Choosing a Payment Gateway for Your Startup in India? Read This First

Launching an online business in India today is easy.
Getting paid smoothly? That’s where most founders hit their first real wall.

UPI works, cards work, wallets work… until you realise all of them need a payment gateway behind the scenes.
That’s when the questions begin:

“Which gateway has the best success rate?”
“Do I need RBI approval?”
“Why are international payments charged extra?”
“Why did my settlement not arrive T+1 like they promised?”

This guide is written to answer exactly that — in simple, founder-friendly language.

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You may also like to read: Ecommerce Export: How New Rules Could Boost MSMEs Growth

What Exactly Is a Payment Gateway?

Imagine you run an online store. A customer pays you using UPI or card.
The money doesn’t go directly to your bank.

In between, a payment gateway:

✅ Collects the money securely
✅ Confirms the transaction
✅ Sends it to your bank account after settlement
✅ Handles refunds, chargebacks, settlements and compliance

Think of it as the bridge between your website/app and the banking system.

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What Startups Should Know Before Choosing a Gateway

Here’s the plain truth nobody says out loud:

💡 Not all payment gateways in India are equal.
Some excel in UPI, some in card payments, some in global customers, some in instant settlements.

So the right question is not:

“Which is the best payment gateway?”

But:

“Which gateway is best for my business model?”

That’s what the next sections will help you answer.

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The Only Comparison Table You Actually Need

Gateway	UPI	Cards	International Payments	Subscription Billing	Instant Settlements	Best For
Razorpay	✅	✅	✅	✅	✅ (paid feature)	D2C brands, SaaS, startups
Cashfree Payments	✅	✅	✅	✅	✅	Fast payouts, global payments
PayU	✅	✅	✅	✅	✅	Mid-to-large ecommerce & apps
CCAvenue	✅	✅	✅ (many currencies)	✅	❌	Enterprises, large catalog stores
Stripe	✅	✅	✅ (strongest globally)	✅	❌ in India	SaaS, international customers
PayPal	❌ domestic	❌ domestic	✅ export only	✅	❌	Freelancers, global buyers trust

(✅ means the feature is supported natively)

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Best Gateway Based on Your Business Type

Business Type	Best Options
D2C brand / Shopify / WooCommerce	Razorpay, Cashfree, PayU
SaaS / Subscription startup	Stripe + Razorpay backup
Digital products / courses	Razorpay, Cashfree, Stripe
Freelancers / service providers	Razorpay links, PayPal for global clients
Export-heavy ecommerce	Cashfree International, Razorpay International, PayPal
Marketplace / multi-seller platform	Razorpay Route, Cashfree Split, PayU

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What About Fees?

Let’s keep it simple:

Payment Type	Usual Fee Range
UPI	Often 0% (or very low)
Domestic cards	~1.75% to 2.5%
International cards	~3% to 4.5% + currency conversion
PayPal export	~4.4% + FX fee
Instant settlement	Extra charge (optional)

💡 Negotiation tip: Once your monthly volume crosses a decent level, always ask for a reduced MDR.

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Settlement Time: When Does the Money Reach You?

• Standard in India: T+2 business days
• Many gateways offer T+1 or instant settlement (extra fees)
• International payments may take longer due to currency rules

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Important Compliance Notes (Without Legal Jargon)

✅ You must use a payment gateway that is authorised to operate in India
✅ Card numbers cannot be stored — tokenisation is mandatory
✅ Recurring payments need customer approval alerts
✅ Export payments require documentation (like FIRC)

Don’t worry — the gateway handles most of this.
You just need to choose a compliant one.

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Founder Checklist Before Finalising a Gateway (Downloadable)

✔ Does it support both UPI and cards?
✔ Does it allow international payments if I scale abroad?
✔ Does it offer instant settlement if I need faster cashflow?
✔ What is the refund and chargeback process like?
✔ Does it integrate with my platform (Shopify / WordPress / app)?
✔ Can I switch easily later if needed?

📌 Download full checklist PDF (placeholder – you can add link later)

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Common Startup Mistakes

❌ Choosing based only on lowest fees
❌ Ignoring settlement timelines
❌ Not testing success rates on UPI + cards
❌ Getting stuck with a gateway that doesn’t support global payments
❌ Assuming PayPal works for domestic India (it doesn’t)

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Quick FAQs

1. Can I use more than one payment gateway?
Yes. Many startups use one for India + one for international customers.

2. Is UPI free forever?
As of now, UPI is zero or very low MDR, but value-added features may cost.

3. Can a startup accept USD payments?
Yes, but only through gateways that support cross-border payments.

4. Which is best for Shopify stores?
Razorpay, Cashfree, PayU work smoothly.

5. I just need payment links, no website. What should I use?
Razorpay Payment Links, Cashfree Payment Pages, or PayPal for clients abroad.

🔗 Sources & References (Short Links)

1️⃣ RBI Payment Aggregator Guidelines → rbi.org.in/payagg
2️⃣ Inc42 on RBI Directions → inc42.com/payrules
3️⃣ AZB & Partners Legal Insight → azbpartners.com/paygateway

About the Author

Tabrez is a trader, entrepreneur, and exporter who writes on BusinessZindagi.com about msme business ,entrepreneurship and compliance for Indian startups.

🔒 Disclaimer

The information provided in this article about international payment gateways is intended for general educational and informational purposes only. While every effort has been made to ensure accuracy at the time of publication, fees, regulations, and payment gateway features may change over time or vary by country, business type, and risk profile.
Readers, MSME owners, and e-commerce sellers should verify current terms directly with each payment gateway provider and consult their financial institution or a qualified professional before making any business, tax, or compliance decisions.

BusinessZindagi.com and the author do not endorse or have any commercial partnership with the payment gateways mentioned, unless explicitly disclosed. All product names, logos, and trademarks are property of their respective owners.

💡 Disclosure

This article may contain affiliate links to trusted tools, services, or payment gateway providers that are relevant to MSMEs and online business owners. These links help support the content on BusinessZindagi.com at no additional cost to you.

We carefully select and recommend only those platforms that we believe offer real value to small businesses. However, readers are encouraged to verify all pricing, terms, and policies directly with the respective providers before making any purchase or financial decision.

All opinions, insights, and recommendations in this article are written independently and based on publicly available data from official sources, regulatory guidelines, and credible industry research. Transparency and reader trust rem

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