{"id":27013,"date":"2026-06-09T22:40:45","date_gmt":"2026-06-09T17:10:45","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=27013"},"modified":"2026-06-09T22:40:45","modified_gmt":"2026-06-09T17:10:45","slug":"payment-gateway-transparent-pricing-explained","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/payment-gateway-transparent-pricing-explained\/","title":{"rendered":"Payment Gateways With Transparent Pricing: How to Choose a Payment Gateway With No Hidden Charges in India"},"content":{"rendered":"<p>Merchants comparing payment gateways routinely fixate on the merchant discount rate (MDR) as the deciding number. The data does not support this approach. A payment gateway quoting 1.75% MDR with a Rs. 4,999 annual maintenance charge and Rs. 9,999 setup fee costs more in absolute rupees than one quoting 2% with zero fixed fees, until monthly GMV crosses a specific threshold. This article reframes cost around Total Cost of Ownership and lets merchants score any payment gateway on transparency before signing.<\/p>\n<div style=\"border-left: 4px solid #007BFF; background: #f0f8ff; padding: 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; text-align: left;\">\n<h3 style=\"margin-top: 0; color: #007bff; font-size: 22px;\">Key Takeaways<\/h3>\n<ul style=\"margin: 15px 0; padding-left: 20px; color: #333; line-height: 1.6;\">\n<li>The lowest MDR rarely equals the lowest total cost. Annual maintenance charges, setup fees, instant settlement surcharges, refund MDR retention, and chargeback fees collectively determine real cost.<\/li>\n<li>A payment gateway charging Rs. 4,999 annually in AMC adds Rs. 416 to monthly costs, erasing a 0.25 percentage point lower MDR at Rs. 2 lakh GMV.<\/li>\n<li>Payment success rate is a pricing variable. A payment gateway with 85% success costs more per successful sale than one at 92%, even at identical MDR.<\/li>\n<li>Refund MDR retention and chargeback representment fees are the two most underestimated cost categories.<\/li>\n<li>Transparent pricing is defined by written disclosure of every fee category, not by the lowest headline rate.<\/li>\n<\/ul>\n<\/div>\n<h2>Quick Answer: What Makes a Payment Gateway Pricing Truly Transparent?<\/h2>\n<p>A payment gateway has transparent pricing when every cost a merchant can incur is disclosed in writing before the contract is signed, presented in a single fee schedule, and itemised at the transaction level after onboarding. Seven elements define this standard.<\/p>\n<p>First, <a href=\"https:\/\/razorpay.com\/payment-gateway\/\">payment gateway charges<\/a> must be disclosed by payment method: credit cards, debit cards, UPI, netbanking, wallets, EMI, and international cards each carry distinct rates.<\/p>\n<p>Second, GST treatment must be explicit. Quoted rates should specify whether 18% GST is inclusive or exclusive.<\/p>\n<p>Third, fixed fees must be enumerated: setup fee, AMC, platform fees, payment link fees, API access fees.<\/p>\n<p>Fourth, settlement terms must specify the standard cycle (T+1 or T+2), instant settlement charge, cutoff time, and any rolling reserve.<\/p>\n<p>Fifth, refund policy must state whether MDR is reversed on full refunds, partial refunds, and pre-capture cancellations.<\/p>\n<p>Sixth, chargeback policy must list dispute fee, representment fee, and fund hold duration.<\/p>\n<p>Seventh, recurring payment fees must specify mandate creation cost, debit attempt cost, retry behaviour, and bounce charges.<\/p>\n<h2>Payment Gateway Pricing Is More Than MDR<\/h2>\n<p>MDR is the most visible component of pricing but covers a narrow slice of total cost. Understanding what MDR includes, and what it does not, separates merchants who budget accurately from those who discover their effective rate is 0.4 to 0.8 percentage points higher than quoted.