UPI Payment Gateways in India: Functionality, Charges, and Integration Insights

Your user taps ‘Pay Now’ on your app. The transaction completes instantly. No redirection and no OTP delays. That’s the power of UPI payment gateways.

UPI has revolutionised India’s payment landscape, now making up over 80% of the country’s retail digital transactions. In 2024 alone, UPI processed over 172 billion transactions worth Rs. 247 trillion. But behind this seamless real-time experience is a robust system: the UPI payment gateway.

As a product leader or CTO, you’re not just looking to accept payments. You’re aiming to enhance conversion rates, reduce payment drop-offs, and deliver a frictionless payment experience. To succeed, you need to understand how gateways work, optimise for cost, and integrate them effectively into your tech stack.

This blog covers everything about UPI payment gateways, including core functionality, charges, and the integration process. Let’s get into the details that drive real business impact.

Understanding UPI payment gateways

UPI (Unified Payments Interface) lets users transfer money instantly between bank accounts through a single mobile application. Unlike wallets, UPI doesn’t store money. It pulls directly from the bank account. And unlike net banking, it doesn’t need login credentials or long waits.

A UPI payment gateway works as the technical connector between your digital platform and the UPI infrastructure. It ensures secure, effortless routing of UPI transactions with instant confirmation.

Behind this system is the National Payments Corporation of India (NPCI)—the body that governs UPI. NPCI collaborates with certified Payment Service Providers (PSPs) such as:

• PhonePe
• Google Pay
• BHIM
• Paytm

These PSPs connect to UPI gateways such as:

• Pine Labs Payment Gateway (our flagship UPI-first solution)
• Razorpay
• Paytm Payments Gateway

With these gateways, your business can:

• Initiate and confirm payments in under 2 seconds.
• Access real-time transaction analytics.
• Enable recurring UPI payments via UPI AutoPay.
• Ensure 24×24 uptime and high success rates.

UPI is more than just a payment option. It’s a core driver of customer satisfaction and retention. Choosing the right UPI gateway makes all the difference.

How UPI payment gateways operate

Every time your user makes a payment via UPI, there’s a series of invisible but rapid processes at work.

Here’s a step-by-step view of how a UPI payment gateway facilitates that:

• Your customer enters their VPA or scans a QR code.
• The UPI gateway initiates a payment request via API to their PSP (e.g., Google Pay).
• The PSP sends this request to NPCI for validation and routing.
• The NPCI verifies the user’s bank account details and triggers the payment deduction.
• Funds are instantly credited to your account, and a confirmation is returned—all in under 3 seconds.

At the core of this real-time flow are robust APIs and SDKs. These allow you to:

• Integrate UPI into apps, web checkouts, or smart POS systems.
• Trigger transactions directly from your backend systems.
• Set up customised journeys like UPI AutoPay to manage recurring payments and mandates.

Our Pine Labs Gateway makes this even easier with full-stack UPI API support, built to minimise drop-offs and maximise success rates. Whether you’re scaling a marketplace or a D2C platform, we help you go live faster with zero complexity.

A seamless UPI gateway powers transactions, improves user experience, and boosts retention.

UPI payment gateway charges explained

Here’s the big question: Do you have to pay for UPI transactions?

As per NPCI’s latest directive, UPI payments made from bank accounts for P2P or P2M use cases are free of charge. However, when the payment source is a prepaid wallet, an interchange fee of 0.5% to 1.1% may apply, only for transactions above Rs. 2,000.

In short:

• Bank account-based UPI: No fee for you or your users.
• Prepaid wallet UPI: Interchange fee may apply (for large-ticket P2M payments).
• B2B volumes: This may attract MDR, depending on risk profile and volume.

This fee is usually borne by the platform (not the user) and depends on the PSP and UPI gateway structure.

At Pine Labs Online, our UPI payment gateway comes with a transparent, scalable pricing model. You get:

• No hidden fees.
• Volume-based MDR customisation.
• Lower costs at higher success rates.

This approach ensures you deliver a free, fast UPI experience to customers while optimising your own payment costs. With Pine Labs, you stay compliant, cost-efficient, and user-first.

Integrating UPI payment gateways into your business

Integrating a UPI payment gateway may seem straightforward until you start building.

You’ll need to work with APIs, SDKs, or plugins that vary by provider. You might face compatibility issues, security concerns, bank-mapping errors, and scattered tech support. On top of that, onboarding processes, KYC documentation, and PSP partnerships add more layers of complexity.

Thankfully, it doesn’t need to be complex.

With our Pine Labs Gateway, you get a plug-and-play UPI solution designed for scale. Whether you’re integrating with a mobile app, website, or in-store POS, we simplify the stack.

Here’s how we streamline the entire process for you:

• Ready-to-integrate APIs and SDKs for iOS, Android, and the web.
• Sandbox environment for fast testing and deployment.
• Guided onboarding with dedicated support.
• Bank tie-ups and KYC assistance are handled by us.

What you get in return:

• Lightning-fast UPI checkouts with zero friction.
• Real-time payment confirmation and reconciliation.
• Faster settlements to help you manage cash flow better.

You focus on building customer experiences. We’ll take care of the complexity behind your UPI gateway infrastructure.

Advantages of using UPI payment gateways

Why should your business invest in a UPI payment gateway?

Because it’s not just about payments, it’s about speed, scale, and customer delight.

Here’s what you gain:

• Lower transaction costs compared to cards and wallets.
• Instant payments with immediate confirmation and refund capability.
• Support for UPI AutoPay, ideal for subscriptions and repeat billing.
• Reach across India’s 350M+ active UPI users, as per NPCI’s latest data.
• Increased sales—platforms can reduce cart abandonment, enhance customer satisfaction, and ultimately boost conversion rates.

That’s an impact you can measure.

Our Pine Labs Gateway supercharges your payment flows. You can:

• Enable QR-based UPI collection across devices and locations.
• Automate payment capture with Auto Collect APIs.
• Streamline recurring payments using UPI mandates.

Whether you’re scaling a marketplace, running an online store, or launching a subscription model, UPI gateway integration helps you grow faster, reduce costs, and delight users.

And with us, it’s a future-proof investment.

Wrapping up!

In today’s digital-first economy, a UPI payment gateway is an essential growth tool. The right solution helps you simplify transactions, reduce operational costs, and build trust with your customers. It’s how leading digital platforms scale faster and smarter in India’s competitive market.

With Pine Labs Online, you get reliability, innovation, and support, all in one place. Boost your business with our Pine Labs Gateway, your reliable UPI payment partner. Get in touch with us to know how we can simplify UPI payments for your business.