UPI Payment Gateways Compared: Razorpay vs PhonePe vs Cashfree
Confused between Razorpay, PhonePe and Cashfree? Compare fees, settlement speed & ease for small Indian stores. Pick the right UPI gateway today.
Updated 30 September 20268 min readBy Memora Digital
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Your customer scans a QR code, pays via UPI, and the money lands in your account. That is the dream. But pick the wrong payment gateway and you deal with failed transactions, delayed settlements, and a dashboard that makes no sense. For a small store in India, your payment gateway is not just a tech decision — it is a cashflow decision. Here is a practical, no-fluff comparison of three popular UPI payment gateways in 2025: Razorpay, PhonePe Payment Gateway, and Cashfree Payments.
Why your small store needs a proper UPI payment gateway
Over 80% of digital payments in India now happen through UPI. Your customers in Jaipur, Coimbatore, or Nashik do not want to type card numbers. They want to open Google Pay or PhonePe, scan, and leave.
A proper payment gateway does three things for your store:
Accepts UPI, cards, netbanking, and wallets from a single integration
Shows payment status instantly so you can confirm orders on WhatsApp
Settles money to your bank account on a predictable schedule
Just sharing your personal UPI QR code from PhonePe or Google Pay is fine for a paan shop. But if you run a product business — clothing, electronics, home décor — you need a gateway that links to your website, tracks every payment, and handles refunds without a 20-minute phone call to customer care.
At a glance: Razorpay vs PhonePe vs Cashfree
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Note: Gateway providers update fees frequently. Always check the official pricing page before signing up. The figures above reflect commonly listed rates in early 2025.
Razorpay: The developer favourite that scales with you
Razorpay is probably the most talked-about gateway among Indian startups and D2C brands. Founded in 2014, it powers payments for thousands of businesses from local tiffin services in Pune to funded SaaS companies in Bengaluru.
What works for small stores
Clean dashboard. You see every transaction, its status, and settlement date in one screen. No training needed.
Smart routes. If one bank is down, Razorpay routes the payment through another. Fewer failed transactions mean fewer angry customers.
Subscription support. If you sell monthly boxes or memberships, Razorpay handles recurring UPI mandates well.
WhatsApp integration. You can generate and share payment links directly on WhatsApp, which is how most small stores actually close sales.
Where it falls short
The 2% fee on cards is on the higher side compared to Cashfree.
PhonePe and Google Pay UPI intents sometimes fail because of routing changes — this is a known industry issue, not Razorpay-specific, but it affects user experience.
Customer support for free-tier merchants can be slow during peak sale periods.
Verdict: Pick Razorpay if you want a polished experience, plan to grow beyond ₹5 lakh monthly transactions, or need subscriptions.
PhonePe Payment Gateway: Ride the UPI wave
PhonePe already processes a massive share of India's UPI transactions as a consumer app. Their merchant payment gateway (earlier called PhonePe for Business) leverages that same infrastructure.
What works for small stores
Native UPI experience. When your customer pays via PhonePe, the transaction flows through their own rails. Success rates for PhonePe UPI payments are noticeably higher.
Zero setup fee. PhonePe does not charge a setup or annual maintenance fee, which matters when you are just starting out.
In-store + online. If you run a physical shop in Surat and also sell on Instagram, PhonePe lets you manage both digital and QR payments from one dashboard.
Brand trust. Customers recognise the PhonePe name. Seeing it at checkout can reduce payment anxiety.
Where it falls short
The dashboard is functional but not as intuitive as Razorpay's. Finding a specific transaction takes more clicks.
Fewer integrations with platforms like Shopify or WooCommerce compared to Razorpay and Cashfree.
International payment support is limited, so skip this if you sell to NRIs or overseas buyers.
Documentation for developers is improving but still lags behind Razorpay.
Verdict: Pick PhonePe PG if most of your customers already use PhonePe, you run a hybrid (offline + online) store, and you want to keep costs predictable.
Cashfree Payments: The budget-friendly powerhouse
Cashfree is less glamorous than Razorpay but quietly powers backend payouts for many Indian platforms. Based in Bengaluru, it has been RBI-licensed since 2021.
What works for small stores
Lowest card and netbanking fees. At 1.75%, you save ₹25 for every ₹1 lakh in card transactions compared to Razorpay's 2%. That adds up.