<\/p>\n<h3>What MDR Covers<\/h3>\n<p>MDR is the percentage deducted from each successful transaction to compensate the payment gateway, the acquiring bank, and the card network or payment rail. On a Rs. 1,000 credit card transaction at 2% MDR, the merchant receives Rs. 980 at settlement. MDR covers processing infrastructure, network routing, basic fraud screening, the payment page, and standard settlement. It does not cover GST, which applies separately at 18% of the MDR amount, nor any optional service or fixed charge.<\/p>\n<h3>What MDR Usually Does Not Cover<\/h3>\n<p>The fee categories outside MDR account for most surprise costs. AMC at Rs. 2,999 to Rs. 4,999 adds Rs. 250 to Rs. 416 in monthly fixed cost regardless of volume. Setup fees range from Rs. 1,500 to Rs. 25,000. Instant settlement charges of 0.1% to 0.25% apply on each accelerated transaction. Refund processing fees of Rs. 5 to Rs. 25 compound when MDR on the original transaction is not reversed. Chargeback fees of Rs. 500 to Rs. 750 multiply when representment fees of Rs. 750 to Rs. 1,500 are added. Recurring mandate retries, payout fees, and reconciliation export fees round out the categories. None of these appears in headline MDR comparisons.<\/p>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">A payment gateway charging Rs. 4,999 in annual AMC adds Rs. 416 to monthly operating costs, enough to erase the TDR advantage of a 0.25 percentage point lower rate at Rs. 2 lakh monthly GMV.<\/p>\n<\/div>\n<h2>The Total Cost of Ownership Formula for Payment Gateways<\/h2>\n<p>Total Cost of Ownership replaces MDR as the correct comparison metric. It captures every rupee the merchant pays directly or loses indirectly, expressed as a percentage of GMV.<\/p>\n<h3>Payment Gateway TCO Formula<\/h3>\n<p>Monthly TCO = MDR fees + fixed transaction fees + GST on fees + AMC allocation + setup fee allocation + settlement fees + refund costs + chargeback costs + recurring mandate costs + payout fees + reconciliation costs<\/p>\n<p>Effective cost percentage = (Monthly TCO \/ Monthly GMV) x 100<\/p>\n<p>AMC is amortised by dividing the annual charge by 12. Setup fee can be amortised over 12 to 24 months. GST is calculated at 18% on fees, not on GMV.<\/p>\n<h3>Worked Example: How Hidden Charges Increase Effective Cost<\/h3>\n<p>Consider a D2C business processing Rs. 10,00,000 in monthly GMV at 2% MDR.<\/p>\n<table>\n<thead>\n<tr>\n<th>Cost component<\/th>\n<th>Calculation<\/th>\n<th style=\"text-align: right;\">Monthly cost (Rs.)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>MDR at 2% on Rs. 10,00,000 GMV<\/td>\n<td>10,00,000 x 2%<\/td>\n<td style=\"text-align: right;\">20,000.00<\/td>\n<\/tr>\n<tr>\n<td>Instant settlement on 25% of GMV at 0.25%<\/td>\n<td>2,50,000 x 0.25%<\/td>\n<td style=\"text-align: right;\">625.00<\/td>\n<\/tr>\n<tr>\n<td>AMC allocation (Rs. 2,999\/year)<\/td>\n<td>2,999 \/ 12<\/td>\n<td style=\"text-align: right;\">249.92<\/td>\n<\/tr>\n<tr>\n<td>Chargebacks (3 cases at Rs. 500)<\/td>\n<td>3 x 500<\/td>\n<td style=\"text-align: right;\">1,500.00<\/td>\n<\/tr>\n<tr>\n<td>Refund MDR not reversed on Rs. 1,00,000 refunded<\/td>\n<td>1,00,000 x 2%<\/td>\n<td style=\"text-align: right;\">2,000.00<\/td>\n<\/tr>\n<tr>\n<td><strong>Total monthly payment cost<\/strong><\/td>\n<td>Sum of above<\/td>\n<td style=\"text-align: right;\"><strong>24,374.92<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Effective cost on GMV<\/strong><\/td>\n<td>24,374.92 \/ 10,00,000<\/td>\n<td style=\"text-align: right;\"><strong>2.437%<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The quoted MDR was 2%. The effective rate is 2.437%, a 21.9% increase. The Rs. 4,374.92 difference is fully predictable from the fee schedule if calculated before signing. Two payment gateways at identical 2% MDR can produce effective costs of 2.1% and 2.6% based purely on fixed fees, refund treatment, and success rate differences.<\/p>\n<h2>Hidden Charges to Check Before Choosing a Payment Gateway<\/h2>\n<p>The hidden charges that drive Indian merchants over budget cluster into six categories.