Decoding Payment Gateway Charges in India: What Every Business Should Know

Your digital platform is scaling rapidly. Customers are pouring in. Transactions are growing. Yet, your profit margins are tighter than expected. Why? Hidden payment gateway charges.

Today, seamless digital transactions are non-negotiable. India recorded over ?200 trillion worth of digital payments in 2024 alone. But every swipe, tap, or click comes at a cost: payment gateway charges that can quietly eat into your revenue if not managed wisely.

Understanding how these charges work is critical for every business, whether you’re a rising e-commerce or an established enterprise. A clear view of payment gateway fees helps you optimise costs, negotiate better, and boost profitability.

In this blog, we’ll break down everything you need to know about payment gateway charges, clearly and with zero jargon. Let’s help you make sharper, more rewarding choices for your business.

Understanding Payment Gateway Charges

Simply put, payment gateway charges are the fees businesses incur to enable secure online payments. They cover everything from verifying customer details to transferring funds to your account.

Let’s quickly walk you through the common types of payment gateway fees.

• One-time setup fee: Covers onboarding assistance and initial integration services.
• Annual maintenance fee: A yearly charge to ensure system upgrades, security patches, and tech support.
• Transaction fees: A percentage (usually 1.5–3%) of every transaction processed.
• Refund handling charges: A fee for processing refunds, often overlooked but significant over time.

These charges aren’t random. They involve several players:

• Banks: Verify and move funds securely.
• Payment gateways: Facilitate encrypted, secure transactions between your customers and your business.
• Aggregators: Help businesses access multiple payment methods via one integration.

Importantly, payment gateway transaction fees vary based on your business model, industry, and transaction volumes. Many providers, like us at Pine Labs, offer customised pricing for high-volume businesses. This helps you save as you scale.

Choosing the right gateway isn’t just about low rates. It’s about value, flexibility, and long-term partnership.

Breakdown of Common Fee Structures

Understanding payment gateway charges starts with decoding the typical fee structure. Here’s what you usually pay:

1. MDR (Merchant Discount Rate)

Typically ranging from 1.5% to 3%, this charge covers the cost of processing each transaction.

• Credit cards: Higher MDR (1% to 3%) due to higher risk and reward points.
• UPI payments: No fees apply to UPI payments from bank accounts for both P2P and P2M. However, if the payment is made via a prepaid wallet, an interchange fee of 0.5% to 1.1% may apply to transactions above ?2,000.
• Wallets: Typically charge 1.5% to 2% per transaction, varying by provider.

In B2C e-commerce, the business absorbs MDR. In B2B models, MDR is often transparently passed on to customers.

2. One-time setup fee

Some providers charge ?5,000 – ?50,000 to integrate and configure the gateway.

3. Annual Maintenance Charges (AMC)

Covers ongoing support, upgrades, and security, ranging from ?1,200 to ?3,600 yearly.

At Pine Labs, we simplify pricing with a transparent, tier-based model. You pay exactly for what you use with no hidden surprises. When you integrate our gateway, you also unlock:

• Access to 100+ payment modes.
• Real-time dashboards.
• Advanced fraud detection.
• Seamless refunds and fast settlements.

Some gateways offer:

• Flat-rate fees: Fixed cost per transaction.
• Percentage-based fees: Cost varies with the transaction amount.

Choosing between them depends on your ticket size and volume patterns.

Factors Influencing Payment Gateway Fees

Several factors influence your payment gateway fees. Knowing these details puts you in a stronger position to negotiate better terms.

Key factors include:

• Business type: High-risk industries, such as gaming or crypto, attract higher charges due to a higher fraud risk.
• Volume and average transaction size: Higher monthly transaction volumes usually qualify you for lower payment gateway transaction fees.
• Payment methods accepted: Credit card transactions cost more due to fraud protection measures. UPI and net banking generally have lower processing fees.
• Integration complexity or settlement speed: Custom integrations, faster T+1 settlements, or bulk payouts may involve slightly higher fees.
• Gateway features: Premium features like fraud detection systems, multi-currency acceptance, and advanced analytics impact the final cost.

At Pine Labs, we work with businesses across industries to create customised fee structures. Our mission is clear—boost your payment success rates while helping you optimise costs. Growing and innovating become easier when your gateway pricing works smarter, not just cheaper.

Hidden Costs to Watch Out For

The advertised payment gateway charges are only part of the equation when selecting a provider. Overlooked hidden costs can slowly erode your margins if not addressed early.

Watch out for:

• Chargebacks and refund handling fees: Every disputed or refunded transaction may attract additional charges.
• Cross-border transaction fees: International transactions often involve extra forex conversion and processing costs.
• Early settlement or payout charges: Faster settlements (T+0, T+1) can come with added costs.
• Technical support or integration assistance fees: Some providers charge for basic support or extended integration help.
• Lack of transparency in pricing: Fine print clauses may conceal conditions such as minimum monthly commitments or penalty charges.

At Pine Labs, we believe transparency drives trust. We maintain clear, upfront pricing with no unexpected fees. When you integrate our payment gateway, you stay in complete control of your costs. Our real-time dashboards let you track every rupee flowing through your platform.

By eliminating unnecessary charges, we help businesses like yours drive profitability more smartly and quickly. Understanding true cost-to-serve is critical when evaluating payment gateway fees for sustainable growth.

Tips for Choosing the Right Payment Gateway

Finding the right partner to handle your payment gateway charges requires more than comparing rates. Here’s your simple guide to choosing the correct option:

• Match gateway features to your business model: Choose a provider that supports your use case—whether it’s subscription billing, split payments, or international transactions.
• Compare pricing models: Determine whether the gateway offers fixed rates, blended pricing, or an interchange-plus model.
• Focus on the customer experience: Check the speed of transaction processing, success rates, and how payment failures are handled.
• Prioritise security, compliance, and support: Ensure the gateway offers PCI DSS compliance, fraud protection, and responsive technical support.

Before finalising, first, decide if you need a gateway or an aggregator. With Pine Labs, you don’t have to choose. We offer both, giving you the best of flexibility and scalability.

Our flexible pricing, rapid onboarding, and tailored solutions empower businesses across industries to scale payments seamlessly. When you optimise both features and payment gateway transaction fees, you build a robust foundation for growth.

Choosing smart today can unlock compounding benefits tomorrow.

Wrapping Up!

Managing payment gateway charges is key to running a profitable online business. While fees are unavoidable, you can control them with intelligent choices and careful planning. Always research, ask the right questions, and negotiate where possible. Make sure your gateway partner supports your progress, not just your transactions.

We know that fair pricing and flexibility are crucial for your business growth. Choose Pine Labs Gateway for a pricing model that’s fair, predictable, and built to empower businesses at every stage. With Pine Labs, you get more than great rates. You gain a partner who is genuinely committed to fuelling your success.

Contact us to learn more about our customised payment solutions.