UPI Payment Gateway Charges in India 2026: MDR Guide

If your business mainly collects small UPI payments at a counter, start with a plain UPI QR or soundbox from your bank or payment app and add a gateway only when you need online checkout, payment links, reconciliation or recurring collections. If you sell online, pick a gateway on four things, in this order: the UPI fee actually written into your agreement, settlement speed, reconciliation exports, and support for UPI Autopay. Published list prices differ more on UPI than on cards. One large gateway lists UPI as "zero MDR" but still charges a platform fee on its standard plan, while another says UPI charges are "as per the applicable law". So "free UPI payment gateway" is a question to settle in writing, not something to assume from a marketing banner.

Executive summary

• UPI is now the default way Indians pay merchants. The Government's tenth-anniversary release says UPI processed 24,161.69 crore transactions worth about ₹314 lakh crore in FY 2025-26, and that person-to-merchant (P2M) payments made up 63% of volume (PIB).
• Merchant payments are small. The same release reports that 86% of P2M transactions were below ₹500, so a flat percentage fee on UPI adds up quickly for high-frequency, low-ticket businesses.
• "Zero MDR" and "zero cost" are not the same thing. Razorpay's pricing page lists UPI as "Zero MDR — 2% platform fee applies" on its standard plan, with 18% GST on platform fees (Razorpay pricing). Cashfree says UPI charges are "as per the applicable law" (Cashfree charges).
• Setup fees have mostly gone. Razorpay lists ₹0 setup and ₹0 annual maintenance. Cashfree says "ZERO setup fees". PayU says there are no setup or maintenance fees (PayU pricing).
• Recurring UPI is regulated separately. RBI's Digital Payments – E-mandate Framework, 2026 allows recurring debits of up to ₹15,000 per transaction without an additional factor of authentication and requires a pre-debit notification at least 24 hours before each charge (RBI).
• The real cost gap is negotiation, not the list price. In our illustrative model, a merchant collecting ₹6 lakh a month over UPI pays ₹14,160 a month at a 2% platform fee plus GST, and nothing on UPI if the fee is negotiated down to zero.

Market context

UPI's growth is well documented by official sources, so there is no need to rely on third-party market-size estimates. According to the Press Information Bureau's release marking ten years of UPI, annual volume grew from about 2 crore transactions in FY 2016-17 to more than 24,162 crore in FY 2025-26. Value rose from ₹0.07 lakh crore to about ₹314 lakh crore over the same period. The release lists 703 banks live on UPI as of March 2026 and puts UPI's share of India's digital payments at 85% in FY 2025-26 (PIB).

Two details in that release matter more to a merchant than the headline totals:

1. P2M payments dominate volume but not value. They were 63% of transactions by count, while person-to-person transfers accounted for 71% of value. Merchants therefore handle many small payments.
2. Tickets are tiny. 86% of P2M payments were below ₹500. A ₹300 kirana basket, a ₹150 cab ride or a ₹99 app subscription is typical UPI traffic.

Together these explain why pricing structure matters so much. For a small ticket, a fixed percentage fee plus 18% GST is proportionally the same as on a large one, but a business with thin retail margins feels it. They also explain why many offline merchants never need a gateway: a static or dynamic QR from their bank, with a soundbox for confirmation, covers counter payments. A gateway earns its keep when you need:

• online checkout on a website or app, with UPI intent and collect flows
• payment links sent over WhatsApp, SMS or email
• automatic reconciliation against orders, refunds and settlements
• recurring collections through UPI Autopay, cards or e-mandates
• a single dashboard across UPI, cards, netbanking, wallets and EMI

Regulation shapes recurring payments too. RBI's consolidated e-mandate directions, issued on 21 April 2026, apply to "all Payment System Providers and Payment System Participants in respect of processing of recurring transactions, domestic or cross-border, using cards / PPI / UPI". They set a ₹15,000 per-transaction limit without additional authentication (₹1,00,000 for insurance premiums, mutual fund subscriptions and credit card bills), require a pre-debit notification at least 24 hours ahead, give customers an opt-out, and bar charging customers for the e-mandate facility (RBI). If you plan subscriptions, read our subscription billing software coverage alongside this guide.

For a broader card-and-netbanking comparison, see our payment gateway charges comparison. This article focuses specifically on UPI.

Evaluation framework

The weights below are App Advisor's methodology for choosing a UPI-first gateway for an Indian small or mid-sized business. They are editorial judgements, not an industry standard. Adjust them if, for example, you run a marketplace where split settlements matter more.

A useful rule: if two gateways score within 5 points of each other, pick the one whose reconciliation reports your accountant can import without manual work. That saves more money over a year than a small difference in list price.

Vendor comparison

Prices below are taken only from each vendor's official pricing page as we accessed it in September 2026. "Not published" means we could not find a figure on the official page. Always confirm the rate in your merchant agreement, because published rates change and negotiated rates are common.

How to read this table:

• Razorpay is the most transparent on list pricing. The trade-off is explicit: UPI carries a platform fee on the standard plan unless you negotiate otherwise.
• Cashfree publishes detailed card, EMI and subscription fees but ties UPI to "applicable law". Ask for the UPI P2M rate in writing before you sign.
• PayU says merchant UPI pricing depends on business type and volume, which means you need a quote.
• PhonePe and Paytm have strong consumer UPI apps. Their merchant gateway pricing needs a sales conversation. We have not listed numbers we could not verify.