<\/p>\n<h3>Setup Fees and Annual Maintenance Charges<\/h3>\n<p>Setup fees range from Rs. 1,500 for standard integrations to Rs. 25,000 for custom API work. AMC recurs every 12 months at Rs. 2,999 to Rs. 4,999. A payment gateway charging Rs. 3,600 AMC adds Rs. 300 monthly. At Rs. 2 lakh GMV, this equals 0.15% of GMV, neutralising a lower MDR. Ask whether AMC is waivable based on volume commitments.<\/p>\n<h3>GST on Payment Gateway Fees<\/h3>\n<p>GST applies at 18% on payment gateway fees. A 2% MDR becomes an effective 2.36% once GST is added. Some payment gateways quote inclusive, others exclusive. Confirm which convention applies, because the difference is 18% of the fee value.<\/p>\n<h3>Settlement and Instant Payout Charges<\/h3>\n<p>Standard settlement runs on T+1 or T+2. Instant settlements move funds within minutes, typically at 0.1% to 0.25%. Cutoff times matter: a payment gateway with a 6 PM cutoff classifies later transactions as next-day. Rolling reserves of 5% to 10% withheld for 90 to 180 days apply to high-risk merchant categories.<\/p>\n<h3>Refund and Failed Refund Charges<\/h3>\n<p>Three questions decide refund cost. Does the payment gateway reverse MDR on full refunds. Does it reverse MDR on partial refunds. Does it charge a flat fee per refund. A payment gateway that retains MDR on refunds effectively doubles MDR on every returned order. For a merchant with 10% return rate on Rs. 10 lakh GMV at 2% MDR, retention adds Rs. 2,000 monthly. Online refunds by transparent payment gateways reverse MDR at completion.<\/p>\n<h3>Chargeback and Dispute Fees<\/h3>\n<p><a href=\"https:\/\/razorpay.com\/blog\/chargebacks\/\">Chargeback<\/a> costs comprise five layers. The base fee runs Rs. 500 to Rs. 750. Representment fees add Rs. 750 to Rs. 1,500. Evidence submission costs Rs. 200 to Rs. 500. The original transaction is debited pending resolution. Funds held average 90 to 120 days. Three chargebacks monthly on Rs. 5,000 transactions absorb Rs. 16,500 in transaction loss plus Rs. 1,500 to Rs. 2,250 in fees.<\/p>\n<h3>Reporting, Reconciliation, and Data Export Fees<\/h3>\n<p>Some payment gateways charge for transaction-level fee invoices, GST invoices, or settlement reports. Confirm that payment reconciliation reports, fee invoices, and data exports are included.<\/p>\n<h2>India-Specific Payment Method Pricing: What to Ask for Each Mode<\/h2>\n<p>Pricing varies sharply by payment method because each rail has different network economics.<\/p>\n<h3>UPI and RuPay<\/h3>\n<p><a href=\"https:\/\/razorpay.com\/upi\/\">UPI payments<\/a> from bank accounts are free for merchants on regular UPI under NPCI&#8217;s clarification. PPI-funded UPI above Rs. 2,000 attracts 1.1% interchange paid by the issuing wallet. RuPay debit on prescribed merchants under <a href=\"https:\/\/www.incometaxindia.gov.in\/w\/circular-no.-32\/2019-clarifications-in-respect-of-prescribed-electronic-modes-under-section-269su-of-the-income-tax-act-1961?p_l_back_url=%2Fsearch%3Fq%3DSection%2B271C%26category%3D38284%26category%3D37776%26delta%3D60%26start%3D19&amp;p_l_back_url_title=Search\" rel=\"nofollow noopener\" target=\"_blank\">CBDT Circular No. 32\/2019<\/a> cannot attract MDR. Confirm the payment gateway does not bill UPI separately under platform fee labels.<\/p>\n<h3>Credit Cards and Debit Cards<\/h3>\n<p>Credit card MDR ranges from 1.8% to 2.5%, with premium and corporate cards at the upper end. Debit card MDR runs 0.9% to 1.5%. Card-based EMI and credit cards are not exempt.<\/p>\n<h3>Netbanking<\/h3>\n<p>Netbanking follows a fixed-fee model, Rs. 10 to Rs. 22 per transaction. At low ticket sizes the economics flip: a Rs. 200 netbanking transaction at Rs. 15 equals 7.5%.<\/p>\n<h3>Wallets and PPIs<\/h3>\n<p>Wallet transactions price between 1.5% and 2%. Request per-wallet pricing rather than a blended rate.<\/p>\n<h3>EMI and Pay Later Options<\/h3>\n<p>EMI processing fees add 1% to 2% above standard card MDR. Some gateways pass through interest subvention costs separately.<\/p>\n<h3>International Cards<\/h3>\n<p>International credit cards carry MDR of 3% to 4.5% plus FX markup of 0.5% to 1%. The combined effective cost on a USD 100 transaction reaches 4.5% to 5.5%.