{"id":26978,"date":"2026-06-08T11:51:53","date_gmt":"2026-06-08T06:21:53","guid":{"rendered":"https:\/\/blog.razorpay.in\/blog\/?p=26978"},"modified":"2026-06-08T11:51:53","modified_gmt":"2026-06-08T06:21:53","slug":"cheapest-payment-gateway-for-businesses-under-%e2%82%b925-lakh-monthly-gmv-how-to-compare-real-costs","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/cheapest-payment-gateway-for-businesses-under-%e2%82%b925-lakh-monthly-gmv-how-to-compare-real-costs\/","title":{"rendered":"Cheapest Payment Gateway for Businesses Under \u20b925 Lakh Monthly GMV: How to Compare Real Costs"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">For an Indian business processing under \u20b925 lakh in monthly Gross Merchandise Value (GMV), the cheapest payment gateway is rarely the one with the lowest advertised Merchant Discount Rate (MDR). At this volume band, fixed costs such as annual maintenance charges (AMC) and setup fees, plus revenue lost on failed transactions, dominate small differences in headline transaction rates. A payment gateway with a 1.8% MDR but a \u20b94,999 AMC and an 85% payment success rate can leave more rupees on the table than one with a 2% MDR, zero AMC, and a 93% success rate. This guide reframes &#8220;cheapest&#8221; as the payment gateway that maximises net realised revenue.<\/span><\/p>\n<h2><strong>Key Takeaways<\/strong><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">&#8220;Cheapest&#8221; under \u20b925 lakh GMV means highest net realised revenue, not lowest MDR.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A \u20b94,999 annual AMC adds \u20b9416 to monthly operating cost before a single transaction is processed.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">At \u20b92.08 lakh monthly GMV, a 0.2 percentage point MDR discount is fully erased by a \u20b94,999 AMC.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">One percentage point of payment success rate is worth 10x a 0.1 percentage point MDR saving at \u20b910 lakh GMV.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bank-account UPI carries 0% network MDR, but UPI on wallets or RuPay credit cards can attract 0.5% to 2% merchant cost.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MDR is generally not refunded when you refund a customer.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Instant settlement typically costs 0.15% to 0.30% per transaction.<\/span><\/li>\n<\/ul>\n<h2><strong>Quick Answer: Which Payment Gateway Is Cheapest Under \u20b925 Lakh GMV?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The cheapest payment gateway for a business under \u20b925 lakh monthly GMV is almost never the one with the lowest advertised transaction rate. It is the payment gateway that produces the highest net rupee deposit in your bank account after factoring in transaction fees, fixed fees, payment success rate, refunds, and any settlement add-ons.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For this volume band, the lowest total cost of ownership (TCO) comes from a payment gateway that combines six attributes:<\/span><\/p>\n<table dir=\"ltr\" border=\"1\" cellspacing=\"0\" cellpadding=\"0\" data-sheets-root=\"1\" data-sheets-baot=\"1\">\n<colgroup>\n<col width=\"100\" \/>\n<col width=\"100\" \/><\/colgroup>\n<tbody>\n<tr>\n<td>\n<h3><strong>Attribute<\/strong><\/h3>\n<\/td>\n<td>\n<h3><strong>What to look for<\/strong><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td>Setup fee<\/td>\n<td>\u20b90, or fully waived<\/td>\n<\/tr>\n<tr>\n<td>Annual maintenance charge<\/td>\n<td>\u20b90, or under \u20b91,200 per year<\/td>\n<\/tr>\n<tr>\n<td>Domestic MDR<\/td>\n<td>Transparent, flat, around 2% for cards, UPI, net banking, wallets<\/td>\n<\/tr>\n<tr>\n<td>Payment success rate<\/td>\n<td>Independently verifiable at or above 93%<\/td>\n<\/tr>\n<tr>\n<td>Instant settlement<\/td>\n<td>Optional and per-transaction, not bundled<\/td>\n<\/tr>\n<tr>\n<td>Refund and chargeback policy<\/td>\n<td>No additional refund processing fee, clear MDR treatment<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">A payment gateway charging 1.9% MDR but \u20b94,999 in AMC and showing an 85% success rate can produce \u20b910,000 to \u20b960,000 less monthly revenue than a zero-AMC, 93% success payment gateway at the same \u20b910 lakh GMV. The brand to choose is the one whose published rate card plus operational metrics deliver the highest net realised revenue against your actual payment mix. Razorpay&#8217;s standard plan, which lists <\/span><a href=\"https:\/\/razorpay.com\/pricing\/\"><span style=\"font-weight: 400;\">\u20b90 setup and \u20b90 maintenance with a 2% platform fee on domestic transactions<\/span><\/a><span style=\"font-weight: 400;\">, is a reference point for evaluating any other published rate card.