UPI Payment Gateways Compared: Razorpay vs PhonePe vs Cashfree
Compare Razorpay, PhonePe & Cashfree for your small store. Know setup fees, transaction charges & ease of use. Pick the right UPI gateway today.
Updated 9 November 20269 min readBy Memora Digital
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If you run a kirana store in Bengaluru, a boutique in Jaipur, or a home-run tiffin service in Pune, you already know the scene. Customers walk in, pick up what they need, and ask — "UPI kar sakte hain?" Nine times out of ten, they do not carry cash. In 2025, UPI accounts for over 80% of digital transactions in India. For a small store, choosing the right payment gateway is not a tech decision. It is a survival decision. You need something that settles fast, charges less, and does not make your customers jump through hoops. Three names come up most often: Razorpay, PhonePe Payment Gateway, and Cashfree Payments. Let us break them down so you can pick the one that actually fits your shop.
Why your small store needs a proper UPI payment gateway
Sure, you can always open your PhonePe or Google Pay app, show the QR code, and collect money manually. That works when you have five customers a day. But once orders grow — especially online orders coming through WhatsApp, Instagram DMs, or your own website — manual collection becomes chaos. You lose track, you forget to confirm, and you have no record to reconcile at month-end.
A payment gateway does three things you cannot do with a plain QR code. One, it generates a fresh payment link for every order. Two, it tells you instantly whether the money landed in your account. Three, it keeps a dashboard of every transaction so you can download reports and share them with your CA. If you are building even a basic website with Memora, integrating a gateway means customers pay on your site and never leave. That is the difference between a hobby and a real business.
The three contenders at a glance
Before we go deep, here is a quick side-by-side look at what matters most to small store owners: setup effort, transaction fees, settlement speed, and what payment methods they support beyond UPI.
Feature
Razorpay
PhonePe PG
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Keep in mind that payment gateway providers revise their pricing periodically. Always check the live pricing page on their website before you sign up. The figures above reflect commonly published rates as of early 2025.
Razorpay: The solid all-rounder
Razorpay is probably the first name any founder in India hears when they start looking for a payment solution. Founded in 2014, it powers payments for thousands of businesses from solo freelancers to large startups.
Where Razorpay shines
Clean dashboard. The admin panel is intuitive. You can search by order ID, filter by date, and refund a transaction in two clicks. For a store owner who is not very tech-savvy, this matters.
Smart collect. If a customer pays slightly more or less than the invoice amount, Razorpay auto-reconciles it against the outstanding amount. Handy for wholesale shops where rounding off is common.
Route API. If you run a multi-vendor setup (say, a local marketplace), Razorpay can split a single payment across sellers automatically.
Plugins for everything. WooCommerce, Shopify, Magento, OpenCart — Razorpay has ready-made modules. If Memora is building your site, integration is straightforward.
Where it may not fit
The 2% fee on UPI is slightly higher than some competitors. For a store doing ₹2 lakh in monthly UPI transactions, that is ₹4,000 gone in fees. Over a year, it adds up.
Customer support for smaller merchants can be slow during peak season (Diwali, Raksha Bandhan). You are routed to email-first support unless you are on a higher plan.
PhonePe Payment Gateway: Riding the UPI wave
PhonePe is not just a payment gateway — it is the app that millions of Indians already open to scan QR codes at chai stalls and auto rickshaws. When you use PhonePe's merchant gateway, you tap into that massive user base.
Where PhonePe shines
Trusted brand for UPI. Many customers feel more confident completing a payment when they see the PhonePe name. For a small store selling to first-time online buyers — say, a saree shop in Varanasi — that trust can reduce cart abandonment.
PhonePe switch. Customers can pay directly from the PhonePe app without entering a UPI PIN again if they have already authenticated. Faster checkout, fewer drop-offs.
Low UPI fee at 1.99%. Marginally cheaper than Razorpay for pure UPI volumes.
In-store + online combo. If you already use a PhonePe QR at your counter, the same merchant ID can handle online payments. One settlement, one dashboard.
Where it may not fit
The dashboard is functional but not as polished as Razorpay's. Finding a specific transaction can take more clicks.
Plugin ecosystem is smaller. If your website runs on a less common CMS, you may need custom integration work.
Documentation for developers, while improving, is not as extensive as Razorpay's.
Cashfree Payments: The settlement speed champion
Cashfree has been quietly gaining ground, especially among small and mid-size merchants who care about getting money into their bank account as fast as possible.