<\/p>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">A netbanking transaction at Rs. 15 fixed fee on a Rs. 200 order equals 7.5% effective cost, three to four times higher than credit card MDR.<\/p>\n<\/div>\n<h2>Policy-Level Checks Most Merchants Forget<\/h2>\n<p>Pricing transparency is also about policies that determine how rates apply in edge cases. Five policy areas account for most disputes.<\/p>\n<h3>Refund Policy<\/h3>\n<p>The refund policy must answer four questions in writing. Is MDR reversed on full refunds. Is MDR reversed pro-rata on partial refunds. Is GST on the original MDR reversed. Is there a flat fee per refund. A payment gateway charging Rs. 10 per refund and retaining MDR at 10% return rate on Rs. 10 lakh GMV adds Rs. 2,000 in retained MDR plus Rs. 1,000 in refund fees, 0.3% of GMV.<\/p>\n<h3>Chargeback Policy<\/h3>\n<p>The chargeback policy must specify dispute fee, representment fee, evidence cost, win refund rule, and fund hold duration. A payment gateway that refunds the dispute fee when the merchant wins differs structurally from one that retains it. Fund hold duration should be capped at 120 days. The policy must distinguish fraud chargebacks from service chargebacks.<\/p>\n<h3>Settlement Policy<\/h3>\n<p>Settlement policy covers cycle, cutoff time, weekend handling, instant settlement charge, and rolling reserve. A 7 PM cutoff means a 7:30 PM transaction Friday settles Monday, adding two days of working capital lock.<\/p>\n<h3>Recurring Billing Policy<\/h3>\n<p>For subscription businesses, recurring billing is the largest cost driver. The policy must specify mandate creation fee for eNACH and <a href=\"https:\/\/razorpay.com\/upi-autopay\/\">UPI AutoPay<\/a>, debit attempt fee, retry rules, bounce fee, and whether charges apply per attempt or per successful collection. The <a href=\"https:\/\/www.rbi.org.in\/Scripts\/BS_PressReleaseDisplay.aspx?prid=53980\" rel=\"nofollow noopener\" target=\"_blank\">RBI raised the e-mandate limit<\/a> to Rs. 15,000 in June 2022.<\/p>\n<h3>Pricing Revision Policy<\/h3>\n<p>The contract must specify the notice period for fee changes. Sixty days is the reasonable standard. The clause should also specify whether the merchant can exit penalty-free if rates increase beyond a threshold.<\/p>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">Under the <a href=\"https:\/\/www.rbi.org.in\/Scripts\/NotificationUser.aspx?Id=11693&amp;Mode=0\" rel=\"nofollow noopener\" target=\"_blank\">RBI&#8217;s failed transaction TAT framework<\/a>, failed UPI transactions where the customer is debited but the beneficiary is not credited must be auto-reversed by T+1, with Rs. 100 per day compensation beyond T+1.<\/p>\n<\/div>\n<h2>Payment Success Rate: The Hidden Cost Behind Failed Payments<\/h2>\n<p>Payment success rate is the most underweighted variable in payment gateway selection. A gateway at 85% success processes 85 of every 100 attempts. The remaining 15 either retry successfully, retry and abandon, or abandon immediately. Industry data suggests roughly half of failed first attempts do not convert to a successful retry, meaning a 7 percentage point gap translates to approximately 3.5 percentage points of lost revenue.<\/p>\n<p>Effective cost per successful sale = (Total payment costs \/ Successful collected revenue) x 100<\/p>\n<p>A payment gateway quoting 1.9% MDR with 85% success can produce a higher effective cost per successful sale than one quoting 2% with 92% success. Transparent payment gateways publish payment success rate data by method, failure reason code distribution, and downtime reporting. Request 90-day success rate data segmented by <a href=\"https:\/\/razorpay.com\/docs\/payments\/payment-methods\/upi\/upi-intent\/\">UPI intent<\/a>, UPI collect, credit card, debit card, and netbanking before signing.<\/p>\n<h2>Transparent Pricing Scorecard: Rate Any Payment Gateway Out of 100<\/h2>\n<p>The following scorecard converts qualitative transparency into a measurable score.