Payment gateway charges in India vs platform revenue share
What institutes really pay per sale on their own gateway, how the UPI MDR from 15 October 2026 changes things, and when a revenue share costs less, with a worked example.
On this page 11 sections
Payment gateway charges in India are typically about 2% of each payment on most domestic methods, including UPI at some major gateways, plus 18% GST on that fee: roughly 2.36% in all, and around 3% on international cards. A platform revenue share is a different kind of cost, usually a larger percentage that also pays for the platform itself. To compare the two fairly, work out total cost at your sales volume, and ask a separate question that matters just as much: whose account do your students' fees land in?
Two questions, not one
Institutes often treat "gateway or revenue share" as a single choice. It is really two:
- How do you pay the platform? A flat monthly fee, a price per student, or a share of revenue.
- Where does the money land? In your own merchant account with a payment gateway, or in the platform's account first, to be paid out to you later.
The two are independent. A platform can charge a revenue share while fees still land in your own gateway, and it simply bills you for its share. Or a platform on a flat fee might still collect payments in its own account. Keep the questions apart and the comparison gets much clearer.
| Question | Fees land in your own gateway | Fees land in the platform's account |
|---|---|---|
| Who is the merchant? | Your institute | Often the platform |
| When is the money yours? | On your gateway's settlement cycle, commonly one or two working days | On the platform's payout schedule |
| Who handles refunds and disputes? | You, from your gateway dashboard | The platform, on its terms |
| Who holds the payment records? | You | The platform; you get reports |
| What happens if you change platforms? | Your gateway and payment history stay with you | Payment history and any recurring mandates stay behind |
What a payment gateway charges
A gateway's price has three parts: a percentage per successful payment (the platform fee), GST at 18% on that fee, and sometimes extras such as instant settlement or instant refunds. Most major gateways publish their standard rates:
| Gateway (standard plan) | Most domestic methods | Higher-cost methods | Setup fee |
|---|---|---|---|
| Razorpay | 2%, including UPI and RuPay debit (shown as zero MDR plus a 2% platform fee) | Corporate cards 2.15%; international cards up to 3% | None |
| Cashfree Payments | About 1.95% to 2% on cards and wallets; UPI "as per the applicable law" | International cards 2.99% | None |
| PayU | 2% on Visa, Mastercard, net banking and wallets; merchant UPI priced by category and volume | 3% on Amex, Diners, EMI and international | None |
Rates from the Razorpay and PayU pricing pages and Cashfree's published charges, checked on 29 September 2026. Treat them as typical, not fixed. They change, larger merchants can often negotiate, and new-merchant offers come with caps and exclusions.
Three details catch institutes out:
- GST is on the fee, not the payment. A 2% fee on a ₹20,000 payment is ₹400, plus ₹72 GST: ₹472 in total.
- Refunds don't return the fee. Razorpay's documentation says fees and taxes on a captured payment are not reversed when you refund it, and instant refunds cost extra. Check your gateway's policy before promising "full refunds".
- Chargebacks cost the amount. If a student disputes a payment with their bank and you lose, the amount is debited from you.
UPI, cards and EMI
UPI
UPI pricing is changing. A Finance Ministry notification of 14 September 2026 (S.O. 5067(E)) bars banks and system providers from charging for UPI payments up to ₹2,000 and for RuPay debit card payments. Above ₹2,000, NPCI's MDR FAQ of 15 September 2026 says:
- from 15 October 2026, merchant (P2M) UPI payments above ₹2,000 carry a 0.4% merchant discount rate, capped at ₹300 for payments of ₹75,000 and above;
- some categories, such as insurance, fuel and utilities, pay a flat ₹5 instead, and educational fee collections are listed among categories with flat or capped rates, without a figure;
- merchants may not pass the MDR on to the payer, and UPI AutoPay mandates carry no prescribed MDR;
- small merchants receiving up to ₹1 lakh a month through a UPI QR code into their own account stay at zero.
This MDR is separate from your gateway's platform fee. Ask your gateway how your UPI price will change from 15 October, and how it classifies your institute, because the category decides whether an education rate applies.
Cards, EMI and recurring payments
- International and premium cards cost more to accept, which is why Amex, Diners, corporate and foreign cards sit in the higher bands.
- EMI is priced higher at most gateways. "No-cost EMI" usually means you absorb the interest as a discount, so build it into your fee.
- Monthly fee plans on card or UPI mandates: RBI allows recurring debits up to ₹15,000 without the student authenticating each one (RBI circular, June 2022). Above that, each debit needs the student's approval.
- Saved cards: since 1 October 2022, merchants and gateways other than card issuers and networks may not store full card numbers, so saved cards work through tokens. See encryption vs tokenization.
