{"id":26640,"date":"2026-04-13T15:11:33","date_gmt":"2026-04-13T09:41:33","guid":{"rendered":"https:\/\/blog.razorpay.in\/blog\/?p=26640"},"modified":"2026-04-13T15:20:36","modified_gmt":"2026-04-13T09:50:36","slug":"low-cost-payment-gateway-in-india-the-complete-decision-guide","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/","title":{"rendered":"Low Cost Payment Gateway in India: The Complete Decision Guide 2026"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Most businesses pick a payment gateway by looking at one number: the TDR (Transaction Discount Rate). A gateway advertising 1.6% beats one charging 2.0%, right? <\/span><b>Not usually.<\/b><span style=\"font-weight: 400;\"> This guide gives you a five-factor framework to calculate what a gateway actually costs \u2014 and shows, with real numbers, why the headline TDR is often the least important factor in your decision.<\/span><\/p>\n<h3><b>Key Takeaways<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>TCO &gt; TDR:<\/b><span style=\"font-weight: 400;\"> Don&#8217;t just look at the headline rate. Always evaluate the Total Cost of Ownership (TCO), including fixed, operational, and failure costs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Success Rates Matter Most:<\/b><span style=\"font-weight: 400;\"> The revenue lost to failed transactions usually outweighs minor savings from a fractionally lower TDR.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Avoid Fixed-Cost Traps:<\/b><span style=\"font-weight: 400;\"> Zero-setup and zero-AMC gateways protect margins for early-stage and fluctuating businesses.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Leverage a UPI-First Strategy:<\/b><span style=\"font-weight: 400;\"> Maximizing zero-MDR UPI transactions naturally lowers your blended overall payment rate.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b style=\"font-size: 19px;\">Negotiate on TCO:<\/b><span style=\"font-weight: 400;\"> Use your total cost data\u2014not just competitor quotes\u2014as leverage, and only switch if the Year 1 savings justify the migration effort.<\/span><\/li>\n<\/ul>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69df944f94042\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69df944f94042\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#1_Why_Headline_Payment_Gateway_Pricing_Is_a_Misleading_Number\" >1. Why Headline Payment Gateway Pricing Is a Misleading Number<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#2_The_Five-Factor_Cost_Model\" >2. The Five-Factor Cost Model<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#3_How_Razorpay_Eliminates_Hidden_Costs_Through_Zero-Setup_Architecture\" >3. How Razorpay Eliminates Hidden Costs Through Zero-Setup Architecture<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#4_UPI-First_Strategy_The_%E2%80%9CZero_MDR%E2%80%9D_Reality\" >4. UPI-First Strategy: The &#8220;Zero MDR&#8221; Reality<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#5_Evaluating_Zero-Setup_Gateways_What_to_Actually_Check\" >5. Evaluating Zero-Setup Gateways: What to Actually Check<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#6_The_SME_Negotiation_Playbook\" >6. The SME Negotiation Playbook<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#7_Compliance_and_Security_What_Zero-Setup_Gateways_Cover\" >7. Compliance and Security: What Zero-Setup Gateways Cover<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#8_When_to_Switch_Gateways_and_When_Not_To\" >8. When to Switch Gateways (and When Not To)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#9_How_to_Pick_the_Right_Gateway_for_Your_Stage\" >9. How to Pick the Right Gateway for Your Stage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#10_The_Decision_Framework_A_Summary\" >10. The Decision Framework: A Summary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"1_Why_Headline_Payment_Gateway_Pricing_Is_a_Misleading_Number\"><\/span><b>1. Why Headline Payment Gateway Pricing Is a Misleading Number<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The TDR (or MDR \u2014 Merchant Discount Rate or sometime called as platform fee) is the percentage charged on each successful transaction. It is the number printed on every payment gateway pricing page, and it is the number most merchants use to compare options.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The problem: TDR only tells you the cost of transactions that succeed. It tells you nothing about:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What percentage of transactions actually succeed<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What fixed fees you pay regardless of volume (AMC, setup)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How much engineering time integration and maintenance consumes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How delayed settlements affect your working capital<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What reconciliation overhead your finance team carries monthly<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Here is a simple illustration of why TDR alone misleads:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h4><b>Metric<\/b><\/h4>\n<\/td>\n<td>\n<h4><span style=\"font-weight: 400;\">Payment <\/span><b>Gateway A<\/b><\/h4>\n<\/td>\n<td>\n<h4><span style=\"font-weight: 400;\">Payment <\/span><b>Gateway B<\/b><\/h4>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Headline TDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.7%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2.0%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Annual AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b910,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Setup fee<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Average success rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">70%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">85%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Monthly attempted volume<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b910,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b910,00,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Revenue actually processed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b97,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b98,50,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">TDR cost<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b911,900<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b917,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Revenue lost to failed txns<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b93,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,50,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Net revenue landed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b96,88,100<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b98,33,000<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<div style=\"font-family: -apple-system, 'Segoe UI', sans-serif; font-size: 11px; font-weight: bold; letter-spacing: 0.1em; text-transform: uppercase; color: #2563eb; margin-bottom: 6px;\">What the Math Shows<\/div>\n<p style=\"margin: 0; font-size: 16px; color: #1e3a5f; font-style: italic;\">Payment Gateway B costs \u20b95,100 more per month in TDR fees. But it delivers \u20b91,44,900 more in net revenue. The &#8220;expensive&#8221; payment gateway is 28x more profitable in this scenario.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The rest of this guide breaks down how to calculate each of these factors for your specific business.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"2_The_Five-Factor_Cost_Model\"><\/span><b>2. The Five-Factor Cost Model<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To compare payment payment gateways accurately, you need to account for five cost categories \u2014 not just one.<\/span><\/p>\n<h3><b>Factor 1: Direct Transaction Fees (TDR + GST)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">This is the cost you see on the pricing page. Standard domestic rates in India range from 1.6% to 2.5% depending on payment mode and payment gateway. GST (18%) applies on top of the TDR.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Formula<\/strong>: Monthly TDR Cost = (Monthly Successful Volume) \u00d7 TDR Rate \u00d7 1.18<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Example<\/strong>: \u20b95,00,000 successful transactions \u00d7 2% \u00d7 1.18 = \u20b911,800\/month<\/span><\/p>\n<h3><b>Factor 2: Fixed Costs (Setup + AMC + Minimum Fees)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Many payment gateways charge a one-time setup fee (\u20b95,000 to \u20b950,000) and an Annual Maintenance Charge or AMC (\u20b92,400 to \u20b99,999\/year). These costs exist regardless of your transaction volume.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At low volumes, fixed costs often dominate the total cost comparison. See the table below:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Monthly Volume<\/b><\/td>\n<td><b>Payment Gateway A (1.8% + \u20b94,999 AMC)<\/b><\/td>\n<td><b>Payment Gateway B (2.0% + Zero AMC)<\/b><\/td>\n<td><b>Cheaper Option<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u20b950,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,325\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,180\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Gateway B<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u20b91,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b92,217\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b92,360\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Gateway A (marginally)<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u20b92,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b94,033\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b94,720\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Gateway A<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u20b93,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95,849\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b97,080\/mo<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Gateway A<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div><\/div>\n<div><\/div>\n<div style=\"font-family: -apple-system, 'Segoe UI', sans-serif; font-size: 11px; font-weight: bold; letter-spacing: 0.1em; text-transform: uppercase; color: #2563eb; margin-bottom: 6px;\">Breakeven Insight<\/div>\n<p style=\"margin: 0; font-size: 16px; color: #1e3a5f; font-style: italic;\">At \u20b950,000\/month, a zero-AMC gateway at 2% is cheaper than a 1.8% gateway with \u20b94,999 AMC. The breakeven point is around \u20b983,000\/month in this example. Below that volume, zero-AMC wins.<\/p>\n<p>&nbsp;<\/p>\n<h3><b>Factor 3: Failure Costs (Lost Revenue from Poor Success Rates)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">This is the biggest cost most merchants never calculate. When a payment fails, you lose the sale \u2014 but you also lose the customer acquisition cost that brought that user to checkout.