<\/span><\/p>\n<h2><strong>Why Lowest MDR Is Not the Same as Lowest Cost<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Most merchants treat MDR as the entire cost of a payment gateway. This is incorrect for businesses under \u20b925 lakh monthly GMV, because at lower volumes fixed fees and failure-driven revenue loss dominate small MDR differences.<\/span><\/p>\n<h3><strong>MDR only applies when a payment succeeds<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">MDR is levied on successful transactions. A failed UPI handshake, a timed-out card authentication, or a dropped 3D Secure flow does not show up as a gateway fee, but it does erase the entire order value from your top line. A payment gateway with a slightly lower MDR but a weaker success rate effectively charges you the full margin of every dropped order.<\/span><\/p>\n<h3><strong>The real metric is net realised revenue<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">A merchant-friendly formula for evaluating any payment gateway is:<\/span><\/p>\n<p><b>Net Realised Revenue = (Attempted GMV \u00d7 Payment Success Rate) &#8211; Transaction Fees &#8211; Fixed Fees &#8211; Settlement Add-ons &#8211; Refund and Dispute Costs<\/b><\/p>\n<p><span style=\"font-weight: 400;\">This formula starts with attempted GMV rather than successful GMV, because the payment success rate determines how much of your traffic actually converts into captured revenue. A payment gateway with 93% success on \u20b910 lakh attempted GMV captures \u20b99.3 lakh. One with 85% captures only \u20b98.5 lakh. That \u20b980,000 monthly gap is 40x larger than the saving from a 0.1 percentage point lower MDR at the same volume.<\/span><\/p>\n<h3><strong>Why this matters more below \u20b925 lakh GMV<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Fixed fees amortise over fewer transactions at low GMV. A \u20b94,999 annual AMC works out to \u20b9416 per month. At \u20b92 lakh GMV, that \u20b9416 is 0.21% of your top line \u2014 enough to wipe out an entire 0.2 percentage point MDR advantage advertised elsewhere. At \u20b950 lakh GMV, the same \u20b94,999 is only 0.008% of GMV and effectively irrelevant.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is why our <\/span><a href=\"https:\/\/razorpay.com\/blog\/low-cost-payment-gateway-in-india-the-complete-decision-guide\/\"><span style=\"font-weight: 400;\">low-cost payment gateway decision guide<\/span><\/a><span style=\"font-weight: 400;\"> recommends building a TCO model rather than ranking payment gateways by their landing-page MDR.<\/span><\/p>\n<p><em><b>Did You Know?<\/b><span style=\"font-weight: 400;\"> A payment gateway charging \u20b94,999 per year in AMC adds \u20b9416 to monthly operating cost. At \u20b92 lakh monthly GMV, that single line item adds 0.21 percentage points to your effective cost, enough to erase the advantage of a 0.2 percentage point lower advertised MDR.<\/span><\/em><\/p>\n<h2><strong>The 7 Cost Components You Must Compare<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">A complete payment gateway comparison must look at seven cost categories. Each interacts with your GMV, payment mix, and refund rate differently.<\/span><\/p>\n<h3><strong>1. MDR or platform fee by payment mode<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">MDR varies by instrument. Typical Indian benchmarks for 2026 cluster as follows:<\/span><\/p>\n<table dir=\"ltr\" border=\"1\" cellspacing=\"0\" cellpadding=\"0\" data-sheets-root=\"1\" data-sheets-baot=\"1\">\n<colgroup>\n<col width=\"100\" \/>\n<col width=\"100\" \/><\/colgroup>\n<tbody>\n<tr>\n<td><strong>Payment mode<\/strong><\/td>\n<td><strong>Typical MDR band<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Bank-account UPI<\/td>\n<td>0% network, gateway platform fee may apply<\/td>\n<\/tr>\n<tr>\n<td>Domestic debit cards<\/td>\n<td>0.4% to 0.9%<\/td>\n<\/tr>\n<tr>\n<td>Domestic credit cards<\/td>\n<td>1.5% to 2.2%<\/td>\n<\/tr>\n<tr>\n<td>Net banking<\/td>\n<td>1.0% to 1.5%<\/td>\n<\/tr>\n<tr>\n<td>Wallets<\/td>\n<td>1.5% to 2.5%<\/td>\n<\/tr>\n<tr>\n<td>EMI<\/td>\n<td>2.5% to 3.5%<\/td>\n<\/tr>\n<tr>\n<td>International cards<\/td>\n<td>3.0% to 4.5%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Use a blended MDR to compare flat-fee and instrument-wise payment gateways. Our <\/span><a href=\"https:\/\/razorpay.com\/blog\/convenience-fee-tdr-mdr-platform-fee-amc-setup-fee-technology-fee-of-payment-gateway\/\"><span style=\"font-weight: 400;\">breakdown of MDR, TDR, AMC, setup fee, and platform fee<\/span><\/a><span style=\"font-weight: 400;\"> details each component.<\/span><\/p>\n<h3><strong>2. Setup fee and AMC<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Some payment gateways still charge \u20b95,000 to \u20b950,000 in one-time setup fees and \u20b92,400 to \u20b99,999 per year in AMC. Others, including Razorpay, list <\/span><a href=\"https:\/\/razorpay.com\/pricing\/\"><span style=\"font-weight: 400;\">\u20b90 setup and \u20b90 maintenance<\/span><\/a><span style=\"font-weight: 400;\">. One legacy payment gateway publishes a \u20b91,200 plus GST annual software upgradation charge with a privilege plan setup fee of \u20b930,000. At low GMV, these fixed line items dominate.