A Small Business Guide to Comparing Payment Gateway Charges in India

By WovLab Team | April 21, 2026 | 3 min read

Deconstructing the Fees: What Is MDR, Setup Cost, and Annual Maintenance Charge (AMC)?

Navigating the landscape of payment gateway charges in India can feel overwhelming. The first step to gaining control over these costs is understanding the core components of the fee structure. Most gateways build their pricing around three pillars: the Merchant Discount Rate (MDR), Setup Fees, and Annual Maintenance Charges (AMC). Getting a firm grasp on these terms is essential for any small business owner looking to accept online payments without eroding their profit margins.

The Merchant Discount Rate (MDR) is the most significant and frequent charge you'll encounter. It's a percentage of each transaction value that is deducted by the payment gateway before the funds are settled into your bank account. For example, if your MDR is 2% and a customer pays you ₹1,000, the gateway will keep ₹20. This rate isn't a single number; it varies significantly based on the payment mode used by your customer—credit cards (especially international or corporate cards) typically have the highest MDR, while UPI and RuPay debit cards often have the lowest, sometimes even zero, due to government mandates. Understanding your customer's preferred payment methods is key to forecasting your actual MDR costs.

Next are the one-time and recurring fixed fees. The Setup Cost, or integration fee, is a one-time charge for activating your merchant account. In the hyper-competitive Indian market of 2026, this fee is often waived for startups and small businesses to encourage adoption. However, for enterprises requiring complex, custom integrations, a setup fee might still apply. On the other hand, the Annual Maintenance Charge (AMC) is a recurring yearly fee to keep your account active. Similar to setup costs, many providers now offer zero-AMC plans, but it's crucial to read the fine print. Sometimes, a zero-AMC plan is contingent on meeting a minimum monthly transaction volume, failing which could result in charges.

Key Insight: Don't be swayed by a "zero setup fee" alone. The MDR is where the real, long-term cost lies. A gateway with a 0.25% lower MDR will save you vastly more over a year than one that simply waives a one-time ₹2,000 setup fee.

2026 Head-to-Head: Comparing Payment Gateway Charges for Razorpay, PayU, and Instamojo

When evaluating the top players in the Indian market, a side-by-side comparison reveals subtle but important differences. While headline rates can look similar, the specifics of their fee structures for different payment modes determine the true cost. Here’s a detailed breakdown of the standard payment gateway charges in India for Razorpay, PayU, and Instamojo as of early 2026 for new small business accounts.