or WooCommerce to sell products online, then you should include Xflow in your custom stack. It charges a transparent 1% fee with no hidden charges and offers robust APIs for integration with sites and ERP/CRM tools.
Final thoughts
Razorpay is better for Indian businesses with a customer base from the country itself. But for global reach and buyer protection, PayPal is a good choice despite its higher charges.
Both platforms offer strong security and easy integrations with e-commerce stores. And alternatives like Xflow fill in the gaps of fees and scalability for both these platforms.
For smooth global payment collection, visit Xflow's site today!
Frequently asked questions
Razorpay is better if your main market is India and you need support for payment methods like UPI, net banking and local card payments at lower fees. But if you have global customers and want a trusted international brand, then PayPal is a good choice.
No. PayPal does not work like a regular UPI app for domestic transfers in India. But it has partnered with UPI rails to let Indian users pay on select international merchants via UPI-linked accounts.
For domestic payments in India, Razorpay charges around 2% with additional GST on transactions via standard cards, UPI, and net banking. This is lower than PayPal's 4.40% + fixed fee. PayPal can seem expensive once cross-border and currency conversion fees are added for receiving international payments.
Yes. You can accept international payments using Razorpay. It supports payment methods like cards, such as Visa and Mastercard, and some global wallets in 100+ currencies. But for this, you need to enable international mode and complete KYC.
For freelancers with overseas clients, PayPal is a good option. This is because many clients already use PayPal and can pay quickly in their own currency. Razorpay can also work, but your clients need to be willing to pay via supported payment methods or Razorpay-powered links and pages.
Both Razorpay and PayPal follow strict compliance standards and use strong encryption. But PayPal stands out for global transactions because of its long history and buyer/seller protection programs.
Razorpay settles funds to your Indian bank account in T+2 working days, with optional instant settlement at an extra fee for eligible merchants. Receiving PayPal payouts to local bank accounts can take one to five days, depending on the country and the bank.