<\/span><\/p>\n<h3><strong>3. Payment success rate<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Independent comparisons place payment success rates across Indian payment gateways between roughly 80% at the low end and 93% or higher at the top end. One comparison reports <\/span><a href=\"https:\/\/dev.to\/techiestark\/payment-gateway-pricing-compared-high-roi-options-in-india-in-2026-39h6\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">at least 93% payment success rate<\/span><\/a><span style=\"font-weight: 400;\"> for Razorpay&#8217;s payment gateway. An 8 percentage point gap on \u20b910 lakh GMV equals \u20b980,000 of revenue that either converts or evaporates.<\/span><\/p>\n<h3><strong>4. GST on payment gateway fees<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">GST at 18% applies on payment gateway fees in India. A 2% MDR becomes an effective 2.36% after GST. Always compute MDR \u00d7 1.18 when modelling cost.<\/span><\/p>\n<h3><strong>5. Instant settlement fees<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Same-day or instant settlement is rarely free. Razorpay lists instant settlement pricing starting at <\/span><a href=\"https:\/\/razorpay.com\/capital\/instant-settlements\/\"><span style=\"font-weight: 400;\">0.20% for settlements within 10 seconds and 0.15% to 0.20% for same-working-day settlements<\/span><\/a><span style=\"font-weight: 400;\"> with no setup or AMC on the facility itself. Some payment gateways charge 0.20% to 0.50% per day for advancing settlement.<\/span><\/p>\n<h3><strong>6. Refund and chargeback cost<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">MDR is generally not refunded when a merchant refunds a customer. Our explainer on <\/span><a href=\"https:\/\/razorpay.com\/blog\/refunds-and-mdr-in-payment-gateways\/\"><span style=\"font-weight: 400;\">whether MDR is refunded on refunds<\/span><\/a><span style=\"font-weight: 400;\"> confirms that the principal goes back to the customer but the original transaction fee is not reversed. For a business with a 5% refund rate at \u20b910 lakh GMV and 2% MDR, that is \u20b91,000 in MDR retained on reversed revenue every month.<\/span><\/p>\n<h3><strong>7. Recurring payment and mandate costs<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Subscriptions ride on UPI AutoPay, e-NACH, or card mandates. Razorpay&#8217;s <\/span><a href=\"https:\/\/razorpay.com\/e-mandate\/\"><span style=\"font-weight: 400;\">e-mandate and recurring payments<\/span><\/a><span style=\"font-weight: 400;\"> overview notes <\/span><a href=\"https:\/\/razorpay.com\/blog\/what-is-razorpay-emandate\/\"><span style=\"font-weight: 400;\">transaction limits of \u20b91,00,000 per transaction for categories such as mutual fund subscriptions, insurance premiums, and credit card bill payments<\/span><\/a><span style=\"font-weight: 400;\">, and \u20b915,000 for other categories.<\/span><\/p>\n<h2><strong>Public Pricing Snapshot of Major Indian Payment Gateways<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The table below consolidates publicly listed standard pricing as inputs to your TCO calculation. Treat these as starting points, since enterprise pricing is negotiable above approximately \u20b95 lakh monthly GMV.<\/span><\/p>\n<table>\n<thead>\n<tr>\n<th><b>Payment gateway<\/b><\/th>\n<th><b>Domestic standard pricing<\/b><\/th>\n<th><b>International cards<\/b><\/th>\n<th><b>Setup fee<\/b><\/th>\n<th><b>AMC or annual fixed fee<\/b><\/th>\n<th><b>Settlement notes<\/b><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span style=\"font-weight: 400;\">Razorpay<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2% per successful domestic transaction across cards, UPI, net banking, wallets<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3% for Amex, Diners, international cards, and EMI<\/span><\/td>\n<td><a href=\"https:\/\/razorpay.com\/pricing\/\"><span style=\"font-weight: 400;\">\u20b90<\/span><\/a><\/td>\n<td><a href=\"https:\/\/razorpay.com\/pricing\/\"><span style=\"font-weight: 400;\">\u20b90<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">Standard settlement free, optional instant settlement at <\/span><a href=\"https:\/\/razorpay.com\/capital\/instant-settlements\/\"><span style=\"font-weight: 400;\">0.15% to 0.30%<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">One promotional-rate payment gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.95% standard domestic MDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~3% standard<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not publicly listed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not publicly listed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">T+2 default; instant settlement available