Payment gateway fees calculation is simple once you separate the percentage fee from GST charged on that fee. This guide works through ₹1 lakh, ₹5 lakh, ₹10 lakh and higher monthly sales, then compares the result with a flat PaymentSetu plan for UPI payment verification.
The important distinction is that PaymentSetu is a payment verification service, not a payment gateway. Your customer pays your own Paytm Business or PhonePe Business merchant account; PaymentSetu matches the UTR and amount to the order and sends the webhook. There is 0% commission on the payment itself, while the plan is a fixed cost for verification credits.
The formula: sales × rate + GST on fee
Start with the monthly payment value, not the number of orders. For a percentage rate, use:
Gateway fee = monthly sales × gateway rate
GST on fee = gateway fee × GST rate
Total monthly cost = gateway fee + GST on feeFor a worked benchmark, this article assumes 18% GST on the gateway service fee. That is an illustration for comparing invoices, not tax advice. GST treatment can depend on the supplier, invoice and your business circumstances; the Central Board of Indirect Taxes and Customs service-rate booklet lists “all other services not specified elsewhere” at 18%—check the current position with your tax professional. CBIC rate booklet
At a 2% rate, the calculation on ₹1,00,000 is:
- The gateway fee is ₹1,00,000 × 2% = ₹2,000.
- GST on that fee is ₹2,000 × 18% = ₹360.
- The total fee is ₹2,360.
- The amount left after this fee is ₹97,640, before any separate charges or adjustments.
That makes the combined cost 2.36% of sales in this example. The 18% GST is not 18% of your sales; it is 18% of the gateway fee.
Which rate should you use?
Do not assume that one headline rate applies to every transaction. Payment methods, domestic or international use, negotiated pricing, offers, fixed charges and account terms can change the invoice. Use the rate in your current agreement when you need an exact forecast.
For planning, these are useful published-rate examples checked on 23 October 2026:
| Example rate | Fee on ₹1,00,000 | 18% GST on fee | Total cost | Effective cost on sales |
|---|---|---|---|---|
| 1.95% | ₹1,950 | ₹351 | ₹2,301 | 2.301% |
| 2.00% benchmark | ₹2,000 | ₹360 | ₹2,360 | 2.360% |
| 2.15% | ₹2,150 | ₹387 | ₹2,537 | 2.537% |
The 2% row is the clean benchmark used in most examples below. The 1.95% and 2.15% rows show why a small rate difference becomes material at scale. Round numbers help you plan, but your settlement report is the final source for the amount actually deducted.
Table: ₹1 lakh to ₹25 lakh a month
The following table uses the 2% benchmark and adds 18% GST to the fee. It assumes the rate is applied to the full monthly sales value and does not include per-transaction charges, refunds, chargebacks, international-payment pricing or other optional services.
| Monthly sales | Gateway fee at 2% | GST on fee at 18% | Total monthly fee | Sales after fee |
|---|---|---|---|---|
| ₹1,00,000 | ₹2,000 | ₹360 | ₹2,360 | ₹97,640 |
| ₹2,50,000 | ₹5,000 | ₹900 | ₹5,900 | ₹2,44,100 |
| ₹5,00,000 | ₹10,000 | ₹1,800 | ₹11,800 | ₹4,88,200 |
| ₹10,00,000 | ₹20,000 | ₹3,600 | ₹23,600 | ₹9,76,400 |
| ₹15,00,000 | ₹30,000 | ₹5,400 | ₹35,400 | ₹14,64,600 |
| ₹25,00,000 | ₹50,000 | ₹9,000 | ₹59,000 | ₹24,41,000 |
At ₹5 lakh a month, the headline 2% fee looks like ₹10,000, but the invoice total in this illustration is ₹11,800 after GST. At ₹10 lakh, the same structure becomes ₹23,600. This is why a merchant should compare the all-in monthly amount, not only the percentage printed in a pricing banner.
The alternative published examples scale in the same way. At ₹5 lakh, 1.95% plus 18% GST is ₹11,505, while 2.15% plus 18% GST is ₹12,685. At ₹10 lakh, the corresponding totals are ₹23,010 and ₹25,370. A difference of 0.20 percentage points in the headline rate becomes ₹2,360 a month at ₹10 lakh after applying the same GST assumption.
Flat-fee verification cost for the same volume
PaymentSetu changes the cost model for a merchant using UPI direct to the merchant account. The customer pays the merchant’s own connected Paytm Business or PhonePe Business account. PaymentSetu verifies the successful payment against the order and provides the dashboard, dynamic QR, API and webhooks; it does not hold or settle the money.
The plans are fixed for 30 days:
| Plan | Price per 30 days | Credits | Best fit by verification volume |
|---|---|---|---|
| Starter | ₹399 | 100 | Up to 100 successful payments |
| Pro | ₹999 | 1,000 | Up to 1,000 successful payments |
| Business | ₹1,499 | 100,000 | High-volume businesses within the credit allowance |
One credit equals one successful payment verified. The plan price is therefore not a percentage of the rupee value of each order. A merchant processing ten high-value UPI payments and a merchant processing ten low-value UPI payments use the same ten verification credits, although the sales totals are very different.
For a WooCommerce store, the PaymentSetu WooCommerce plugin can mark an order paid after verification. A hosting business can use the WHMCS module for invoices and renewals. If you use the API directly, keep the order ID, amount and UTR in your reconciliation record and verify webhook signatures before changing an order’s status.
