How online payments work in India
Unlike Western e-commerce where international credit cards account for the majority of volume, Indian online shopping is dominated by Unified Payments Interface (UPI), followed by net banking, debit cards, and Buy Now Pay Later (BNPL) credit lines.
Because Shopify Payments is not available for domestic INR transactions, every Indian merchant must contract with an RBI-authorized Payment Aggregator (PA) and pay both the gateway's Merchant Discount Rate (MDR) and Shopify's third-party transaction surcharge (unless using custom web apps).
Fees, settlements, and capabilities comparison
| Feature / Gateway | Razorpay | Cashfree Payments | PayU India |
|---|---|---|---|
| Standard Domestic MDR | 2% + 18% GST | 1.90% – 2% + 18% GST | 2% + 18% GST |
| RuPay Debit & UPI (P2M) | 0% for eligible low-ticket / standard | 0% for eligible / standard | 0% for eligible / standard |
| International Cards | 3% + ₹3 per transaction | 3.5% + transaction fee | 3% + currency conversion |
| Standard Settlement Cycle | T+2 business days | T+1 to T+2 business days | T+2 business days |
| Shopify Integration | Verified native Shopify App | Official Shopify App | Official Shopify App |
| Recurring Subscriptions (e-Mandate) | Robust recurring billing suite | Cashfree Subscriptions API | PayU Hub e-Mandate |
Why UPI Intent is your most critical metric
There are two ways payment gateways handle UPI on mobile phones:
- UPI Collect (Slow): The shopper enters their UPI ID, waits for a notification on their banking app, switches apps, enters their PIN, and switches back. Drop-off rates can exceed 25%.
- UPI Intent (Fast): The checkout directly launches the installed PhonePe, Google Pay, or Paytm app via an OS deep-link. The user authenticates with fingerprint or PIN, and is returned to the order confirmation screen in 5 seconds.
Ensure your chosen gateway actively defaults to native UPI Intent on all mobile checkouts.
RBI Payment Aggregator compliance and onboarding
Under Reserve Bank of India (RBI) guidelines, Payment Aggregators enforce strict merchant KYC verification. To avoid onboarding rejections:
- Ensure your business has an active GSTIN or registered entity (LLP, Private Limited, or registered Sole Proprietorship).
- Your website must have live, accessible legal policy pages: Terms & Conditions, Privacy Policy, Refund & Cancellation Policy, and Contact Us with a physical address and customer support email.
- All product catalog pricing must be clearly denominated in INR.