What a revenue share covers
A revenue share isn't a payment fee with a bigger number. It usually pays for the platform: hosting, video delivery, apps, support and updates, and sometimes gateway fees or marketing. Judge it on what it includes.
| Revenue share: strengths | Revenue share: costs |
|---|---|
| Little or no upfront cost, which helps when you're starting or testing a new course | The cost grows with your success: at scale, a percentage usually costs more than a fixed fee |
| The platform earns only when you do, so incentives are aligned | If the platform also collects the money, you depend on its payout schedule and records |
| Often bundles infrastructure and usage you would otherwise pay for separately | Harder to compare, because bundles differ between vendors |
A flat or per-student plan is the mirror image: a fixed cost that is heavy when you're small and light when you're big. Some flat plans also bill usage, such as video bandwidth and storage, separately, so include that in any comparison.
A worked example
For illustration, compare a flat platform plan of ₹25,000 a month (₹3 lakh a year) with a 10% revenue share, with fees landing in the institute's own gateway at 2% plus GST in both cases. These are example numbers, not any vendor's prices.
| Annual course sales | Gateway (2.36%) | Flat plan | 10% revenue share | Cheaper platform option |
|---|---|---|---|---|
| ₹15 lakh | ₹35,400 | ₹3,00,000 | ₹1,50,000 | Revenue share |
| ₹30 lakh | ₹70,800 | ₹3,00,000 | ₹3,00,000 | Equal |
| ₹50 lakh | ₹1,18,000 | ₹3,00,000 | ₹5,00,000 | Flat plan |
| ₹1 crore | ₹2,36,000 | ₹3,00,000 | ₹10,00,000 | Flat plan |
In this example, the break-even is ₹30 lakh a year: below it, the revenue share costs less; above it, the flat plan does. The gateway cost is the same either way because the money lands in your gateway in both cases. If a platform collects payments itself and its share includes gateway fees, subtract the gateway column from its side before comparing.
From 15 October 2026, UPI payments above ₹2,000 may add up to 0.4% on top of the gateway fee, depending on your gateway and category. On ₹50 lakh of sales paid entirely by UPI, that would be at most ₹20,000 a year.
Settlement, refunds and who owns the customer
- Settlement. Settlement timelines come from your agreement with the gateway. Razorpay's pricing page lists T+1 or instant settlement, Cashfree's default is T+1 and PayU lists T+2 working days; faster settlement can cost extra. With a platform's account, add its payout cycle on top.
- Refunds and disputes. With your own gateway, you issue refunds and answer disputes from your dashboard. With a platform's account, you wait for its process, even when a parent is on the phone.
- Reconciliation. A course should unlock only when the gateway itself confirms the payment, not when the student's browser says it has paid. See verifying payment webhooks.
- The customer. When fees land in your gateway, the payment relationship, the records and the history are yours, and they stay yours if you ever change platforms. That control, more than a fraction of a percent, is the main reason to prefer your own gateway.
Key takeaways
- Typical gateway pricing is about 2% plus 18% GST on the fee for most domestic methods, and around 3% for international cards.
- From 15 October 2026, UPI payments above ₹2,000 carry a 0.4% MDR, capped at ₹300, with concessions for some categories; the gateway's own fee is separate.
- Revenue share and "where the money lands" are separate choices. Compare total cost at your volume.
- Revenue share suits low or uncertain volume; flat pricing usually wins as you grow.
- Fees landing in your own gateway give you control of cash flow, refunds and records.
Where Upclass fits
Upclass gives institutes a course website, live classes, tests, a lead CRM and branded apps on Android, iOS, Windows and macOS, with students' fees paid straight into the institute's own payment gateway on every plan, including revenue share. Compare the plans on the Upclass pricing page, or see LMS for coaching institutes.
Frequently asked questions
Which payment gateway is best in India?
There isn't one best gateway for everyone. Compare the effective rate on your own payment mix, since UPI and card pricing differ, along with settlement speed, UPI success rates, support for EMI and recurring mandates, how easily you can issue refunds, and how well it connects to your LMS. Ask each gateway whether lower rates are available at your volume, and read the conditions attached to any promotional offer.
Is UPI free for merchants?
Only partly, and it is changing. Banks may not charge for UPI payments up to ₹2,000, and from 15 October 2026 merchant payments above ₹2,000 carry a 0.4% MDR capped at ₹300, with lower rates for some categories. Payment gateways may also charge their own platform fee on UPI, often around 2% on standard plans. Small merchants using a bank UPI QR code for up to ₹1 lakh a month remain free.
Which payment gateway is best in India and free?
None of the major gateways is permanently free. Some offer new merchants zero fees for a limited period or up to a sales limit, with exclusions such as international and corporate cards. A plain bank UPI QR code avoids gateway fees, but it doesn't enrol students automatically, issue receipts or reconcile with your LMS, which is why institutes selling online usually use a gateway.