up to a per-day limit<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">A pay-as-you-use payment gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2% plus GST for cards, net banking, wallets, UPI<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3% plus GST<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not standard<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not standard<\/span><\/td>\n<td><span style=\"font-weight: 400;\">T+1 or T+2 typical<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">An instrument-priced legacy payment gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.90% UPI, 2.15% credit card on UPI, 3% corporate\/Amex\/Diners<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3% international cards<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90 startup plan; higher for premium plans<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b91,200 annual software upgradation charge plus GST on standard plan<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Early settlement at 0.20% to 0.50% per day<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">An online-only zero-AMC payment gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2% plus \u20b93 per transaction<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3% plus \u20b93<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90 for gateway; store plans up to \u20b914,999\/year<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standard T+2<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">An SME-focused payment gateway<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0.40% UPI under \u20b92,000, 0.90% UPI over \u20b92,000; card rates 1.20% to 3.99% by category<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Category-dependent<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90 for SME<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Not explicitly listed<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Mixed T+0\/T+1 products<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><b>Important context.<\/b><span style=\"font-weight: 400;\"> Some payment gateways charge \u20b94,999 per year in AMC, which adds materially to effective cost under \u20b925 lakh GMV. Some gateways with lower TDR recover margin through annual maintenance charges, software upgradation charges, or per-settlement fees not visible on the rate card. To turn the table into a ranking, layer your GMV, payment mix, refund rate, and target settlement speed onto the rate cards.<\/span><\/p>\n<p><em><b>Did You Know?<\/b><span style=\"font-weight: 400;\"> Some payment gateways still charge a one-time setup fee between \u20b95,000 and \u20b950,000 and an annual maintenance charge of up to \u20b99,999 per year. Razorpay&#8217;s published pricing lists \u20b90 for both setup and maintenance.<\/span><\/em><\/p>\n<h2><strong>How to Calculate Real Payment Gateway Cost Under \u20b925 Lakh GMV<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Use a five-step model to convert any rate card into an actual rupee cost for your business.<\/span><\/p>\n<h3><strong>Step 1: Start with attempted GMV, not successful GMV<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Pull your last six months of transaction data and identify gross attempted transaction value, including failed and abandoned attempts. This number, not your captured revenue, is the input into the cost model, because it is where payment success rate acts as a multiplier.<\/span><\/p>\n<h3><strong>Step 2: Apply payment success rate<\/strong><\/h3>\n<p><em><span style=\"font-weight: 400;\">Captured GMV = Attempted GMV \u00d7 Payment Success Rate<\/span><\/em><\/p>\n<p><span style=\"font-weight: 400;\">A payment gateway claiming 93% on \u20b910 lakh of attempted GMV captures \u20b99.3 lakh. A payment gateway delivering 85% captures \u20b98.5 lakh. Always treat success rate as the first cost lever, because it acts on the full cart value, not just the fee slice.<\/span><\/p>\n<h3><strong>Step 3: Apply MDR and GST<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Transaction Fees = Captured GMV \u00d7 MDR \u00d7 1.18<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Use a blended MDR based on your actual payment mix:<\/span><\/p>\n<p><b>Blended MDR = (UPI share \u00d7 UPI MDR) + (Card share \u00d7 Card MDR) + (Wallet share \u00d7 Wallet MDR) + (Net Banking share \u00d7 Net Banking MDR)<\/b><\/p>\n<p><span style=\"font-weight: 400;\">For a D2C brand with 70% UPI, 20% cards, and 10% wallets, the blended MDR calculation depends heavily on the gateway&#8217;s platform fee on bank-account UPI \u2014 which varies across providers and is often not prominently disclosed.