Payment Gateway Integration in India 2026: Razorpay, PayU, Cashfree Compared

Introduction

"Payment gateway kaun sa use karein?"

This question comes up in every e-commerce project. And the answer isn't simple because each payment gateway has different pricing, features, integration complexity, and support quality.

Choose wrong, and you'll face:

• Higher transaction fees eating into profits
• Failed payments losing sales
• Poor customer experience
• Integration nightmares
• Compliance issues

I've integrated every major payment gateway available in India — from Razorpay and PayU to CCAvenue and newer players like Cashfree. Some made our lives easy. Others were constant headaches.

This guide compares all major payment gateways in India for 2026. Real pricing, actual integration difficulty, genuine pros and cons. No sponsored recommendations — just honest comparisons based on hands-on experience.

By the end, you'll know exactly which gateway fits your business needs and budget.

Let's find your perfect payment partner.

Understanding Payment Gateway Basics

What is a Payment Gateway?

A payment gateway is the digital equivalent of a card swipe machine. It securely processes online payments between your customer and their bank.

The payment flow:

1. Customer enters card/UPI details on your site
2. Payment gateway encrypts and sends data to payment processor
3. Processor communicates with customer's bank
4. Bank approves or declines
5. Gateway receives response
6. Money gets transferred to your account
7. Customer sees confirmation

All this happens in 3-5 seconds.

Payment Methods in India (2026)

Your gateway must support UPI and cards minimum. Wallets are nice-to-have.

Major Payment Gateways Compared

1. Razorpay

Market Position: Most popular for startups and SMBs

Pricing:

• 2% + GST per transaction (all payment modes)
• No setup fee
• No annual maintenance fee
• Instant settlement: 0.5% extra

Pros:

• Excellent developer documentation
• Easy integration (1-2 hours for basic)
• Modern dashboard and UX
• Great support for tech issues
• Subscription/recurring payments built-in
• Payment links (no website needed)
• Route (smart routing for better success rates)

Cons:

• Slightly higher pricing than competitors
• Can be strict with compliance
• Account holds sometimes happen
• Support can be slow for non-technical issues

Best For: Startups, SaaS, subscription businesses, tech-savvy teams

2. PayU India

Market Position: Enterprise favorite, highest market share

Pricing:

• 1.8-2% + GST (negotiable for high volume)
• Setup fee: ₹3,000-10,000 (sometimes waived)
• AMC: ₹10,000-25,000/year

Pros:

• Highest success rates in industry
• Excellent for high-volume businesses
• Strong fraud prevention
• Dedicated account manager (for larger businesses)
• Flexible pricing for enterprises
• LazyPay integration (buy now pay later)

Cons:

• Complex onboarding process
• Slower integration (documentation not as clear)
• Older UI/UX
• Minimum volume requirements for best rates

Best For: Established e-commerce, high transaction volumes, enterprises

3. Cashfree

Market Position: Rising star, good middle ground

Pricing:

• 1.75-1.95% + GST
• No setup fee
• No AMC (for most plans)
• Instant settlement: ₹3 per transaction

Pros:

• Competitive pricing
• Good developer experience
• Fast instant settlements (30 minutes)
• Vendor payouts feature
• Auto collect for recurring
• Responsive support

Cons:

• Smaller market share (acceptance issues occasionally)
• Fewer advanced features than Razorpay
• Lesser known brand

Best For: Cost-conscious businesses, marketplaces, payout-heavy businesses

4. Instamojo

Market Position: Best for absolute beginners

Pricing:

• 2% + ₹3 per transaction + GST
• No setup fee
• Free payment links/pages

Pros:

• No website needed (payment links/pages)
• Instant activation
• Very simple to use
• Good for freelancers/creators
• Built-in basic website builder

Cons:

• Less professional for established businesses
• Limited advanced features
• Lower payment success rates
• Basic API (limited customization)

Best For: Freelancers, creators, small businesses without website

5. CCAvenue

Market Position: Oldest, most conservative

Pricing:

• 2-2.5% + GST (varies widely)
• Setup fee: ₹5,000-15,000
• AMC: ₹15,000-30,000/year

Pros:

• Accepts maximum payment modes (200+)
• Multi-currency support
• Works with any website platform
• Good for international payments
• Stable and reliable

Cons:

• Outdated UI/UX
• Complex integration process
• Poor developer documentation
• Clunky dashboard
• Expensive for small businesses

Best For: International businesses, specific niche payment methods needed

Feature Comparison

Pricing Comparison (Real Costs)

Let's calculate actual costs for different scenarios:

Scenario 1: Small Business (₹5 Lakhs/month)

Winner: Cashfree (cheapest)

Scenario 2: Medium Business (₹50 Lakhs/month)

Winner: Cashfree

Scenario 3: Large Business (₹5 Crores/month)

At this scale, negotiate custom rates:

• Razorpay: 1.5-1.8%
• PayU: 1.3-1.6%
• Cashfree: 1.4-1.7%

PayU typically offers best rates for enterprise volume.

Integration Process

Razorpay Integration (Easiest)

Basic integration steps:

1. Sign up on razorpay.com
2. Complete KYC (instant for many, 1-2 days for some)
3. Get API keys from dashboard
4. Install Razorpay SDK/library
5. Add checkout code to website
6. Test with test mode
7. Go live with production keys

Sample code (basic):

// Include Razorpay checkout script
<script src="https://checkout.razorpay.com/v1/checkout.js"></script>

// Payment button click
var options = {
  "key": "YOUR_KEY_ID",
  "amount": "50000", // Amount in paise (₹500)
  "currency": "INR",
  "name": "Your Business Name",
  "description": "Purchase Description",
  "image": "https://yourlogo.png",
  "handler": function (response){
    // Payment successful
    alert(response.razorpay_payment_id);
  }
};

var rzp1 = new Razorpay(options);
rzp1.open();

That's it for basic integration. Production-ready needs server-side verification.

