Topics: Custom software & SaaS
Want this done for your business? Get a fixed quote or book a free 30-minute call.
Quick answer: Pick an RBI-authorised payment aggregator that fits how your software actually moves money: UPI success rates, settlement timing, webhook reliability, split payouts or recurring mandates. Headline fees matter less than those. Then build your own payments layer inside the app, so a second gateway can be added or the first replaced without a rewrite.
Fee tables make gateway choice look like a pricing decision. Inside a custom app or portal, it's closer to an architecture decision. The gateway shapes how orders are confirmed, how refunds work, how vendors get paid, how subscriptions renew and how your accountant reconciles the month. A difference of a few basis points matters far less than a webhook that occasionally doesn't arrive.
This guide is for businesses commissioning software in India: e-commerce, marketplaces, booking platforms, SaaS and customer portals. If you're comparing subscription billing tools specifically, read our guide to Stripe vs Razorpay vs Paddle for subscriptions.
What does a payment gateway actually do inside your software?
It takes the customer's payment, tells your system what happened and moves the money to your bank later. In India, most businesses use a payment aggregator, which collects funds on your behalf and settles them to your account. Payment aggregators must be authorised by the RBI, which issued updated directions regulating them in September 2025; only work with one that is.
The flow your developers will build:
- Your system creates an order with an amount and your internal reference.
- The customer pays on the gateway's checkout, by UPI, card, net banking or wallet.
- The gateway notifies your system through a webhook and a redirect back to your app.
- Your system verifies the payment with the gateway before marking the order paid.
- The gateway settles funds to your bank account, minus fees and tax on those fees.
- Your finance team reconciles settlements against orders.
Steps 3, 4 and 6 are where custom builds succeed or fail. Never mark an order paid just because the customer's browser landed on a success page; redirects get lost when a phone switches apps, and they can be faked. The server-side check in step 4 is what counts.
Which payment methods do Indian customers expect at checkout?
UPI first, then cards and net banking, with extras depending on what you sell.
| Method | Where it matters | Integration notes |
|---|---|---|
| UPI (apps, QR, intent on mobile) | Almost every consumer business | Smooth app switching on mobile matters more than the QR on desktop |
| Debit and credit cards | Higher-value orders, B2B, international buyers | Saved cards rely on tokens, never stored card numbers |
| Net banking | Older customers, some B2B payers | Bank pages vary in reliability |
| Wallets | Some consumer categories | Check which wallets your audience actually uses |
| EMI and pay later | Expensive consumer goods, education, health | Separate approval and eligibility checks |
| International cards and currencies | Exporters, overseas clients | Usually a separate approval, not on by default |
On mobile, test the round trip from your app to a UPI app and back on several phones and UPI apps. Customers who approve a payment but never return to your app are a common source of "money debited, no order" complaints, which is exactly why the webhook, not the return trip, should confirm the order.
How do Razorpay, Cashfree, PayU and PhonePe PG differ for custom builds?
All four are established Indian providers with APIs, payment links and checkout SDKs; the differences that matter show up in your own tests, not in their marketing. Product names, pricing and features change often, so judge them on these points for your specific build:
| What to compare | Why it matters to custom software |
|---|---|
| UPI success rate for your audience | Failed payments are lost orders; ask for data and test with real phones |
| Documentation and sandbox quality | Clear docs and a realistic sandbox cut build time |
| SDKs for your stack | Native Android, iOS, Flutter or React Native support saves effort |
| Settlement timing and options | Cash flow; faster settlement may cost extra |
| Split settlement and payouts | Essential for marketplaces and vendor platforms |
| Recurring payments support | UPI AutoPay, card mandates and eNACH coverage |
| Reports and reconciliation APIs | Your finance team's month-end depends on them |
| Support for developers | How fast integration problems are answered |
Our advice: shortlist two, build a small proof of concept against each sandbox (create order, pay by UPI, receive webhook, refund), and choose the one your developers found more predictable.
Do you need split payments, payouts or recurring mandates?
Decide this before you choose, because not every account supports every money movement.
- Split payments. Marketplaces, aggregators and multi-vendor apps collect from customers and pay several parties. The gateway must support splitting settlements and onboarding each vendor with its own KYC. Our guide to building a marketplace platform covers the wider design.
- Payouts. Refunds to bank accounts, vendor payments, cashback or commissions need a payouts product, often a separate approval.