<\/span><\/p>\n<h3><strong>Step 4: Add fixed fees<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Monthly Fixed Cost = (Annual AMC \/ 12) + (Setup Fee \/ 12 for the first year)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A \u20b95,000 setup fee plus a \u20b94,999 AMC adds \u20b9833 per month in year one. At \u20b92 lakh GMV, that is 0.42% of GMV, effectively a hidden MDR. Razorpay&#8217;s <\/span><a href=\"https:\/\/razorpay.com\/blog\/payment-gateway-misconceptions-merchants-should-know\"><span style=\"font-weight: 400;\">payment gateway misconceptions guide<\/span><\/a><span style=\"font-weight: 400;\"> flags this as a common mistake.<\/span><\/p>\n<h3><strong>Step 5: Add refund, chargeback, and settlement costs<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Refund MDR Cost = Refunded GMV \u00d7 MDR<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instant Settlement Cost = Instant-settled GMV \u00d7 Instant Settlement Fee Percentage<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Add these to fixed and transaction costs to arrive at total cost. Subtract from captured revenue to get net realised revenue.<\/span><\/p>\n<h3><strong>The break-even principle<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">A \u20b94,999 AMC needs to be offset by MDR savings somewhere. The break-even GMV at which a 0.2 percentage point lower MDR offsets a \u20b94,999 AMC is approximately \u20b92.08 lakh per month. Below that, a zero-AMC payment gateway with 0.2 percentage points higher MDR is cheaper in absolute rupee terms. Above \u20b92.08 lakh, the lower-MDR plan starts to win on direct transaction cost, but only if its success rate matches.<\/span><\/p>\n<h2><strong>Worked Examples: \u20b95 Lakh, \u20b910 Lakh, and \u20b925 Lakh Monthly GMV<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The following examples use generic &#8220;Payment Gateway A&#8221; and &#8220;Payment Gateway B&#8221; labels. Numbers are illustrative but anchored in the published rate cards above.<\/span><\/p>\n<h3><strong>Example 1: \u20b95 lakh monthly GMV<\/strong><\/h3>\n<table>\n<thead>\n<tr>\n<th><\/th>\n<th><b>Payment Gateway A<\/b><\/th>\n<th><b>Payment Gateway B<\/b><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span style=\"font-weight: 400;\">MDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.8%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC (monthly)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b9416<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Payment success rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">93%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">86%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Captured GMV<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b94,65,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b94,30,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Transaction fees<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b99,300<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b97,740<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Net realised revenue<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b94,55,700<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b94,21,844<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The 0.2 percentage point MDR advantage on Payment Gateway B is worth \u20b9860 per month at most. The 7 percentage point success rate gap costs \u20b935,000 in captured GMV. Payment Gateway A wins by roughly \u20b933,856 per month.<\/span><\/p>\n<h3><strong>Example 2: \u20b910 lakh monthly GMV<\/strong><\/h3>\n<table dir=\"ltr\" border=\"1\" cellspacing=\"0\" cellpadding=\"0\" data-sheets-root=\"1\" data-sheets-baot=\"1\">\n<colgroup>\n<col width=\"100\" \/>\n<col width=\"100\" \/>\n<col width=\"100\" \/><\/colgroup>\n<tbody>\n<tr>\n<td><\/td>\n<td><strong>Payment Gateway A<\/strong><\/td>\n<td><strong>Payment Gateway B<\/strong><\/td>\n<\/tr>\n<tr>\n<td>MDR<\/td>\n<td>2%<\/td>\n<td>1.80%<\/td>\n<\/tr>\n<tr>\n<td>AMC (monthly)<\/td>\n<td>\u20b90<\/td>\n<td>\u20b9416<\/td>\n<\/tr>\n<tr>\n<td>Payment success rate<\/td>\n<td>93%<\/td>\n<td>87%<\/td>\n<\/tr>\n<tr>\n<td>Captured GMV<\/td>\n<td>\u20b99,30,000<\/td>\n<td>\u20b98,70,000<\/td>\n<\/tr>\n<tr>\n<td>Transaction fees<\/td>\n<td>\u20b918,600<\/td>\n<td>\u20b915,660<\/td>\n<\/tr>\n<tr>\n<td>Net realised revenue<\/td>\n<td>~\u20b99,11,400<\/td>\n<td>~\u20b98,53,924<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Gap: roughly \u20b957,476 per month in favour of the zero-AMC, higher-success-rate payment gateway. At \u20b910 lakh attempted GMV, one percentage point of payment success rate is worth \u20b910,000 in captured GMV, while a 0.1 percentage point MDR difference is worth only \u20b91,000.