<\/span><\/p>\n<h4><strong>Industry success rates vary significantly:<\/strong><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Budget\/legacy payment gateways: 65-75% on cards, variable on UPI<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mid-tier payment gateways: 75-82%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Enterprise-grade payment gateways with smart routing: 85-93%<\/span><\/li>\n<\/ul>\n<h4><span style=\"font-weight: 400;\">How to calculate your failure cost:<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Monthly Failure Loss = (Attempted Volume) \u00d7 (1 &#8211; Success Rate) \u00d7 (Net Margin %)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Example on \u20b950L\/month attempted, 10% net margin:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Success Rate<\/b><\/td>\n<td><b>Volume Processed<\/b><\/td>\n<td><b>Volume Lost<\/b><\/td>\n<td><b>Margin Lost Monthly<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">70%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b935,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b915,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,50,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">80%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b940,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b910,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,00,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">85%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b942,50,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b97,50,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b975,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">90%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b945,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95,00,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b950,000<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">A 20% improvement in success rate (70% to 90%) recovers \u20b91,00,000\/month in margin on \u20b950L volume. The TDR difference between a 1.8% and 2.0% gateway on that same \u20b950L is \u20b910,000. The success rate premium is worth 10x the TDR premium.<\/span><\/p>\n<h3><b>Factor 4: Operational Costs (Reconciliation + Support Overhead)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Finance teams at businesses using fragmented or poorly-documented gateways spend significant time on manual reconciliation \u2014 matching settlements to invoices, handling failed refunds, and resolving disputes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conservative estimate: if your finance team spends 2 extra days per month on reconciliation due to a poor payment gateway, and your team costs \u20b980,000\/month, that is \u20b95,333\/month in operational overhead \u2014 more than the TDR difference on \u20b93L monthly volume.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Gateways with unified dashboards, automated settlement reporting, and clean API documentation eliminate most of this overhead.<\/span><\/p>\n<h3><b>Factor 5: Engineering Costs (Integration + Maintenance)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">This factor primarily affects businesses building custom integrations rather than using plugins. If your developers spend two extra weeks integrating a gateway because of poor documentation, unstable sandboxes, or inconsistent APIs, that has a direct rupee cost.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At a blended developer cost of \u20b91L\/month, two weeks of delay or rework = \u20b950,000. That is more than a year of TDR savings on \u20b92L monthly volume at 0.2% difference.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What to check: sandbox quality, webhook reliability, API versioning policy, and whether the gateway has a dedicated developer portal with working code samples.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"3_How_Razorpay_Eliminates_Hidden_Costs_Through_Zero-Setup_Architecture\"><\/span><b>3. How Razorpay Eliminates Hidden Costs Through Zero-Setup Architecture<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Razorpay <a href=\"https:\/\/razorpay.com\/payment-gateway\/\">payment gateway<\/a> charges 2% + GST per successful transaction across cards, UPI, wallets, and net banking. There is no setup fee, no AMC, no miscellaneous charge. The 2% covers everything: processing, high success rates, dashboard, reporting, and support.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here is what that means in practice across the five factors:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Cost Factor<\/b><\/td>\n<td><b>Legacy\/Budget Gateway<\/b><\/td>\n<td><b>Razorpay<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">TDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.6-1.8% (plus hidden charges)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2% flat, all modes<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Setup fee<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95,000 &#8211; \u20b950,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b92,400 &#8211; \u20b99,999\/year<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Refund charges<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95-25 per refund at some gateways<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Success rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">65-75% on cards (typical)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">85-90%* + (*Success rates are based on internal average data and may vary by industry and payment mix.) with Smart Routing<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Reconciliation<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Manual matching required<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Unified settlement dashboard<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Developer docs<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Variable quality, patchy sandboxes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Full API docs, working sandbox<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3><b>Smart Routing: The Technical Reason for Higher Success Rates<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Razorpay&#8217;s Smart Routing dynamically routes each transaction through the bank terminal with the highest real-time success probability, based on historical performance data across issuing banks, card networks, and time-of-day patterns. When one route fails, it retries through an alternate path without the user seeing an error.