If you sell online in India, you don't get paid until money moves from a customer's bank into yours. A payment gateway is the plumbing that makes that happen - it takes the UPI, card or netbanking payment at checkout, checks it's genuine, and settles it into your account a few days later. This guide explains the whole flow without the jargon.
We won't rank vendors or tell you which one is 'best'. We'll cover what changes your actual cost and cash flow: fees, settlement timing, KYC, refunds and international cards. Rules and rates shift often, so treat specifics as directional and confirm current terms before you commit.
Why UPI now runs the show
Most online payments in India today are UPI - the QR-and-VPA system behind PhonePe, Google Pay, Paytm and dozens of banking apps. For a small merchant this matters because UPI is instant to confirm, familiar to almost every customer, and cheap to accept. Buyers trust it, so offering it well reduces abandoned checkouts.
Cards and netbanking still exist and matter for higher-ticket purchases, corporate buyers and international shoppers. But if you only get one payment method perfect, make it UPI.
The gateway landscape
Several established players serve Indian SMBs - Razorpay, PayU, Cashfree, Paytm and others. They broadly do the same core job: accept UPI, cards, netbanking and wallets, run fraud checks, and settle funds to your bank. Where they differ is onboarding speed, dashboard quality, support, payout timing options and the fine print on fees.
Rather than chasing a 'winner', compare two or three on the things that hit your wallet: effective fee per transaction type, settlement cycle, refund handling and how painful their KYC is. Read the current fee page - do not rely on a blog's numbers, including this one.
How fees usually work
Gateways charge a percentage of each transaction, sometimes with a small fixed component. The rate typically varies by method: UPI has historically carried very low or zero MDR (merchant discount rate) for many merchant categories under government policy, while cards - especially credit and international cards - usually cost more. These policies have changed before and can change again, so verify the current position.
Watch for extras beyond the headline rate: setup fees (many waive these), refund charges, chargeback fees on disputed card payments, and GST on the gateway's fee itself. Your true cost is the blended rate across your actual method mix, not the lowest advertised number.
- UPI: often lowest cost - commonly near-zero MDR for eligible merchants (check current rules)
- Domestic debit/credit cards: a modest percentage, higher for premium cards
- International cards: noticeably higher, plus currency handling
- Extras to confirm: refund fee, chargeback fee, GST on charges
Settlement cycles and cash flow
You don't get the money the instant a customer pays. The gateway holds it briefly and settles a batch to your bank on a cycle - commonly T+1 to T+3 working days, where T is the transaction day. Weekends and bank holidays push this out, which matters during long festival breaks.
Some gateways offer faster or instant settlements for an extra fee. If you're buying stock to fulfil orders and cash is tight, a shorter settlement cycle can be worth more than a slightly lower transaction rate. Map your payout timing against when you actually need to pay suppliers.
KYC, onboarding and what you'll need
Every legitimate gateway must verify you before releasing money - this is regulatory, not bureaucracy for its own sake. Onboarding is usually online and can be same-day if your documents are clean. A sole proprietor typically needs less paperwork than a private limited company.
Keep your bank account name, PAN and business proof consistent - mismatches are the top reason onboarding stalls. GST registration may be required above certain turnover thresholds or for specific categories; confirm what applies to you.
- PAN (personal for proprietors, company PAN for registered entities)
- Bank account details for settlement (matched to your business name)
- Business proof - GST certificate, shop licence, or registration document
- Basic KYC of the owner/directors
- Your website or store URL, since gateways review what you sell
Refunds, disputes and international cards
Refunds flow back through the gateway to the customer's original method; UPI and card refunds usually land within a few working days. Some gateways charge a small refund fee and may not return their original transaction fee - check this, because high-return categories like fashion feel it.
Card payments can be disputed by the buyer (a chargeback), where the amount is temporarily pulled back until you provide proof of a genuine order and delivery. Keep order and shipping records. If you want to sell abroad, ask specifically about international card acceptance - it needs separate enabling, costs more, and carries stricter fraud checks.
Where your store fits in
A gateway needs somewhere to plug into - your online store, where the customer actually checks out. If you don't have one yet, Kartrocket lets you build a working store by describing your business in plain language, with a checkout that supports COD, UPI and cards out of the box. Prices are computed on the server, so totals can't be tampered with at checkout.
Publishing is free on a yourname.kartrocket.ai address with SSL included, and you can connect your own domain later. You pay only real pass-through costs - courier charges when you ship via Shiprocket, and payment-gateway fees on prepaid orders. The commerce core that handles money runs on a locked layer, so the store's design can change freely without ever putting the payment path at risk.
Frequently asked questions
Do I need a registered company to accept online payments?
Is UPI really cheaper than cards for merchants?
How long until money reaches my bank?
What happens when a customer wants a refund?
Can I accept payments from customers abroad?
Do I need a website before applying to a gateway?
Build the store your payment gateway plugs into
Describe your business in plain language and get a working store with UPI, cards and COD at checkout - free to publish, with the money path locked and safe.
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