<\/span><\/p>\n<h3><strong>Example 3: \u20b925 lakh monthly GMV<\/strong><\/h3>\n<table>\n<thead>\n<tr>\n<th><\/th>\n<th><b>Payment Gateway A<\/b><\/th>\n<th><b>Payment Gateway B<\/b><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span style=\"font-weight: 400;\">MDR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.95% (custom-priced above \u20b95L GMV)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1.8%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">AMC (monthly)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b90<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b9833<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Payment success rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">93%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">88%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Captured GMV<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b923,25,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">\u20b922,00,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Transaction fees<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b945,338<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b939,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Net realised revenue<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b922,79,662<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~\u20b921,59,567<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Gap: approximately \u20b91,20,095 per month. At \u20b925 lakh GMV, MDR negotiation begins to matter because absolute rupee amounts grow, but success rate continues to dominate. Razorpay offers volume-based pricing once businesses have six to twelve months of transaction history, and our <\/span><a href=\"https:\/\/razorpay.com\/blog\/enterprise-payment-gateway-pricing-in-india-volume-based-pricing-strategies\/\"><span style=\"font-weight: 400;\">volume-based payment gateway pricing<\/span><\/a><span style=\"font-weight: 400;\"> guide explains what data to bring.<\/span><\/p>\n<p><em><b>Did You Know?<\/b><span style=\"font-weight: 400;\"> At \u20b910 lakh attempted monthly GMV, one percentage point of payment success rate is worth \u20b910,000 in captured revenue, while a 0.1 percentage point MDR saving is worth only \u20b91,000. Success rate is roughly 10x more valuable than equivalent MDR negotiation at this volume band.<\/span><\/em><\/p>\n<h2><strong>UPI Is Not Always Free for Merchants: What Changed in 2025-2026<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">A common merchant assumption is that UPI is free. This is half-true. UPI is free for end customers, but the merchant cost depends on the UPI rail used.<\/span><\/p>\n<h3><strong>Three UPI cost layers<\/strong><\/h3>\n<table>\n<thead>\n<tr>\n<th><b>UPI type<\/b><\/th>\n<th><b>Free for customer?<\/b><\/th>\n<th><b>Merchant cost<\/b><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span style=\"font-weight: 400;\">Bank-account UPI<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0% network MDR; gateway platform fee may apply<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UPI on wallet or PPI above \u20b92,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Interchange of 0.5% to 1.1% applies to merchant<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">RuPay credit card on UPI<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Credit-like MDR of approximately 1.1% to 2% applies<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">UPI AutoPay<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Gateway or mandate platform charges may apply<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Per our <\/span><a href=\"https:\/\/razorpay.com\/learn\/upi-transaction-charges\/\"><span style=\"font-weight: 400;\">UPI transaction charges for merchants<\/span><\/a><span style=\"font-weight: 400;\"> explainer, UPI PPI interchange varies by merchant category: 0.5% for fuel, 0.7% for telecom, utilities, and education, 0.9% for supermarkets, and 1.1% for insurance, mutual funds, and railways for transactions above \u20b92,000.<\/span><\/p>\n<h3><strong>2025-2026 policy updates that affect cost calculus<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">UPI per-transaction limits were raised to \u20b95 lakh for categories such as capital markets, insurance, government e-marketplace tax payments, travel, credit card bill payments, and business or merchant payments. Jewellery transactions are capped at \u20b92 lakh per transaction. RBI&#8217;s updated authentication rules, effective 1 April 2026, require two factors of authentication from different categories with at least one dynamic factor for every digital payment transaction. Stronger authentication should lower fraud and chargebacks over time but may temporarily affect conversion if integrations are not updated.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For a merchant with 70% of GMV through UPI, the cost picture depends on whether customers default to bank-UPI or wallet-UPI. If 80% of UPI flows are bank-account UPI and 20% are wallet-UPI above \u20b92,000 in a supermarket category, the blended UPI cost is approximately (0.8 \u00d7 0%) + (0.2 \u00d7 0.9%) = 0.18%, before the payment gateway platform fee.<\/span><\/p>\n<h2><strong>When Should You Pay for Instant Settlement?