Today, payment gateways are being utilised by all businesses, small or large, to carry out their transactions in the digital economy. In handling your online portal, wherein one sells products or performs subscription-based services, the right payment gateway must be chosen. A safe and secure payment system will also be critical as a matter of operational expenses.
Let’s know some factors that influence payment gateway costs before deciding on a payment gateway. Pricing models can vary drastically, and a bad choice may cost more in the long run.
In this blog, we will explore the different factors that shape payment gateway costs: transaction volume, integration complexity, fees and the service provider’s terms.
List of factors that influence the cost of payment gateway solutions
When evaluating payment gateway solutions, understanding the various factors that influence overall cost is crucial to making a smart and sustainable choice for your business.
- Transaction volume and frequency
One of the most significant factors that affect payment gateway costs is the level of transactions on a monthly basis.
- Higher volume, lower rates
Most providers work by charging a per-transaction fee (2% + ₹3). However, businesses with higher volumes of transaction processing can, in fact, negotiate lower rates or a tiered pricing structure. Bulk transactions dilute costs and are attractive to gateway providers, who may offer economies of scale in discounts.
- Lower volume, higher margins
Small businesses or start-ups may not qualify for volume discounts. Thus, the cost per transaction may be higher, especially if combined with setup or monthly maintenance fees.
Tip: Estimate the monthly transaction volume realistically; this will help select the plan that saves you money. Any committed volumes above the real transaction level will incur unnecessary fees.
- Integration and customisation requirements
Another factor that influences the total cost of a payment gateway is how you integrate it with your website, app or point-of-sale system.
- Plug-and-play vs. custom integration
- Basic integration (like using hosted payment pages or plugins for platforms like Shopify or WooCommerce) usually comes at no extra cost and is suitable for most small-to-medium businesses.
- Advanced integration with APIs or custom checkout flows often requires developer time and expertise. There are cases where the payment gateway provider charges additional setup fees or maintenance costs for API usage.
- Security certifications
- If you’re developing a custom solution, your platform may need to meet compliance standards like PCI DSS. This could involve additional investment in development, hosting and security infrastructure.
Tip: Choose a payment gateway that fits your technical capacity. A simple, plug-and-play gateway can reduce costs and get you up and running quickly.
- Merchant and transaction fees
It is definitely the fee structure that becomes the focus of attention for anyone considering any payment gateway. Most providers blend or combine the following per-transaction fees:
- Per-transaction fees: Where, usually, a fixed fee (say ₹X) is combined with some percentage (say Y%) of the total transaction value. For example: ₹3 + 2% per transaction.
- Setup and onboarding fees: Some providers have a one-time charge to set up your account and configure the gateway; other providers offer this for free to gain new customers.
- Monthly maintenance fees: It is a recurring cost that gives you access to your dashboard for payment, any reporting tools, support and miscellaneous admin features. These fees can vary per month from being free up to several thousand, solely based on the nature of the services availed.
- Refund and chargeback fees: Most payment gateways usually charge an administrative fee ranging between ₹250-₹1,000 per chargeback, for example, when a customer disputes a transaction or refunds the amount.
Tip: Before you sign agreements with any provider, always request a completion breakdown of all those fees. Some providers can show themselves as less cost-prone, but will finally have a lot of hidden fees in between.
- Currency conversion and cross-border payments
Currency conversion and cross-border transaction fees can significantly impact the total cost when your business engages in international payment options.
- Currency conversion fee: A fee of 1-2% is charged by the payment gateway when a transaction takes place in USD but the settlement is in INR.
- Cross-border charges: If the card is issued outside of India, the same gateways may charge extra. These fees are levied on top of normal transaction charges and may differ per card type (Visa, MasterCard, Amex, etc.).
Tip: Choose a payment gateway with competitive foreign exchange rates and low cross-border fees if you want to target global customers.
- Service provider terms and support
The reliability of your payment gateway partner, as well as the technologies and transparent communication channels involved, have direct and indirect effects on the cost.
- Contract terms: Some providers bind businesses to long-term contracts that include penalties for early termination. Others offer more day-to-day flexibility in a pay-as-you-go format.
- Settlement time: It refers to how quickly you receive your payment, which impacts your cash flow. This could be within 1 day, 3 days or 7 days. Some payment providers offer faster settlement times, but they may charge an additional fee for this service.
- Customer support: Premium support or dedicated support could be charged at an extra rate, and it could be most important when sales are peaking or in case of an emergency.
Tip: Read the fine print. Go for providers with upfront policies, transparent pricing and quick support.
Making informed choices
Because some gateways to payments charge per usage and others per dollar, fees pose a series of considerations before determining the final choice. Of course, when it comes to costs, several factors can influence the final amount. These include the type of integration needed, required features, transaction volume, multi-currency support and more. Setup fees may be charged, transaction and maintenance fees, conversion charges for cross-border fees, customisations that need to be made and any additional features that may be desired.
To make wise choices that offer cost maximisation, it must be understood that these are the bases for operations. Choosing one of the best payment gateways, like Pine Labs Online, will boost confidence, facilitate transactions and lay a good groundwork for prospects in the digital marketplace.