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Instant settlement. This is the killer feature. For a small store with tight cash flow — imagine a fresh vegetable vendor in Hyderabad who needs to buy stock every morning — getting same-day settlement is a game-changer. Cashfree offers instant settlement on eligible transactions, sometimes at a small extra fee.
Competitive pricing. 1.99% on UPI, matching PhonePe, and often slightly lower on cards and net banking depending on your volume.
Paylater and EMI options. Cashfree supports buy-now-pay-later providers like LazyPay and Simpl. If your customers tend to make larger purchases (electronics, furniture), offering EMI or Paylater can lift your average order value.
Bulk payouts. If you need to disburse money — vendor payments, refunds, salary advances — Cashfree's payout API is fast and reliable.
Where it may not fit
Brand recognition among end customers is lower than PhonePe or even Razorpay. A first-time buyer may hesitate if they see an unfamiliar gateway name.
The onboarding process, while digital, can sometimes ask for additional documents if your business category falls under higher-risk segments (digital services, travel bookings).
Pricing reality check: What you actually pay
The headline transaction fee is only part of the story. Here is what small store owners often overlook:
1GST on fees. All three charge 18% GST on their transaction fee. A 2% fee is effectively 2.36%. Always calculate your cost with GST included.
2Refund charges. Some gateways do not reverse the fee when you refund a customer. You pay the fee and lose the sale.
3Settlement holidays. T+1 means next working day. If a customer pays on Friday evening, you may see the money only on Monday. Cashfree's instant settlement bypasses this, but check if your bank is supported.
4Volume discounts. Once you cross ₹10–20 lakh in monthly transactions, reach out to your gateway's sales team. All three negotiate custom rates. Do not stay on the default plan if your volumes justify a conversation.
How to choose the right gateway for your store
There is no single winner. It depends on what your store looks like today and where you want it to go.
If you are just starting out and want the easiest dashboard with good documentation, go with Razorpay. You will spend less time figuring things out.
If most of your customers already use PhonePe and you sell primarily to consumers (B2C), PhonePe PG gives you a trust advantage and a slight fee edge.
If cash flow is tight and you need money in your account the same day, Cashfree is the clear pick. Also consider Cashfree if you want to offer Paylater or EMI options.
If you run a marketplace or need to split payments between multiple parties, Razorpay's Route feature makes it the practical choice.
Many small stores in India actually use two gateways — one as primary, one as fallback. This is not overkill. If one gateway has downtime during your peak sale hour, the other takes over. Razorpay + Cashfree is a common pairing. Both support payment links, so you can send a WhatsApp message with a link from either and get paid instantly.
Integrating the gateway with your website
This is where most small store owners get stuck. You picked a gateway, you have your API keys, but now what? If your website is built on Shopify or WooCommerce, you install a plugin, paste the keys, and you are live in 15 minutes. But if you have a custom-built site — or no site at all — integration feels intimidating.
That is exactly why we built Memora. When we deliver your complete business website for ₹3,999, we do not just give you a pretty design. We wire up your chosen payment gateway so it actually works. Customers browse your catalogue, add items to cart, pay via UPI or card, and you get a notification on WhatsApp. No manual follow-ups, no lost orders. The whole setup — website + payment integration — is live in 7 days.
Key takeaways
All three gateways — Razorpay, PhonePe, Cashfree — are free to set up and fully digital for KYC. There is no reason to delay signing up.
For pure UPI volume, PhonePe and Cashfree edge out Razorpay slightly at 1.99% vs 2%. Factor in GST when comparing.
Cashfree's instant settlement is the biggest differentiator if daily cash flow matters to your business.
Razorpay's dashboard and developer tools are the most polished, making it ideal for first-time merchants and multi-vendor setups.
PhonePe's brand trust among Indian consumers can reduce payment hesitation, especially for B2C stores selling to less tech-savvy buyers.
Always negotiate once you cross ₹10 lakh in monthly volume. Default rates are not your final rates.
Get your website and payments working together
A great payment gateway sitting alone without a website is like a shop with no front door. Customers cannot find you, browse your products, or reach the checkout page. If you are tired of manually sharing product photos on WhatsApp and chasing payments, it is time to put it all together. At Memora, we build a complete, professional website for your business at ₹3,999 — delivered in 7 days. That includes product pages, WhatsApp integration, and your UPI payment gateway wired up and ready to collect. Visit [memora.bond](https://memora.bond) to get started. Your customers are already asking for UPI. Give them a place to use it.
Written by the Memora studio
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