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Standard payment gateway settlement in India is typically T+2. Instant or same-day settlement is an optional facility priced per transaction. It is a working capital tool, not a default setting.<\/span><\/p>\n<h3><strong>The pricing<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Razorpay&#8217;s <\/span><a href=\"https:\/\/razorpay.com\/capital\/instant-settlements\/\"><span style=\"font-weight: 400;\">instant settlements for businesses<\/span><\/a><span style=\"font-weight: 400;\"> facility prices same-working-day settlements at 0.15% to 0.20% and within-10-second settlements at 0.20% to 0.30% per transaction. There is no setup or AMC. Some payment gateways price instant settlement as 0.20% to 0.50% per day of advancement, which compounds quickly.<\/span><\/p>\n<h3><strong>When it makes sense<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Suppose a merchant uses instant settlement on 20% of \u20b910 lakh monthly GMV at 0.20%:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Instant-settled GMV: \u20b92,00,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Extra cost: \u20b9400 per month<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Effective MDR increase, blended: 0.04 percentage points<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If those \u20b92,00,000 in same-day funds let you restock inventory and avoid working capital borrowing at 14% per annum, the facility pays for itself many times over. If your business runs on healthy cash reserves and T+2 settlement is not causing operational friction, the extra cost is not justified.<\/span><\/p>\n<h2><strong>How to Make Your Final Decision<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Once you have run each gateway&#8217;s rate card through the five-step model above, three numbers determine the ranking: net realised revenue at your GMV, the break-even GMV for any AMC difference, and the success rate gap expressed in rupees per month.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For most businesses under \u20b925 lakh monthly GMV, the decision reduces to: find the gateway with the highest payment success rate and zero fixed fees, then evaluate whether any MDR difference at your specific GMV and payment mix offsets that. At volumes below \u20b92.08 lakh per month, a zero-AMC gateway with 2% MDR is cheaper than any gateway with a \u20b94,999 AMC, regardless of how low the competing MDR is. At higher volumes approaching \u20b925 lakh, begin a pricing conversation with your existing gateway or evaluate alternatives that offer volume-based negotiation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Razorpay&#8217;s pricing page is a useful starting point. Our <\/span><a href=\"https:\/\/razorpay.com\/blog\/razorpay-payment-gateway-pricing-vs-other-payment-gateways\/\"><span style=\"font-weight: 400;\">true cost comparison guide<\/span><\/a><span style=\"font-weight: 400;\"> walks through how to model cost across different volume bands.<\/span><\/p>\n<h2><strong>Frequently Asked Questions<\/strong><\/h2>\n<h3><strong>Which payment gateway is cheapest for a business under \u20b925 lakh monthly GMV?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">The cheapest payment gateway is the one that produces the highest net realised revenue, not the lowest advertised MDR. For businesses below \u20b92.08 lakh per month, a zero-AMC gateway with a 93%+ payment success rate will retain more rupees than a lower-MDR gateway charging \u20b94,999 in annual maintenance. At volumes approaching \u20b925 lakh, the calculation shifts and MDR negotiation starts to matter. Razorpay lists \u20b90 setup, \u20b90 AMC, and a 2% flat domestic MDR as its standard rate, with custom pricing available above \u20b95 lakh monthly GMV.<\/span><\/p>\n<h3><strong>What is the difference between MDR, TDR, AMC, and platform fee?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">MDR (Merchant Discount Rate) and TDR (Transaction Discount Rate) are often used interchangeably and refer to the percentage fee charged on each successful transaction. AMC (Annual Maintenance Charge) is a fixed fee charged by some gateways regardless of transaction volume. A platform fee is a fixed rupee amount charged per transaction in addition to, or instead of, a percentage MDR. Our <\/span><a href=\"https:\/\/razorpay.com\/blog\/convenience-fee-tdr-mdr-platform-fee-amc-setup-fee-technology-fee-of-payment-gateway\/\"><span style=\"font-weight: 400;\">complete guide to payment gateway charges<\/span><\/a><span style=\"font-weight: 400;\"> explains how each component is calculated.<\/span><\/p>\n<h3><strong>Does Razorpay charge an annual maintenance fee or setup fee?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">No. Razorpay&#8217;s <\/span><a href=\"https:\/\/razorpay.com\/pricing\/\"><span style=\"font-weight: 400;\">published pricing<\/span><\/a><span style=\"font-weight: 400;\"> lists \u20b90 for both setup fee and annual maintenance charge on its standard plan. The domestic transaction MDR is 2% across cards, UPI, net banking, and wallets. International cards, Amex, Diners, and EMI transactions are charged at 3%.