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is the primary driver of the success rate gap between <a href=\"https:\/\/razorpay.com\/blog\/razorpay-payment-gateway-pricing-vs-other-payment-gateways\/\">Razorpay and budget payment gateways<\/a>. Budget gateways typically use static routing \u2014 every transaction goes through the same path regardless of performance signals.<\/span><\/p>\n<h3><b>The Real Cost Comparison at \u20b93L Monthly Volume<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Here is a side-by-side annual cost calculation for a business doing \u20b93L\/month, comparing a gateway with 1.8% TDR + \u20b94,999 AMC at 72% success vs Razorpay at 2% + zero AMC at 85% success:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Cost Item<\/b><\/td>\n<td><b>Budget Gateway (1.8% + AMC)<\/b><\/td>\n<td><b>Razorpay (2% + Zero AMC)<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Annual TDR cost (on successful txns)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b945,792<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b972,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Annual AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b94,999<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Setup fee (amortised over 2 years)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b92,500<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Revenue lost to failures (28% fail rate vs 15%)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b943,680\/mo \u00d7 12<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b923,400\/mo \u00d7 12<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Net annual cost (fees + lost revenue)<\/b><\/td>\n<td><b>\u20b95,77,547<\/b><\/td>\n<td><b>\u20b93,52,800<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\"><strong>Note<\/strong>: Failure cost calculation assumes 10% net margin on lost transactions. &#8216;In this scenario&#8217; \u2014 actual numbers will vary by business type, payment mix, and average order value. The point is the framework: success rate impact dwarfs TDR differences at any meaningful scale.<\/span><\/p>\n<h2 data-path-to-node=\"4\"><span class=\"ez-toc-section\" id=\"4_UPI-First_Strategy_The_%E2%80%9CZero_MDR%E2%80%9D_Reality\"><\/span>4. UPI-First Strategy: The &#8220;Zero MDR&#8221; Reality<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3 data-path-to-node=\"5\">What Zero MDR Actually Means for Your Costs (And The Platform Fee Catch)<\/h3>\n<p data-path-to-node=\"6\">While the <a href=\"https:\/\/www.rbi.org.in\/Scripts\/NotificationUser.aspx?Id=11183&amp;Mode=0\" rel=\"nofollow noopener\" target=\"_blank\">RBI mandates<\/a> zero Merchant Discount Rate (MDR) on <a href=\"https:\/\/razorpay.com\/learn\/upi-transaction-charges\/\">UPI transactions<\/a>, <b data-path-to-node=\"6\" data-index-in-node=\"78\">this does not mean your payment gateway provides it for free.<\/b> Most gateways charge a blanket &#8220;Platform Fee&#8221; or &#8220;Software Fee&#8221; (typically around 2%) across all payment methods to cover their infrastructure, checkout UI, and success rate optimization.<\/p>\n<p data-path-to-node=\"7\">To actually benefit from UPI&#8217;s zero MDR, <b data-path-to-node=\"7\" data-index-in-node=\"41\">you must negotiate split pricing<\/b> with your gateway (e.g., 2% on cards, but a much lower percentage or flat fee for UPI).<\/p>\n<table dir=\"ltr\" border=\"1\" cellspacing=\"0\" cellpadding=\"0\" data-sheets-root=\"1\" data-sheets-baot=\"1\">\n<colgroup>\n<col width=\"174\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/><\/colgroup>\n<tbody>\n<tr>\n<td><strong>Payment Mode<\/strong><\/td>\n<td><strong>Typical Gateway Fee<\/strong><\/td>\n<td><strong>The Reality<\/strong><\/td>\n<td><strong>Your Action<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Credit cards<\/td>\n<td>1.5-2.5%<\/td>\n<td>Standard gateway cost + bank MDR.<\/td>\n<td>\n<div>\n<div>Route high-value or international txns here.<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<tr>\n<td>Debit cards<\/td>\n<td>0.4-1.0%<\/td>\n<td>Lower MDR, but often grouped into a flat 2% by PGs.<\/td>\n<td>\n<div>\n<div>Negotiate split rates for domestic cards.<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<tr>\n<td>Net banking<\/td>\n<td>1.5-2.0% or flat<\/td>\n<td>Mostly legacy, declining usage.<\/td>\n<td>\n<div>\n<div>Keep as a fallback option.<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<tr>\n<td>UPI (P2M)<\/td>\n<td>0% MDR + PG Platform Fee (Often ~2%)<\/td>\n<td>Gateways incur zero bank costs here, meaning their margin is 100%.<\/td>\n<td>\n<div>\n<div>Negotiate a lower specific platform fee for UPI, then maximize its share.<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<tr>\n<td>Wallets<\/td>\n<td>1.5-2.0%<\/td>\n<td>Standard TDR applies.<\/td>\n<td>\n<div>\n<div>Niche use cases only.<\/div>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3 data-path-to-node=\"9\">How to Increase Your UPI Mix<\/h3>\n<p data-path-to-node=\"10\">Once you have negotiated a better rate for UPI, you need to drive customers to use it. UPI should appear first in your payment options UI, not buried under cards. Research consistently shows that payment method ordering influences choice\u2014UPI at the top increases UPI share by 15-25% in A\/B tests.<\/p>\n<p data-path-to-node=\"11\"><b data-path-to-node=\"11\" data-index-in-node=\"0\">Practical steps:<\/b><\/p>\n<ul data-path-to-node=\"12\">\n<li>\n<p data-path-to-node=\"12,0,0\">Place UPI (QR + UPI ID + UPI apps) as the first option in your checkout.