How to Choose the Best Shopify Payment Gateway for Your Indian Business

India’s direct-to-consumer (D2C) market has reached a point where payments can no longer be treated as back-office plumbing. Nearly 70% of online carts are abandoned, and much of that happens at the payment stage. With UPI now powering over three-fourths of retail digital transactions, consumers expect payment to be invisible. A clunky checkout is not just an inconvenience, it’s lost revenue.

Choosing the right payment gateway is therefore one of the most critical decisions a Shopify business can make. With so many gateway options, each with confusing fees structures, choosing the right one is critical.

This guide cuts through that noise, providing a clear framework to select a payment partner that will help your Shopify store thrive.

1. Go Beyond the Basics in Payment Coverage

Indian consumers are not consistent in their payment habits. The same customer who pays for groceries with UPI may swipe a card for electronics or opt for EMI on a big-ticket item. A gateway that doesn’t accommodate this diversity leaves money unclaimed.

A complete gateway should cover:

● UPI: Integration with Google Pay, PhonePe, and other major apps isn’t optional, it’s the baseline.

● Cards: Credit and debit cards still matter, from everyday RuPay to global players like Visa and Mastercard. They remain a trusted default for many.

● Netbanking: Often overlooked, but indispensable for higher-value transactions where customers seek added security.

● EMI: No longer a luxury perk. Offering EMI options can lift average order values by up to 40%, turning affordability into a growth lever.

The job of a gateway is simple, reflect how India pays today, and you’ll capture more sales tomorrow.

2. Get A Full Breakdown of Costs and Fees

A low advertised fee can sound attractive, but it rarely tells the full story. The real cost of a payment gateway lies in the fine print.

The Primary Fee: Transaction Discount Rate

The core charge is the TDR. This is a percentage of every sale, and it varies depending on how your customer pays (e.g., UPI is cheaper than international cards).

On top of the TDR, there’s 18% GST. Importantly, this isn’t charged on the sale, but on the fee itself.

● Example: On a ₹1,000 sale with a 2% TDR, the fee is ₹20. With 18% GST (₹3.60) added, the actual deduction is ₹23.60.

Other Hidden Costs

Many gateways add extra charges that aren’t obvious at first glance:

● Refund processing fees - charged when you return money to a customer.

● Annual maintenance charges (AMC) - recurring yearly costs.

● Setup fees - less common now, but worth checking.

The smartest choice isn’t the gateway with the lowest advertised rate, but the one that lays out all charges transparently. Solutions like Shopify's own Shopify Payments or comprehensive gateways like the Razorpay Shopify payment gateway set a reliable standard for what a complete offering should look like.

3. Prioritise Performance Over Low Fees

Low fees won’t matter if payments fail. An unreliable system costs more in lost sales than you would ever save in fees

● Transaction Success Rate: The most critical metric. Even a 2–3% dip can mean lakhs lost. Leading gateways use smart routing to reroute payments when a bank server fails.

● Settlement Speed: Standard is T+2 (payments settled within two working days), but same-day or instant settlements keep cash flow moving which is vital for small businesses reinvesting in ads, stock, or shipping.

● Server Uptime: Peak sales test stability. A few minutes of downtime during Diwali or a major campaign launch can mean thousands in missed orders.

4. Treat Checkout as a Growth Engine

Checkout is more than a formality; it’s the moment that decides whether a shopper follows through or abandons the cart.

Shopify’s default checkout handles the basics well, but for Indian merchants, it misses features that have become critical: faster reorders, smarter COD management, and affordability options like EMI.

When evaluating an enhanced checkout, a few factors stand out.

● Integration should be seamless: tools like Magic Checkout, for example, work out of the box without complex APIs or heavy setup.

● Cost structures must also be transparent. Bundling checkout with the payment gateway simplifies operations and reduces the risk of hidden subscription fees.

● COD Risk engine: With COD still dominant in India, intelligent systems that flag high-risk orders can directly protect margins by reducing return-to-origin losses.

● Affordability features such as EMI and BNPL can expand a shopper’s purchasing power, often lifting average order values by double digits.

The right checkout, in other words, is not just a formality. It is infrastructure that determines whether marketing spend translates into revenue, and whether customers return again.

5. Think of your payment gateway as a long-term partner

The right payment gateway should make life easier on Day 1 and continue to support you as your Shopify store scales.

Consider these factors before deciding:

● Onboarding Process: Your business needs to start accepting payments fast. A fully digital, paperless KYC and quick account activation process is the modern benchmark.

● Customer Support: When issues arise, you need effective help. Check for responsive support channels (phone, email, chat) and always look up online reviews for real-world feedback on their service quality.

● Scalability: The gateway must enable your future growth. This means offering robust APIs for custom integrations and having the capability to process international payments in multiple currencies if you plan to sell globally.

Conclusion

There is no single "best" payment gateway, only the one that’s right for your specific business. By evaluating the complete picture, from fees and performance to user experience, you can select a true partner that is equipped to help your business grow.

Disclaimer: No Deccan Chronicle journalist is involved in the creation of the content. The Group also takes no responsibility for the content.