<\/p>\n<table>\n<thead>\n<tr>\n<th>Category<\/th>\n<th style=\"text-align: right;\">Maximum points<\/th>\n<th>What earns full points<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Complete fee disclosure<\/td>\n<td style=\"text-align: right;\">25<\/td>\n<td>Written schedule covering MDR by method, fixed fees, AMC, setup, GST treatment<\/td>\n<\/tr>\n<tr>\n<td>Settlement transparency<\/td>\n<td style=\"text-align: right;\">15<\/td>\n<td>Cycle, cutoff time, instant settlement fee, rolling reserve documented<\/td>\n<\/tr>\n<tr>\n<td>Refund policy clarity<\/td>\n<td style=\"text-align: right;\">15<\/td>\n<td>MDR reversal rules for full and partial refunds in writing, refund fee disclosed<\/td>\n<\/tr>\n<tr>\n<td>Chargeback policy clarity<\/td>\n<td style=\"text-align: right;\">15<\/td>\n<td>Dispute fee, representment fee, evidence fee, fund hold, win refund rule<\/td>\n<\/tr>\n<tr>\n<td>Recurring payment fee clarity<\/td>\n<td style=\"text-align: right;\">10<\/td>\n<td>Mandate creation, debit, retry, bounce, modification fees listed<\/td>\n<\/tr>\n<tr>\n<td>Payment success reporting<\/td>\n<td style=\"text-align: right;\">10<\/td>\n<td>Success rate dashboards by method, failure reason codes available<\/td>\n<\/tr>\n<tr>\n<td>Reconciliation and GST invoice clarity<\/td>\n<td style=\"text-align: right;\">5<\/td>\n<td>Transaction-level fee invoice and GST invoice provided at no extra charge<\/td>\n<\/tr>\n<tr>\n<td>Contract flexibility<\/td>\n<td style=\"text-align: right;\">5<\/td>\n<td>Sixty day pricing revision notice, no early termination fee<\/td>\n<\/tr>\n<tr>\n<td><strong>Total<\/strong><\/td>\n<td style=\"text-align: right;\"><strong>100<\/strong><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>Interpretation bands:<\/p>\n<ul>\n<li>85 to 100: Highly transparent. Suitable for direct onboarding.<\/li>\n<li>70 to 84: Acceptable. Verify edge case fees in writing.<\/li>\n<li>50 to 69: Risk of unexpected costs. Negotiate or request clarifications.<\/li>\n<li>Below 50: Avoid. Hidden charge exposure is structural.<\/li>\n<\/ul>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">At Rs. 2,08,000 monthly GMV, a payment gateway with zero AMC produces lower total cost than one charging Rs. 4,999 AMC with a 0.25 percentage point lower MDR.<\/p>\n<\/div>\n<h2>Questions to Ask a Payment Gateway Before Signing Up<\/h2>\n<p>Use this as a copy-paste pre-onboarding query. The payment gateway should respond in writing.<\/p>\n<ol>\n<li>Share the complete MDR schedule by payment method: credit card, debit card, UPI, netbanking, wallets, EMI, international cards.<\/li>\n<li>Are quoted rates inclusive or exclusive of 18% GST.<\/li>\n<li>Is there a setup or onboarding fee. If yes, amount and refundability.<\/li>\n<li>Is there an AMC. If yes, amount and billing cycle.<\/li>\n<li>What is the standard settlement cycle, and the cutoff time.<\/li>\n<li>Is instant settlement available. Fee, per-transaction or daily cap.<\/li>\n<li>Is MDR reversed on full refunds. Pro-rata on partial refunds.<\/li>\n<li>Is there a separate fee per refund. Is GST on the original MDR reversed.<\/li>\n<li>Chargeback fee. Representment fee. Are fees refunded if the merchant wins.<\/li>\n<li>How long are funds held during a chargeback dispute.<\/li>\n<li>For <a href=\"https:\/\/razorpay.com\/recurring-payments\/\">recurring payments<\/a>, mandate creation fee, debit fee, retry fee.<\/li>\n<li>Are recurring charges levied per attempt or per successful debit.<\/li>\n<li>What is the rolling reserve, if any, and release period.<\/li>\n<li>What is the notice period for pricing revisions.<\/li>\n<li>Are transaction-level fee invoices, GST invoices, and reconciliation exports included at no extra charge.<\/li>\n<li>What is the payment success rate by method over the last 90 days for similar merchants.<\/li>\n<li>Are there minimum monthly billing commitments or early termination charges.<\/li>\n<\/ol>\n<p>A payment gateway that answers all 17 in writing meets the transparent pricing standard.