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"12,1,0\">For mobile checkout, show UPI app intent links (GPay, PhonePe, Paytm) directly.<\/p>\n<\/li>\n<li>\n<p id=\"p-rc_0b9215a8ccbdd914-27\" data-path-to-node=\"12,2,0\">For recurring billing, use UPI <span class=\"citation-178 citation-179 citation-180 citation-181 citation-end-181\">AutoPay (available on Razorpay Subscriptions API).<\/span><\/p>\n<\/li>\n<li>\n<p id=\"p-rc_0b9215a8ccbdd914-28\" data-path-to-node=\"12,3,0\"><span class=\"citation-174 citation-175 citation-176 citation-177 citation-end-177\">For B2B invoicing, UPI with payment links is faster than NEFT and cheaper.<\/span><\/p>\n<\/li>\n<\/ul>\n<h4 data-path-to-node=\"13\"><span class=\"citation-170 citation-171 citation-172 citation-173 citation-end-173\">Effective Rate Reduction Through Payment Mix<\/span><\/h4>\n<p id=\"p-rc_0b9215a8ccbdd914-29\" data-path-to-node=\"14\"><span class=\"citation-166 citation-167 citation-168 citation-169 citation-end-169\">If you accept a flat 2% fee<\/span><span class=\"citation-166 citation-167 citation-168\"> across all modes, your blended rate will always be 2%. However, if you negotiate a split rate\u2014for example, <\/span><b data-path-to-node=\"14\" data-index-in-node=\"135\"><span class=\"citation-166 citation-167 citation-168 citation-end-168\">2% on cards and <\/span><span class=\"citation-166 citation-167\">a 0.5% platform fee on UPI<\/span><\/b><span class=\"citation-166 citation-167 citation-end-167\">\u2014your payment mix becomes a powerful tool to increase your margins.<\/span><\/p>\n<p id=\"p-rc_0b9215a8ccbdd914-30\" data-path-to-node=\"15\"><span class=\"citation-164 citation-165 citation-end-165\">Here is what happens to your blended effe<\/span><span class=\"citation-164 citation-end-164\">ctive rate when you actively shift customers to UPI under a split-pricing mode<\/span>l.<\/p>\n<table dir=\"ltr\" border=\"1\" cellspacing=\"0\" cellpadding=\"0\" data-sheets-root=\"1\" data-sheets-baot=\"1\">\n<colgroup>\n<col width=\"174\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/><\/colgroup>\n<tbody>\n<tr>\n<td><strong>UPI Share<\/strong><\/td>\n<td><strong>Card Share<\/strong><\/td>\n<td><strong>Card Rate (2%)<\/strong><\/td>\n<td><strong>UPI Rate (0.5%)<\/strong><\/td>\n<td>\n<div>\n<div><strong>Blended Effective Rate<\/strong><\/div>\n<\/div>\n<\/td>\n<\/tr>\n<tr>\n<td>20%<\/td>\n<td>80%<\/td>\n<td>2%<\/td>\n<td>0.50%<\/td>\n<td>1.70%<\/td>\n<\/tr>\n<tr>\n<td>40%<\/td>\n<td>60%<\/td>\n<td>2%<\/td>\n<td>0.50%<\/td>\n<td>1.40%<\/td>\n<\/tr>\n<tr>\n<td>60%<\/td>\n<td>40%<\/td>\n<td>2%<\/td>\n<td>0.50%<\/td>\n<td>1.10%<\/td>\n<\/tr>\n<tr>\n<td>70%<\/td>\n<td>30%<\/td>\n<td>2%<\/td>\n<td>0.50%<\/td>\n<td>0.95%<\/td>\n<\/tr>\n<tr>\n<td>80%<\/td>\n<td>20%<\/td>\n<td>2%<\/td>\n<td>0.50%<\/td>\n<td>0.80%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><b data-path-to-node=\"17,0\" data-index-in-node=\"0\">UPI SHIFT IMPACT:<\/b> By negotiating a lower UPI platform fee and shifting your mix from 40% to 70% UPI, your blended rate drops from 1.40% to 0.95%. For a business doing \u20b910L in monthly volume, that is <b data-path-to-node=\"17,0\" data-index-in-node=\"198\">\u20b94,500\/month saved directly to your bottom line<\/b>, simply by rearranging your checkout UI and negotiating smartly.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"5_Evaluating_Zero-Setup_Gateways_What_to_Actually_Check\"><\/span><b>5. Evaluating Zero-Setup Gateways: What to Actually Check<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">&#8220;Zero setup fee&#8221; has become a marketing claim used loosely. Here is a practical checklist of what to verify before signing up:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Evaluation Criterion<\/b><\/td>\n<td><b>What to Ask<\/b><\/td>\n<td><b>Red Flag<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">TDR structure<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Is TDR the same across UPI, cards, net banking?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Mode-specific rates with higher fees on cards<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Is there any annual or monthly maintenance charge?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">AMC buried in T&amp;Cs, not on pricing page<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Refund charges<\/span><\/td>\n<td><span style=\"font-weight: 400;\">What is charged per refund? Per dispute?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b95-25\/refund charges not mentioned upfront<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Instant settlement<\/span><\/td>\n<td><span style=\"font-weight: 400;\">What does instant settlement cost?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Extra 0.25-1% charge for T+0 settlement<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Success rate data<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Can they show success rate benchmarks by payment mode?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Vague answers or refusal to share data<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Sandbox quality<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Is the test environment stable? Are test credentials easy to get?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Broken sandboxes, manual KYC before testing<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Webhook reliability<\/span><\/td>\n<td><span style=\"font-weight: 400;\">What is their webhook delivery SLA?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No SLA, no retry logic documented<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Support TAT<\/span><\/td>\n<td><span style=\"font-weight: 400;\">What is P1 response time? Is there a dedicated RM?