Other options in our catalogue include Juspay (payment orchestration for larger merchants), Instamojo Payments for very small online sellers, and Zoho Payments for businesses already invoicing in Zoho. Browse the full payment gateway category and the UPI payment apps category.

Total cost of ownership

Illustrative model — assumptions stated. This is not customer data. It shows how published fees translate into a monthly bill so you can repeat the calculation with your own numbers.

Assumptions

• Online collections: ₹10,00,000 per month
• Mix: 60% UPI (₹6,00,000), 40% domestic consumer cards (₹4,00,000)
• No EMI, international or corporate cards
• GST at 18% on gateway fees, as stated on Razorpay's page. Where a vendor page does not state GST treatment, we flag it.
• Refunds, chargebacks and instant settlement are ignored

Scenario A: Razorpay standard published pricing

Scenario B: Cashfree published card pricing, UPI to be confirmed

Sensitivity: what negotiation is worth

• If the UPI fee in Scenario A is negotiated to 0%, the saving is ₹14,160 a month, or ₹1,69,920 a year, on these volumes.
• If the UPI share of your collections rises from 60% to 80% (card volume falls correspondingly), the UPI fee line rises from ₹12,000 to ₹16,000 before GST at a 2% rate. Every extra percentage point of UPI share makes the UPI rate matter more.
• For a counter-only business with no online sales, a bank QR and soundbox may remove the gateway cost entirely. Confirm any device rental with your bank or provider.

The model shows that for UPI-heavy merchants, the negotiated UPI rate outweighs every other line item. Put it first on your negotiation list.

Implementation roadmap

Weeks 1–2: Requirements and shortlist

• Map every collection flow: counter QR, website checkout, app checkout, payment links, invoices, subscriptions.
• Pull three months of payment data to estimate your UPI share and average ticket size.
• Shortlist three gateways and request written pricing for UPI P2M, cards, refunds and instant settlement.

Weeks 2–4: KYC and sandbox

• Submit KYC documents (PAN, GSTIN if registered, bank proof, business registration).
• Integrate in sandbox: UPI intent on mobile web, collect flow on desktop, QR on the checkout page.
• Test failure paths: app not installed, user cancels, timeout, duplicate callbacks.

Weeks 4–6: Reconciliation and accounting

• Map settlement reports to order IDs and your accounting ledger.
• Decide how gateway fees and GST on those fees are booked. Your accountant will need a monthly invoice from the gateway.
• If you use Zoho Books or TallyPrime, test the import format now, not after go-live.

Weeks 6–8: Controlled launch

• Launch to a share of traffic or a single product line first.
• Watch success rate, settlement timing and refund turnaround daily for two weeks.
• Keep your previous collection method live as a fallback until the numbers are stable.

Week 8 onwards: Optimise

• Renegotiate once you have three months of volume history.
• Add UPI Autopay or payment links if they suit your customers.

Risks and compliance checklist

• Written UPI rate. Your agreement states the UPI P2M fee, GST treatment and any conditions. Do not rely on a banner that says "free".
• Recurring payments follow RBI rules. Pre-debit notification at least 24 hours before each charge, opt-out available, and additional authentication above ₹15,000 per transaction (RBI).
• No fees charged to customers for e-mandates. RBI's directions state that no charges shall be levied on the customer for the e-mandate facility.
• Settlement account matches KYC. A mismatch between the business name and the bank account delays activation and settlements.
• Refund policy is published on your website and matches what the gateway can execute.
• Webhook security. Verify signatures on payment callbacks. Never mark an order paid from a client-side redirect alone.
• Data handling. Do not store card data yourself. Use the gateway's hosted or tokenised flows.
• Invoice for gateway fees. Collect GST invoices from the gateway every month so input tax credit can be assessed by your accountant.
• Exit plan. Keep order IDs gateway-agnostic so you can switch or add a second gateway without rebuilding checkout.

KPIs to track

Review these monthly. The effective cost rate and reconciliation exceptions together give a better picture of total cost than the headline fee.

How to choose

• Only counter payments, no website? Use a bank or payment-app QR and soundbox. A gateway is optional.
• Online sales, UPI share above 60%? Negotiate the UPI rate first. Shortlist gateways willing to put a UPI P2M fee in writing that fits your margins.
• Online sales with many card and EMI buyers? Compare card, EMI and pay-later rates as closely as UPI. Cashfree and Razorpay both publish detailed card and EMI lines.
• Subscriptions or recurring bills? Choose a gateway with UPI Autopay and e-mandates, and confirm its notification flow meets RBI's 24-hour pre-debit rule. See our subscription billing software listings.
• Invoicing B2B customers? Payment links tied to invoices, plus accounting integration, matter more than checkout. Consider gateways that plug into your accounting software.
• High volume and multiple gateways? Look at orchestration tools such as Juspay to route between providers.

FAQs

Sources

• PIB — UPI completes 10 years
• RBI — Digital Payments – E-mandate Framework, 2026
• Razorpay pricing
• Razorpay Subscriptions
• Cashfree payment gateway charges
• PayU pricing
• Easebuzz pricing