- Recurring payments. Subscriptions and instalments use UPI AutoPay, card e-mandates or eNACH. Per the RBI's e-mandate rules, the first debit needs additional authentication, and so do later debits above ₹15,000 for most categories; some categories, such as insurance premiums and mutual fund investments, have higher limits. Design renewal flows that handle a customer approving a debit, not just a silent charge.
For split payments, also decide who bears the gateway fee and the GST on it when one payment is shared between you and a vendor, and show it clearly on vendor statements. Disputes over a few rupees per order add up quickly.
If you're building B2B software for Indian customers, our playbook on building B2B SaaS for the Indian market covers GST invoicing alongside payments.
What should you check in the API, webhooks and settlement reports?
That your system can always tell, and prove, what happened to every rupee. A checklist for your developers:
- [ ] Verify every webhook's signature before trusting it
- [ ] Handle the same event arriving twice without double-counting (idempotency)
- [ ] Poll the order status API when a webhook is late, rather than assuming failure
- [ ] Use idempotency keys when creating orders and refunds, so retries don't duplicate them
- [ ] Support full and partial refunds, and record refund status changes
- [ ] Receive dispute and chargeback notifications, and route them to a person
- [ ] Pull settlement reports with per-transaction fees and tax, and match them to orders
- [ ] Never store card numbers or CVVs; card-on-file payments use tokens under RBI rules
- [ ] Keep API keys in a secrets manager, separate keys for test and live
Reconcile against settlements, not just success callbacks. A payment marked successful can still be refunded, disputed or settled late. Your finance view should start from what reached the bank. Our guide to software security basics covers key handling and access control more broadly.
How do you avoid being locked into one gateway?
Own the payment records in your database and treat the gateway as a plug-in. Your software should have its own internal payments layer:
- Orders with your own IDs, amounts and status
- Payment attempts linked to orders, storing the gateway's name and its reference
- Refunds and disputes as separate records with their own status
- Mandates for recurring payments, noting which gateway holds each one
Each gateway then sits behind an adapter that translates between your records and its API. With that in place you can route some payment methods to a second gateway, fail over when one has an outage, or switch provider for new customers. Be realistic about limits: saved card tokens and active mandates belong to the gateway they were created on, so existing subscribers may need to re-authorise if you move.
When you're comparing software development quotes, check that this payments layer is itemised. If it isn't, the gateway's SDK is probably being wired straight into the app.
What documents and approvals does onboarding need?
Business identity, a bank account in the business's name and a live website or app that meets the gateway's policies. Expect to provide:
- PAN of the business, and of the proprietor, partners or directors
- Proof of the business: GST registration, incorporation certificate, partnership deed or similar
- A bank account in the business's name; registered businesses normally use a current account
- KYC documents for the people who own or control the business
- A website or app showing your products and prices, terms, privacy policy, refund and cancellation policy, and contact details
- Extra documents for regulated or restricted categories, and a separate application for international payments
Gateways review your website or app as part of approval, so placeholder pages, missing policies or prices hidden behind a login can hold things up. Approval times vary by provider, business type and how complete your documents are. Apply early, while the software is being built, so live keys are ready before launch.
Frequently asked questions
Which payment gateway is best for a small business in India?
There isn't one best gateway. For custom software, choose the RBI-authorised provider whose UPI performance, settlement options, recurring and split-payment support and developer experience fit your app. Shortlist two and test both sandboxes before deciding.
Do payment gateways charge for UPI payments?
The merchant discount rate on standard bank-account UPI payments is set at zero by government policy, but gateways can still charge their own platform or service fees. UPI payments made through RuPay credit cards or wallets can also carry charges. Read the pricing schedule in your agreement, not just the website summary.
Can one app use two payment gateways?
Yes, if the app keeps its own payment records and talks to each gateway through an adapter. Businesses use a second gateway for failover, for specific payment methods or for international cards. Saved cards and mandates stay with the gateway that created them.
How long does payment gateway onboarding take?
It varies with the provider, your business type and how complete your documents and website are. Simple, well-documented applications can be quick; restricted categories, marketplaces and international payments take longer. Start onboarding during development, not at launch.
Do I need a current account to use a payment gateway?
Registered businesses such as companies, LLPs and partnerships normally need a current account in the business's name. Some providers accept individuals or sole proprietors with a savings account in their own name, depending on the business type. Confirm the requirement with the provider before applying.
Building software that takes payments?
We design payments layers that keep your records clean, survive gateway hiccups and leave room to switch providers. See our custom software and app development work, or send us your requirements for a fixed quote, usually within one business day.