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Only ticket-based support, no phone line<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Enterprise pricing<\/span><\/td>\n<td><span style=\"font-weight: 400;\">At what volume does custom pricing kick in?<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Opaque negotiation, no published threshold<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3><b>Volume Thresholds for Enterprise Pricing<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Most gateways offer custom TDR negotiation above a certain monthly GTV. Typical thresholds:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">\u20b95L\/month: Custom pricing discussions open (<a href=\"https:\/\/razorpay.com\/blog\/razorpay-payment-gateway-pricing-explained\/\">Razorpay Payment Gateway Pricing<\/a>)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">\u20b91Cr\/month: Significant TDR reduction possible (1.4-1.6% range)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">\u20b95Cr+\/month: Full enterprise contract with dedicated infrastructure and SLA<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">At \u20b91Cr+ monthly volume, the negotiation leverage is high. The primary variables to negotiate are: TDR on cards (not UPI, which stays at zero), instant settlement charges, and chargeback dispute fees.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"6_The_SME_Negotiation_Playbook\"><\/span><b>6. The SME Negotiation Playbook<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you are processing \u20b95L-\u20b950L per month, you are in a volume range where negotiation is possible but not automatic. Here is how to approach it:<\/span><\/p>\n<h3><b>Step 1: Know Your Numbers Before the Call<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Calculate your five-factor cost across current and target gateways before you speak to a sales team. Walk in with your own TCO model, not theirs. Specifically:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your current monthly GTV (attempted and successful separately)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your current success rate by payment mode<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your current refund volume per month<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your UPI\/card split<\/span><\/li>\n<\/ul>\n<h3><b>Step 2: Use Competitive Quotes as Leverage \u2014 But Correctly<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Getting a competing quote at 1.6% does not automatically mean you should demand 1.6% from your current gateway. The right question is: what is the success rate and AMC on that 1.6% offer? A 1.6% gateway with 70% success often nets you less revenue than a 2.0% gateway with 85% success. Show this math to your account manager \u2014 it reframes the conversation from price-matching to value justification.<\/span><\/p>\n<h3><b>Step 3: Negotiate the Right Variables<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">TDR on cards, instant settlement fee, and chargeback handling fees are the three negotiable variables. UPI MDR cannot be negotiated (it is zero by law). Setup and AMC on modern gateways are already zero, so there is nothing to negotiate there.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Variable<\/b><\/td>\n<td><b>Negotiable?<\/b><\/td>\n<td><b>Typical Starting Ask<\/b><\/td>\n<td><b>Realistic Outcome at \u20b910L\/mo<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Card TDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Match competitor rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0.1-0.2% reduction<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UPI MDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No (RBI mandate)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">N\/A<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Always 0%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Setup fee<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes (often already 0)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Waive if not zero<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually already 0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes (often already 0)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Waive if not zero<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually already 0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Instant settlement fee<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Reduce or waive<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0.1-0.25% reduction possible<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Refund\/chargeback fees<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Waive on low dispute rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Waivable at &lt;0.5% dispute rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3><b>Step 4: Anchor on TCO, Not TDR<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The most effective negotiation frame: bring your five-factor cost model to the conversation. Show that you are not just comparing TDR \u2014 you are comparing net revenue after fees, failures, and operational overhead. This is harder for a gateway to dismiss than a simple &#8220;your competitor charges less.&#8221;<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"7_Compliance_and_Security_What_Zero-Setup_Gateways_Cover\"><\/span><b>7. Compliance and Security: What Zero-Setup Gateways Cover<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">PCI-DSS compliance and RBI tokenization are non-negotiable requirements for any Indian payment gateway. These are often used as upsell points by legacy providers.