<\/span><\/p>\n<h3><strong>Is UPI free for merchants in India?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Bank-account UPI transactions carry 0% network MDR for merchants, but a payment gateway may charge a platform fee on top of the network rate. UPI transactions made through a prepaid payment instrument (PPI wallet) above \u20b92,000 attract an interchange fee of 0.5% to 1.1% depending on merchant category. RuPay credit card transactions on UPI attract a credit-card-like MDR. The full picture depends on your payment mix and your gateway&#8217;s specific platform fee policy on UPI.<\/span><\/p>\n<h3><strong>What is the break-even GMV when comparing two payment gateways on cost?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If Gateway A charges 2% MDR with \u20b90 AMC and Gateway B charges 1.8% MDR with \u20b94,999 AMC (\u20b9416\/month), the break-even point is approximately \u20b92.08 lakh per month in GMV. Below that volume, Gateway A is cheaper in absolute rupees despite the higher MDR. Above \u20b92.08 lakh, Gateway B&#8217;s MDR saving begins to exceed the AMC cost, but only if its payment success rate matches Gateway A&#8217;s. A lower success rate on Gateway B can shift the break-even point significantly higher.<\/span><\/p>\n<h3><strong>Does Razorpay refund MDR when a customer is refunded?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">No. MDR is charged on the original successful transaction and is not reversed when a refund is issued to the customer. The principal amount is returned to the customer in full, but the gateway retains the transaction fee. This is standard practice across Indian payment gateways. Our <\/span><a href=\"https:\/\/razorpay.com\/blog\/refunds-and-mdr-in-payment-gateways\/\"><span style=\"font-weight: 400;\">MDR refund policy explainer<\/span><\/a><span style=\"font-weight: 400;\"> details how this affects merchants with high refund rates and how to model the cost.<\/span><\/p>\n<h3><strong>What is payment success rate and why does it matter more than MDR?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Payment success rate is the percentage of attempted transactions that result in a successful payment capture. A gateway with a 93% success rate converts 93 out of every 100 checkout attempts into revenue. A gateway at 85% loses 8 additional transactions per 100 attempts. At \u20b910 lakh in attempted GMV, that 8 percentage point gap equals \u20b980,000 in lost revenue per month, while a 0.1 percentage point MDR difference at the same volume is worth only \u20b91,000. Payment success rate is the single highest-leverage variable in the cost model for businesses under \u20b925 lakh GMV.<\/span><\/p>\n<h3><strong>When does instant settlement make financial sense for a small business?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Instant settlement makes sense when the cost of waiting for T+2 funds exceeds the settlement fee. If same-day funds allow you to avoid short-term borrowing at 14% to 18% per annum, restock inventory faster, or fulfil orders without a cash gap, the 0.15% to 0.20% instant settlement fee is likely cheaper than the alternative. It does not make financial sense as a default setting for all transactions. Razorpay&#8217;s <\/span><a href=\"https:\/\/razorpay.com\/capital\/instant-settlements\/\"><span style=\"font-weight: 400;\">instant settlement facility<\/span><\/a><span style=\"font-weight: 400;\"> lets you apply it selectively per transaction rather than bundling it across your full GMV.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For an Indian business processing under \u20b925 lakh in monthly Gross Merchandise Value (GMV), the cheapest payment gateway is rarely the one with the lowest advertised Merchant Discount Rate (MDR). At this volume band, fixed costs such as annual maintenance charges (AMC) and setup fees, plus revenue lost on failed transactions, dominate small differences in<\/p>\n","protected":false},"author":149,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[906],"tags":[],"class_list":{"0":"post-26978","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-payment-gateway"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26978","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=26978"}],"version-history":[{"count":1,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26978\/revisions"}],"predecessor-version":[{"id":26980,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/26978\/revisions\/26980"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=26978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=26978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=26978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}