<\/p>\n<h2>Red Flags That a Payment Gateway May Have Hidden Charges<\/h2>\n<p>Six patterns correlate with hidden charge exposure.<\/p>\n<ul>\n<li>Custom pricing offered without a written fee schedule.<\/li>\n<li>Refund fees described as &#8220;may apply&#8221; without specific amounts.<\/li>\n<li>Settlement promised as instant without disclosure of fee, daily cap, or cutoff.<\/li>\n<li>GST treatment unspecified, leaving 18% uncertainty in every rate.<\/li>\n<li>Chargeback fees mentioned without representment cost, evidence fee, or fund hold duration.<\/li>\n<li>Annual contract with auto-renewal and early termination penalty.<\/li>\n<li>No transaction-level fee export in the merchant dashboard after onboarding.<\/li>\n<\/ul>\n<p>Three or more flags typically indicates a fee structure designed for margin recovery outside the headline MDR.<\/p>\n<h2>Which Type of Transparent Pricing Model Fits Your Business?<\/h2>\n<p>Business model determines which fees matter most.<\/p>\n<p>D2C e-commerce should weight refund policy and success rate, because returns of 10% to 30% and checkout drop-off losses dominate over modest MDR differences.<\/p>\n<p>SaaS and subscription businesses should weight recurring pricing. Mandate retry costs and UPI AutoPay versus eNACH success differences drive subscription unit economics more than card MDR.<\/p>\n<p>Marketplaces require <a href=\"https:\/\/razorpay.com\/route\/\">split payments<\/a> and vendor payout transparency. Payout fees, reconciliation accuracy, and rolling reserve determine net margin.<\/p>\n<p>Education and healthcare merchants benefit from RuPay debit and UPI zero-MDR structures.<\/p>\n<p>Travel and hospitality face high pre-authorization volumes. Pre-capture cancellation fees and partial refund MDR dominate.<\/p>\n<p>Exporters should focus on international card MDR, FX markup, and FIRC documentation costs.<\/p>\n<p>High-refund apparel and footwear categories should treat refund MDR retention as the primary cost driver.<\/p>\n<h2>How Razorpay&#8217;s Pricing Structure Compares on Transparency Criteria<\/h2>\n<p>The following summarises Razorpay&#8217;s pricing structure against the transparency criteria established earlier.<\/p>\n<table>\n<thead>\n<tr>\n<th>Criterion<\/th>\n<th>Razorpay structure<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Setup fee<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>Annual maintenance charge<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>Standard MDR (domestic cards, netbanking, wallets)<\/td>\n<td>2% per transaction<\/td>\n<\/tr>\n<tr>\n<td>UPI MDR<\/td>\n<td>0% on regular UPI<\/td>\n<\/tr>\n<tr>\n<td>RuPay debit MDR on eligible merchants<\/td>\n<td>0% per CBDT prescribed mode rules<\/td>\n<\/tr>\n<tr>\n<td>International card MDR<\/td>\n<td>3% per transaction<\/td>\n<\/tr>\n<tr>\n<td>Standard settlement cycle<\/td>\n<td>T+2 working days<\/td>\n<\/tr>\n<tr>\n<td>Instant settlement availability<\/td>\n<td>Available at applicable fee<\/td>\n<\/tr>\n<tr>\n<td>GST treatment<\/td>\n<td>18% applied on fees, disclosed separately<\/td>\n<\/tr>\n<tr>\n<td>Fee schedule disclosure<\/td>\n<td>Written, public, payment gateway charges page<\/td>\n<\/tr>\n<tr>\n<td>Custom pricing<\/td>\n<td>Available for merchants processing above Rs. 5 lakh per month<\/td>\n<\/tr>\n<tr>\n<td>Transaction-level reporting<\/td>\n<td>Included; fee invoices and reconciliation exports available<\/td>\n<\/tr>\n<tr>\n<td>Recurring billing<\/td>\n<td>Supported via <a href=\"https:\/\/razorpay.com\/upi-autopay\/\">UPI AutoPay<\/a> and eNACH<\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/razorpay.com\/tokenisation\/\">Tokenization<\/a> compliance<\/td>\n<td>RBI card-on-file tokenization implemented<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>A merchant at Rs. 2,08,000 monthly GMV pays Rs. 4,160 in MDR at 2% with no AMC and no setup. Above Rs. 5 lakh monthly GMV, custom pricing becomes available.<\/p>\n<h2>Final Checklist: How to Choose a Payment Gateway With No Hidden Charges<\/h2>\n<p>Apply this sequence before signing any contract.