<\/span><\/p>\n<h3><b>RBI Tokenization (Card-on-File Rules)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">RBI mandated that merchants cannot store raw card data from September 2022. All card transactions must now use network tokens (issued by Visa, Mastercard, RuPay). This means:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You cannot store a customer&#8217;s 16-digit card number<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recurring card payments require tokenized card references<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The gateway must handle tokenization automatically<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Modern zero-setup gateways like Razorpay handle tokenization in the background with no additional charge or integration work. Legacy gateways sometimes charge a separate compliance fee for tokenization infrastructure.<\/span><\/p>\n<h3><b>PCI-DSS: What It Means for Your Integration<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">PCI-DSS Level 1 compliance means the gateway&#8217;s infrastructure meets the highest security standard for card data handling. You benefit from this compliance by using a certified gateway \u2014 you do not need to become PCI-certified yourself, provided your integration does not touch raw card data.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Using a hosted payment page or a certified JavaScript SDK (rather than a custom card form that POSTs directly to your server) keeps you out of PCI scope entirely. This is the default integration path for all major Indian gateways.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"8_When_to_Switch_Gateways_and_When_Not_To\"><\/span><b>8. When to Switch Gateways (and When Not To)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Switching gateways has a real cost: engineering time, testing, potential downtime, re-activating saved payment methods. Do not switch for a 0.2% TDR saving unless the five-factor analysis clearly justifies it.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Scenario<\/b><\/td>\n<td><b>Should You Switch?<\/b><\/td>\n<td><b>Why<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Success rate consistently below 75%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Failure cost likely outweighs switching cost in 2-3 months<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC + setup fees eroding margin at low volume<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Zero-AMC gateway saves money from month 1<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Competitor quotes 0.2% lower TDR, same success rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Evaluate TCO first<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Switching cost may take 6-12 months to recover<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Engineering team struggling with poor API docs<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Operational cost is real and recurring<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Happy with current gateway, looking to reduce cost<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Negotiate first<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Use competitive quote to renegotiate \u2014 avoids migration cost<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Scaling internationally<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Evaluate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Cross-border requirements differ; check currency support and payout options<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<div style=\"font-family: -apple-system, 'Segoe UI', sans-serif; font-size: 11px; font-weight: bold; letter-spacing: 0.1em; text-transform: uppercase; color: #2563eb; margin-bottom: 6px;\">Decision Rule<\/div>\n<p style=\"margin: 0; font-size: 16px; color: #1e3a5f; font-style: italic;\">If the TCO saving in Year 1 exceeds your estimated switching cost (2\u20134 weeks of engineering time), switch. If not, negotiate with your current provider using the competing offer as leverage.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"9_How_to_Pick_the_Right_Gateway_for_Your_Stage\"><\/span><b>9. How to Pick the Right Gateway for Your Stage<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Different business types have different cost profiles. Here is a practical framework:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Business Type<\/b><\/td>\n<td><b>Primary Cost Driver<\/b><\/td>\n<td><b>What to Prioritise<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Bootstrapped startup (&lt;\u20b92L\/month)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Fixed costs (AMC, setup)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Zero-AMC, zero-setup. TDR matters less than fixed cost.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">D2C brand (\u20b910L-\u20b91Cr\/month)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Failure cost + TDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Success rate is the #1 variable. Run TCO model before deciding.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">SaaS\/subscription business<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Recurring payment success<\/span><\/td>\n<td><span style=\"font-weight: 400;\">UPI AutoPay + card tokenization. Dunning management capabilities.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">High-volume marketplace (\u20b91Cr+)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">TDR + settlement speed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Negotiate custom TDR. T+1 or T+0 settlement for cash flow.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">B2B invoicing<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Payment link UX + reconciliation<\/span><\/td>\n<td><span style=\"font-weight: 400;\">UPI payment links, auto-reconciliation, GST invoicing support.