PayU Integration

More complex, requires:

• Merchant onboarding (3-7 days)
• Test credentials setup
• Hash generation (security)
• Return URL handling
• Webhook configuration

Expect 1-2 days for developer to integrate properly.

Platform-Specific

WordPress/WooCommerce:

• All major gateways have plugins
• Install plugin → Enter API keys → Done
• Total time: 15-30 minutes

Shopify:

• Razorpay and PayU have official apps
• One-click installation
• Total time: 10 minutes

Custom websites:

• Use gateway's SDK/API
• Time: 4-8 hours for complete integration

Settlement and Payouts

Settlement Timeline

• Razorpay: T+2 days (instant for extra 0.5%)
• PayU: T+1 to T+3 depending on plan
• Cashfree: T+1 day (instant for ₹3/transaction)
• Instamojo: T+3 to T+7 days

T = Transaction date. T+2 means money arrives 2 working days later.

Settlement Charges

Most gateways don't charge for normal settlement. Only instant settlement has extra fees.

What Affects Settlement

• Business verification status
• Transaction volume history
• Chargeback/refund rates
• Compliance with terms

New businesses often have T+3 or T+7 initially, moving to T+1 after 3-6 months of good track record.

Security and Compliance

PCI-DSS Compliance

All major gateways are PCI-DSS certified. This means:

• Card data is encrypted
• You never handle raw card numbers
• Gateway takes security responsibility

Choose only PCI-DSS certified gateways. Non-certified = huge legal risk.

Two-Factor Authentication

Reserve Bank of India mandates 2FA for all online card transactions. All gateways comply by:

• OTP verification
• 3D Secure authentication
• Biometric authentication

Data Security

• Use HTTPS (SSL) on your website
• Don't store card details
• Don't log payment information
• Use gateway's hosted checkout when possible

Handling Refunds and Chargebacks

Refund Process

All gateways support:

• Full refunds: Return entire amount
• Partial refunds: Return partial amount

Refund timeline: 5-7 working days to customer's account

Refund charges: Most gateways refund transaction fees; some don't

Chargebacks

Customer disputes payment with their bank. Gateway notifies you.

Your options:

1. Accept chargeback (money reversed)
2. Contest with proof (invoices, delivery proof)

Chargeback costs:

• ₹200-500 chargeback fee (even if you win)
• High chargeback rate (>1%) can get account suspended

Prevention:

• Clear product descriptions
• Transparent refund policy
• Good customer service
• Delivery confirmation
• Fraud detection tools

Choosing the Right Gateway

Decision Framework

Choose Razorpay if:

• You're a startup or tech company
• Developer experience matters
• You need subscription/recurring payments
• Modern dashboard/API important
• Willing to pay slightly more for ease

Choose PayU if:

• You're an established e-commerce business
• Transaction volume is high (₹50L+ monthly)
• Payment success rate is critical
• You can negotiate enterprise pricing

Choose Cashfree if:

• Cost is primary concern
• You need fast settlements
• You run a marketplace with payouts
• You want balance of features and pricing

Choose Instamojo if:

• You're a freelancer or creator
• You don't have a website yet
• Transaction volume is very low
• You need payment links quickly

Questions to Ask

1. What's my monthly transaction volume?
2. Do I need recurring/subscription payments?
3. How important is instant settlement?
4. Do I have technical resources for integration?
5. Am I willing to pay setup fees?
6. Do I need international payments?
7. What's my average transaction value?

Multi-Gateway Strategy

Some businesses use multiple gateways for:

Benefits

• Higher success rates: If one fails, try another
• Backup: If primary down, secondary works
• Cost optimization: Route transactions to cheapest gateway
• Feature coverage: Use each for what it does best

Challenges

• More complex integration
• Split settlements across accounts
• More reconciliation work
• Higher maintenance

Only recommended for businesses doing ₹1 crore+ monthly.

Implementation Checklist

Before going live:

Pre-Integration:

• ☐ Business registration documents ready
• ☐ Bank account verified
• ☐ GST number (if applicable)
• ☐ Website with HTTPS/SSL
• ☐ Clear refund policy page

Integration:

• ☐ Test mode integration complete
• ☐ Successful test transactions done
• ☐ Refund process tested
• ☐ Server-side verification implemented
• ☐ Webhook configured (for payment status)

Post-Integration:

• ☐ Production keys activated
• ☐ Real transaction tested
• ☐ Email confirmations working
• ☐ Reconciliation process set up
• ☐ Team trained on dashboard

Conclusion

There's no universal "best" payment gateway. Razorpay wins on ease and experience. PayU wins on success rates and scale. Cashfree wins on cost. Instamojo wins on simplicity.

For most small to medium businesses in India starting in 2026, I recommend:

1. Starting out: Razorpay (ease of setup)
2. Growing fast: Cashfree (best pricing as you scale)
3. Enterprise scale: PayU (negotiate custom rates)

Whatever you choose, remember: payment gateway fees are the cost of doing business. A 0.2% difference in fees matters less than 1% difference in success rates. Don't optimize pennies while losing rupees.

Choose a gateway that's reliable, compliant, and won't create headaches. Start accepting payments, start making money, optimize later.

Your customers are ready to pay. Make it easy for them.

Need help integrating payment gateways?

At Arcenik Technologies, we've integrated every major payment gateway across hundreds of e-commerce sites. We handle the technical complexity while you focus on selling.

Get a free integration consultation — we'll recommend the right gateway for your business and handle the complete setup.