How to Choose a Payment Gateway in India: A 7-Question Scorecard for Your Business

Most "best payment gateway" lists tell you what someone else picked. That's useful, but a SaaS company, a home baker selling on Instagram and an exporter of handicrafts need very different things.

This guide works the other way round. Answer seven questions about your business, score each gateway you're considering, and the right one usually becomes obvious. Set aside 20 minutes and keep two or three gateway pricing pages open in other tabs.

Before You Start: Gather These Numbers

You'll make a better decision with real figures than with guesses. Note down:

1. Monthly sales you expect in the next 12 months
2. Average order value (for example, ₹600 or ₹15,000)
3. How your customers pay: rough share of UPI, cards, net banking, EMI and foreign cards
4. Your platform: Shopify, WooCommerce, a custom website, an app, or no website at all
5. Whether you need to send money out, such as refunds, vendor payments or cashbacks

If you're just starting, use your best estimate and revisit it after three months.

The Scorecard

Score each gateway from 1 (poor fit) to 5 (excellent fit) on each question. A gateway scoring 28 or more out of 35 is a strong match.

Now go through each question.

Question 1: Does It Fit How My Customers Pay?

This matters more than anything else on the list. A gateway that fails at the method your customers prefer will cost you sales, however cheap it is.

How to score it:

1. UPI-heavy business (food, small-ticket products, services under ₹2,000): give high marks to gateways with strong UPI checkout, such as PhonePe PG, Cashfree and Razorpay.
2. High-ticket products (electronics, furniture, courses above ₹10,000): give high marks to strong EMI and Pay Later options. PayU is often a fit here.
3. Business customers: check support for corporate cards and net banking from many banks.

Score 5 if the gateway supports all your customers' main methods with a smooth checkout. Score 1 if your top payment method is missing or limited.

Question 2: What Is My Real Yearly Cost?

Ignore the headline percentage for a moment and calculate the full year.

Use this formula:

Yearly cost = (Monthly sales × fee rate × 1.18 × 12) + annual charge + add-on costs

Example: ₹1,50,000 monthly sales at 2% = ₹3,000 fee + ₹540 GST = ₹3,540 a month, or ₹42,480 a year. Add any annual charge and instant settlement fees on top.

Then compare against the next gateway. For a deeper breakdown of every fee type, read our guide to payment gateway charges in India.

Score 5 for the lowest total yearly cost among your options, and lower scores as costs rise. Don't let a launch offer set the score. Score the standard rate.

Question 3: Does It Work With My Platform?

Integration problems eat weeks and developer fees.

Score 5 if there's a ready, official integration for your setup. Score 2 or lower if you'd need custom development you hadn't planned.

Question 4: How Fast Do I Need My Money?

Standard settlement in India is usually about two business days. That's fine for many businesses, but not all.

1. Tight cash flow (you buy stock with today's sales): instant settlement is valuable, but it costs extra. Razorpay, for example, lists 0.15% to 0.30%.
2. Healthy working capital: standard settlement is enough. Don't pay for speed you don't need.

Score 5 if the gateway's standard or affordable instant settlement matches your cash-flow needs.

Question 5: Do I Sell Outside India?

If even 10% of your sales may come from abroad, this question matters.

Check:

1. Does it accept international cards, and at what rate (often 3% or more)?
2. Does it settle in INR, and what currency conversion charge applies?
3. Does it hold RBI authorisation for cross-border payments (PA-CB)?
4. Will it help with export documents for your bank and GST?

Score 5 for clear cross-border support with published rates. Score 3 if you only sell in India and this doesn't matter. Don't penalise a gateway for a feature you won't use.

Question 6: Do I Need Extra Features?

List only what you'll actually use in the next year:

1. Subscriptions for memberships, SaaS or recurring fees
2. Payouts for paying vendors, sellers or refunds in bulk
3. Invoices sent with a payment link
4. Split payments for marketplaces
5. Offers and EMI at checkout

Score 5 if it covers everything on your list in one dashboard. Lower the score for each feature you'd need to buy elsewhere.

Question 7: Is It Properly Regulated and Supported?

Your customers' money passes through this company, so trust matters.

Check:

1. The gateway is an RBI-authorised payment aggregator. Under RBI's 2025 rules, non-bank aggregators need RBI authorisation. Learn more in our explainer on payment gateway vs payment aggregator.
2. Support is reachable by phone or chat, not just email.
3. The dashboard has clear reports for settlements, refunds and GST invoices.

Score 5 for an authorised gateway with responsive support you've tested yourself.

Questions to Ask the Gateway's Sales Team

Before you sign, send these questions by email so the answers are in writing:

• What is my rate for UPI, debit cards, credit cards, corporate cards and international cards?
• Is there any setup fee, annual charge or minimum monthly billing?
• What is your standard settlement cycle, and what does instant settlement cost?
• Do you return the fee when I refund an order?
• What do you charge for a chargeback or dispute?
• At what monthly volume can I get custom pricing?
• What payment success rate do merchants in my category typically see?
• How long does KYC usually take for a business like mine?

A gateway that answers clearly and quickly is usually one that will support you well later.

Worked Example: A Handmade Jewellery Brand

Priya sells handmade jewellery through a Shopify store. She expects ₹2 lakh a month, with an average order of ₹1,800. About 65% of customers pay by UPI, 25% by card and 10% from abroad, mostly from the US and the UAE.

Here's how she scored two gateways:

Because foreign customers matter to her and she doesn't need subscriptions, Gateway A wins, even though Gateway B has more features.

This is an illustrative example to show how the scorecard works, not a real merchant.

Common Traps When Choosing

Picking By Offer

A 0% fee for three months is nice, but you'll pay the standard rate for years.

Ignoring Integration

A gateway that needs custom code can cost more in developer time than you save in fees.

Overbuying Features

Don't choose the gateway with the most features if you'll use three of them.

No Backup

Once you're processing serious volume, keep a second gateway ready in case of outages.

FAQs

What is the most important factor in choosing a payment gateway?

How well it supports the way your customers pay. A failed payment loses a sale, which costs far more than a small fee difference.

Should a small business choose the cheapest payment gateway?

Not automatically. Compare the full yearly cost and how easily it fits your platform. A slightly higher rate with no annual charge often works out cheaper for small sellers.

Can I change my payment gateway later?

Yes. With platform plug-ins, switching is mostly new KYC and a settings change. Custom integrations take more developer time.

Do I need a company to get a payment gateway?

No. Many gateways onboard sole proprietors and individuals using PAN, Aadhaar and bank details, though limits may apply without GST.

How long does it take to get a payment gateway?

Online KYC can take from a few hours to a few days. Delays usually come from missing documents or website policy pages.

Next Step

Fill in the scorecard for two or three gateways, email them the eight questions, and decide based on the totals. If you want to see how the leading gateways score on fees and features, our guide to the best payment gateway in India compares ten of them side by side.

Need your registration, GST or website policies ready before KYC? Talk to the StartupFlora team.

Disclaimer: StartupFlora is a consultancy service provider specializing in startup consultation. We are not associated or in collaboration with any Government/Non-Government Agency / Institutions / Organisation / Department. For service payments, please ensure all transactions are made directly to our official company account.