Payment gateway fees in India: a step-by-step guide

You unquestionably must have come across the term “payment gateway charges” when operating a business. It is a technology that allows merchants to accept payments from their customers. Thus, you can use several payment mechanisms. For example, depending on the customers’ preferences, you can accept debit cards, credit cards, e-wallets, mobile payments, and other payment methods. 

The payment gateway system has eased the process of transactions and has made payment easier for both the customer and the merchant. 

Are you in business or thinking of having your own business? If so, you need to know about the payment gateway and payment gateway charges in detail, as online money payment has become a must in today’s world. 

Follow this post to learn more about the payment gateway charges and the factors influencing this charging system. 

Free payment gateways? Don’t fall into the trap- It’s all a myth!

Are the payment gateways free? Will you be able to implement payment gateways without any charges? 

You need to understand the workings of payment gateways before knowing about their charges. 

Stakeholders involved in payment gateways

  • Customers: They are individuals who accept the products and services from the merchants and initiate a digital transaction for the payment. 
  • Merchants: Business people who offer the products and services to the customers and accept digital payments in return. 
  • Issuing banks: Banks that issue credit or debit cards to customers in the digital transaction process. 
  • Acquiring banks: The merchant has an account with this bank. This bank transmits all payment-related information to the issuing bank, and the payment is received in this bank account. 
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Working on a payment gateway system

The payment gateway system performs the following:

  • The payment gateway system validates the card information of the customers securely. 
  • It also processes the transactions by ensuring the availability of the funds. 
  • It acts as an interface and connects the merchant website with the acquiring bank. 

A breakdown of the payment gateway charges

The digital payment process involving the payment gateways is complex, so the breakdown of the charges is discussed here.

  • Setup charges: The setup charges are taken up initially when the merchant comes on board for the payment gateway. The charges are for KYC verification, documentation, and infrastructure costs. 
  • Annual maintenance fees: For maintaining the infrastructure, customer service, software maintenance, upgrades, etc., the payment gateways charge a yearly maintenance fee from the merchants. 
  • Integration fees: Some of the payment gateways charge for integrating the app or website of the merchant with the payment gateway system, called integration fees.
  • Transaction Discount Rate (TDR): For each transaction, a part of the amount is charged by the payment system, which mainly includes bank charges, processing charges, and tax. 

Factors influencing the payment gateway charges

  • The charges vary according to the number of modes that the merchant activates in the payment gateway. 
  • It depends on the type of integration. For websites, the charge is low, while for advanced technology apps, the cost is high. 
  • Signing up for advanced features like auto-billing, integrated refund management, and other such services increase the cost and are charged as per the merchant’s needs. 
  • Advanced services like fraud prevention need additional charges. 
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Why do you use payment gateways?

While in physical stores, you can see the debit or credit cards EMI mobile of the customers, during online transactions, one can never guarantee authenticity. Hackers can cause fraud by taking advantage of the situation. Using payment gateways helps secure the transactions and sensitive data of customers, and for this reason, payment gateways have become a must. 

What exactly is TDR?

TDR is an abbreviation for “Transaction Discount Rate.” It is the fee charged by a payment gateway provider per transaction. The price varies depending on the mode of payment.

Is it true that all payment gateway fees are deducted per transaction?

Some payment gateway fees are charged per transaction. As an example, consider the transaction cost. The majority of payment gateway providers charge a percentage of the transaction value, which varies according to the payment method.

Some payment gateway fees are not deducted on a per transaction basis. These include setup fees, maintenance fees, and integration fees.

How should I select the best payment gateway for my online business?

You should evaluate the different payment gateways based on their track and regulatory compliance records. After all, you want your payment gateway to be secure and reliable. You should also consider its scalability and performance and all the features it offers.

Check out for feedback on its customer service and the various payment methods that it supports. It must be easy to use, and a competitive pricing strategy would be a bonus.

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