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Offline\/hybrid retail<\/span><\/td>\n<td><span style=\"font-weight: 400;\">QR + POS integration<\/span><\/td>\n<td><span style=\"font-weight: 400;\">UPI QR (zero MDR) + low-fee card terminal. Unified dashboard.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"10_The_Decision_Framework_A_Summary\"><\/span><b>10. The Decision Framework: A Summary<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The cheapest payment gateway is the one that maximises your net realised revenue \u2014 not the one with the lowest TDR.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To make the right decision:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Calculate your five-factor cost (TDR + fixed + failure + operational + engineering) for each option<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Optimise your payment mix toward UPI to reduce blended TDR before changing gateways<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Compare on Net Realised Revenue, not headline TDR<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Negotiate before switching \u2014 use TCO data, not just a competitor quote<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Only switch when Year 1 TCO saving exceeds your switching cost<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Razorpay&#8217;s 2% zero-AMC model is designed around this framework. The pricing is set to eliminate fixed cost traps for early-stage businesses, and the Smart Routing infrastructure is the mechanism behind the success rate advantage that matters most at scale. If you want to test whether Razorpay&#8217;s TCO is lower for your specific volume and payment mix, the numbers above give you the model to run it.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><strong>1. Does Razorpay charge any AMC or setup fee?<\/strong><\/h3>\n<p>No. There is zero AMC and zero setup fee. You only pay when a transaction succeeds. This makes Razorpay particularly cost-effective for early-stage businesses \u2014 at \u20b950,000\/month volume, the zero-AMC model is cheaper on an annual basis than a 1.8% gateway that charges \u20b94,999 AMC.<\/p>\n<h3><strong>2. How does Razorpay&#8217;s total cost compare to gateways with lower headline TDR?<\/strong><\/h3>\n<p>You need to compare on Total Cost of Ownership, not just TDR. TCO includes: TDR + AMC + setup fees + revenue lost to failed transactions + reconciliation overhead. At \u20b91L\/month, Razorpay at 2% with zero AMC is cheaper than a 1.8% gateway with \u20b94,999 AMC. At \u20b950L\/month, a 10\u201315% success rate advantage can recover \u20b975,000\u2013\u20b91,50,000\/month in otherwise-lost revenue \u2014 which is 7\u201315x the monthly TDR difference.<\/p>\n<h3><strong>3. How do I calculate my real cost per transaction?<\/strong><\/h3>\n<p>Use this formula: (Monthly TDR cost + AMC\/12 + Setup fee\/12) \u00f7 Monthly successful transactions = True cost per transaction. Then add your failure cost: Attempted volume \u00d7 (1 \u2212 success rate) \u00d7 net margin % = monthly revenue lost to failures. Most merchants find the failure cost is 5\u201310x larger than the TDR cost.<\/p>\n<h3><strong>4. Is Razorpay more expensive for small businesses doing \u20b91L\/month or less?<\/strong><\/h3>\n<p>Not when you account for AMC. At \u20b91L\/month, Razorpay at 2% costs \u20b92,000\/month (\u20b924,000\/year). A payment gateway at 1.8% with \u20b94,999 AMC costs \u20b91,800\/month in TDR plus \u20b9417\/month in AMC = \u20b92,217\/month (\u20b926,604\/year). Razorpay is cheaper by around \u20b92,600\/year at this volume, before accounting for success rate differences.<\/p>\n<h3><strong>5. Do high-volume merchants get custom pricing?<\/strong><\/h3>\n<p>Yes. Merchants processing \u20b95L\/month or more can discuss custom pricing. At \u20b91Cr+\/month, significant TDR reductions on card transactions are possible (1.4\u20131.6% range*). UPI always stays at zero regardless of volume \u2014 that is RBI mandate, not a negotiated rate.<\/p>\n<p><i><span style=\"font-weight: 400;\">This article is for informational purposes. All cost comparisons are based on scenario modelling with example inputs. Actual costs will vary based on your payment mix, dispute rate, and negotiated rates. Verify current pricing directly with any gateway before making a decision.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most businesses pick a payment gateway by looking at one number: the TDR (Transaction Discount Rate). A gateway advertising 1.6% beats one charging 2.0%, right? Not usually. This guide gives you a five-factor framework to calculate what a gateway actually costs \u2014 and shows, with real numbers, why the headline TDR is often the least<\/p>\n","protected":false},"author":149,"featured_media":26642,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[906],"tags":[],"class_list":{"0":"post-26640","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payment-gateway"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26640","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/149"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=26640"}],"version-history":[{"count":2,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26640\/revisions"}],"predecessor-version":[{"id":26644,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26640\/revisions\/26644"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/26642"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=26640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=26640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=26640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}