<\/p>\n<ol>\n<li>Build a 12-month transaction profile: monthly GMV, average ticket size, payment method mix, refund rate, chargeback rate, seasonality.<\/li>\n<li>Request written fee schedules covering all 17 questions in the pre-onboarding query list.<\/li>\n<li>Calculate Total Cost of Ownership using the formula in this article, with all fees amortised monthly.<\/li>\n<\/ol>\n<h2>FAQs<\/h2>\n<h3><strong>What are the hidden charges in payment gateways in India?<\/strong><\/h3>\n<p>The charges not visible in MDR comparisons include annual maintenance charges (Rs. 2,999\u20134,999\/year), setup fees (Rs. 1,500\u201325,000), instant settlement fees (0.1\u20130.25% per transaction), GST at 18% on all fees, refund processing fees, MDR retention on returned orders, chargeback fees (Rs. 500\u2013750), and representment fees (Rs. 750\u20131,500). A merchant comparing only MDR can underestimate their effective cost by 0.4 to 0.8 percentage points.<\/p>\n<h3><strong>Which payment gateway in India has zero AMC and zero setup fee?<\/strong><\/h3>\n<p>Razorpay charges no annual maintenance fee and no setup fee. Merchants pay 2% MDR on domestic transactions with no fixed cost floor, which means effective cost scales with volume rather than applying a minimum monthly charge regardless of revenue.<\/p>\n<h3><strong>Does a lower MDR always mean a cheaper payment gateway?<\/strong><\/h3>\n<p>No. A payment gateway charging 1.75% MDR with Rs. 4,999 annual maintenance adds Rs. 416\/month in fixed cost. The 0.25 percentage point MDR saving equals Rs. 416 only at Rs. 1,66,400 monthly GMV \u2014 meaning below Rs. 2.08 lakh\/month, the lower-MDR gateway is more expensive in absolute rupees. Above that volume, the MDR difference begins to outweigh the AMC.<\/p>\n<h3><strong>What is MDR in a payment gateway, and what doesn&#8217;t it cover?<\/strong><\/h3>\n<p>MDR (Merchant Discount Rate) is the percentage deducted from each successful transaction to cover processing infrastructure, network routing, and standard settlement. It does not cover GST (18% on the fee amount), AMC, setup fees, instant settlement surcharges, refund processing fees, chargeback fees, or recurring mandate costs. The effective rate a merchant pays is consistently higher than the quoted MDR once these categories are included.<\/p>\n<h3><strong>What should I ask a payment gateway before signing up?<\/strong><\/h3>\n<p>At minimum, request written answers to: MDR by payment method, GST treatment (inclusive or exclusive), setup fee and AMC, settlement cycle and cutoff time, instant settlement fee, refund MDR reversal policy, chargeback and representment fees, fund hold duration, recurring billing fees per attempt, rolling reserve terms, pricing revision notice period, and 90-day payment success rate by method. A payment gateway that answers all in writing meets the transparent pricing standard.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Merchants comparing payment gateways routinely fixate on the merchant discount rate (MDR) as the deciding number. The data does not support this approach. A payment gateway quoting 1.75% MDR with a Rs. 4,999 annual maintenance charge and Rs. 9,999 setup fee costs more in absolute rupees than one quoting 2% with zero fixed fees, until<\/p>\n","protected":false},"author":119,"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-27013","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\/27013","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\/119"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=27013"}],"version-history":[{"count":1,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/27013\/revisions"}],"predecessor-version":[{"id":27062,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/27013\/revisions\/27062"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=27013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=27013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=27013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}