Instant settlements. Cashfree offers same-day and even intra-day settlement options. If cashflow is tight — and for small stores it always is — getting money in hours instead of days is a game changer.
Bulk payouts. Need to pay 50 suppliers or refund 30 customers at once? Cashfree's batch payout feature handles this cleanly.
Good plugin support. Cashfree has ready-made plugins for WooCommerce, Shopify, Wix, and Instamojo. Setup is genuinely under 30 minutes if your documents are ready.
Where it falls short
Reading about it — or ready to have it built?
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The dashboard works but feels dated compared to Razorpay's modern interface.
UPI intent flow is reliable but not as smooth as PhonePe's native experience.
Brand recognition among your customers is lower. Some buyers may hesitate if they see an unfamiliar gateway name at checkout.
Customer support response times can vary. Smaller merchants sometimes report delays during Diwali or year-end sales.
Verdict: Pick Cashfree if every rupee of transaction fee matters, you need fast settlements, or you do a lot of bulk payouts.
Real-world fee comparison: What you actually pay
Let us say your store in Lucknow does ₹2 lakh in monthly digital collections. Here is a rough fee breakdown assuming 70% UPI, 20% cards, and 10% netbanking.
Gateway
UPI fees (₹)
Card fees (₹)
Netbanking fees (₹)
Total monthly fees (approx.)
Razorpay
0 (UPI free up to ₹2K) + 1.5% above
800
400
₹1,200–₹1,800
PhonePe PG
2,790
796
398
₹3,984
Cashfree
2,450
700
350
₹3,500
These are back-of-envelope calculations. Actual fees depend on your exact mix, UPI transaction sizes, and any negotiated rates. The point is: for UPI-heavy small stores, Razorpay's UPI pricing can be very attractive. For card-heavy stores, Cashfree wins on fees.
Which gateway should you actually choose
There is no single winner. It depends on what your store looks like today.
You sell on WhatsApp and Instagram, no website yet
Go with Razorpay. Their payment links work beautifully on WhatsApp. You create a link, share it, and the customer pays. No website needed.
You have a WooCommerce or Shopify store doing under ₹3 lakh/month
Go with Cashfree. The plugin is easy, fees are lower, and instant settlements keep your working capital healthy.
You run a kirana or garment shop with a physical QR and want to go online
Go with PhonePe PG. You already use PhonePe for in-store UPI. Extending to online payments keeps everything in one place.
You plan to scale past ₹10 lakh/month and need subscriptions
Go with Razorpay. The smart routing, subscription engine, and developer API will save you from migrating later.
How your payment gateway fits into your website
A payment gateway is just one piece. It needs a proper website to live on. Here is what that setup looks like:
1Your product catalogue is on your website (not just Instagram highlights)
2Customers add items to cart and proceed to checkout
3Your website calls the payment gateway API
4The customer sees the UPI intent or QR and pays
5The gateway sends a webhook to your website confirming payment
6You get a WhatsApp notification and ship the order
If you are still running your business only through Instagram DMs and Google Pay screenshots, you are leaving money on the table. Customers forget to pay, send wrong amounts, and you spend hours matching entries. A website with an integrated gateway automates all of this.
Key takeaways
Razorpay offers the best overall experience and UPI pricing, ideal for stores planning to grow
PhonePe PG gives the smoothest UPI checkout for PhonePe users and works well for offline-to-online stores
Cashfree charges the lowest card and netbanking fees and offers instant settlements
For UPI-heavy small stores, Razorpay's zero-fee UPI (up to ₹2,000) is hard to beat
Your gateway choice should match your sales channel: WhatsApp links, website checkout, or in-store QR
No gateway is perfect — test one, monitor failed transaction rates for 30 days, and switch if needed
Ready to accept online payments the right way?
Choosing a gateway is half the battle. You also need a clean, fast website where customers can browse, add to cart, and pay — without calling you on WhatsApp for every order. That is where we come in. At Memora, we build complete business websites for ₹3,999, integrated with your preferred payment gateway, and launch them in 7 days. Whether you sell from home in Indore or run a boutique in Goa, your store deserves to look professional and accept payments seamlessly. Check out https://memora.bond to get started.
Written by the Memora studio
We design and build fast, memorable websites and apps for businesses of every size — complete business websites from ₹3,999, live in 7 days.