Side-by-side at common sales levels
The comparison below uses the 2% plus 18% GST benchmark against a flat plan. It is a cost illustration, not a promise that every UPI workflow has the same operational setup.
| Monthly sales | 2% gateway total | PaymentSetu Pro | PaymentSetu Business |
|---|---|---|---|
| ₹1,00,000 | ₹2,360 | ₹999 | ₹1,499 |
| ₹2,50,000 | ₹5,900 | ₹999 | ₹1,499 |
| ₹5,00,000 | ₹11,800 | ₹999 | ₹1,499 |
| ₹10,00,000 | ₹23,600 | ₹999 | ₹1,499 |
| ₹25,00,000 | ₹59,000 | ₹999 | ₹1,499 |
The plan table is meaningful only when you also check the number of successful payments. A ₹25 lakh month made up of 80 payments is not the same credit requirement as ₹25 lakh spread over 8,000 payments. Choose by both dimensions: sales value affects percentage fees, while payment count affects verification credits.
Break-even point
To calculate the sales level at which a flat plan equals a 2% gateway fee plus 18% GST, divide the plan price by the all-in rate:
Break-even sales = flat plan price ÷ (2% × 1.18)
= flat plan price ÷ 0.0236| Flat plan | Calculation | Approximate break-even sales per 30 days |
|---|---|---|
| Starter ₹399 | ₹399 ÷ 0.0236 | ₹16,907 |
| Pro ₹999 | ₹999 ÷ 0.0236 | ₹42,331 |
| Business ₹1,499 | ₹1,499 ÷ 0.0236 | ₹63,517 |
Above the relevant break-even sales level, the percentage model costs more than that flat plan in this simplified comparison. Below it, the percentage fee may be lower in rupee terms, but you still need to compare the actual features, settlement model and payment methods your business needs.
The break-even point moves if your rate changes. At 1.95% plus 18% GST, the all-in rate is 2.301%, so Pro breaks even at about ₹43,416 and Business at about ₹65,145. At 2.15% plus 18% GST, the all-in rate is 2.537%, so Pro breaks even at about ₹39,378 and Business at about ₹59,086. These figures exclude fixed per-transaction charges.
Pick a plan by monthly payment count
Use this four-step check before choosing a fixed plan:
- Add the value of successful UPI payments you expect in the next 30 days.
- Count the successful payments, not page visits, failed attempts or abandoned checkouts.
- Compare the percentage-plus-GST total with ₹399, ₹999 and ₹1,499.
- Select a plan whose credit allowance covers the payment count and whose integrations match your checkout.
Starter: up to 100 verified payments
Starter is designed for a small shop, freelancer or new store that expects up to 100 successful payments in 30 days. At ₹399 per 30 days, the flat plan is easy to place in a monthly budget. Use the pricing section to confirm the live plan presentation before you subscribe.
Pro: up to 1,000 verified payments
Pro costs ₹999 per 30 days and includes 1,000 credits, dynamic QR, webhooks, API access, a unified dashboard, real-time notifications, WooCommerce and WHMCS plugins, and priority support. It is a practical fit when the store has crossed the Pro break-even sales level and its payment count remains within 1,000 successful verifications.
Business: up to 100,000 verified payments
Business costs ₹1,499 per 30 days and includes 100,000 credits, dynamic QR, webhooks, API access, a unified dashboard, real-time notifications, priority support and a dedicated account manager. For a high-volume SaaS, service business or multi-branch operation, the large credit allowance keeps the cost flat while the sales value rises. This is the plan to compare first when the brief question is “what will payment gateway fees cost at ₹10 lakh or ₹25 lakh a month?”
You can register for PaymentSetu after checking both the monthly sales estimate and the expected payment count. Keep the monthly calculation separate from accounting treatment: the table explains cost planning, not whether a particular GST amount is claimable or how your sales should be reported.
Common mistakes in payment fee calculations
Applying GST to sales instead of the fee
At 2%, GST is not 18% of ₹1 lakh. The fee is ₹2,000, and the illustrative GST is ₹360. Applying 18% to the full sales value would produce ₹18,000 and overstate the gateway cost.
Comparing a percentage with a flat plan without checking volume
A flat ₹999 or ₹1,499 plan is not unlimited. Match the plan’s credits to successful payment count. If the average order value is high, your sales can reach a break-even level with relatively few transactions; if the average order value is low, the credit allowance becomes the more important constraint.
Ignoring per-transaction or payment-method charges
The worked tables assume only a percentage fee and GST on that fee. Your provider’s invoice can include different rates for cards, international payments, refunds, chargebacks or optional services. Add each line item before making a final decision.
Using a temporary offer as a permanent rate
Introductory pricing can make the first month look different from the standard rate. Record the regular rate, its GST treatment and the offer end condition in your forecast. Recalculate when your commercial terms change.
FAQ
How do I calculate a 2% payment gateway fee?
Multiply monthly sales by 0.02 to get the gateway fee. If 18% GST applies to that fee, multiply the fee by 0.18 and add it back: total cost = sales × 0.02 × 1.18.
What is the payment gateway fee on ₹5 lakh?
At 2%, the fee is ₹10,000. With an illustrative 18% GST on the fee, the GST is ₹1,800 and the total is ₹11,800.
At what sales level does a ₹999 plan beat a 2% gateway fee?
Using the 2% plus 18% GST assumption, the break-even point is about ₹42,331 in sales per 30 days. The result changes with your actual rate, taxes and any fixed charges, and you must also have enough plan credits for the payment count.
Is PaymentSetu a payment gateway?
No. PaymentSetu is a payment verification service. The customer pays the merchant’s own Paytm Business or PhonePe Business account, and PaymentSetu verifies the payment against the order and sends a webhook; the service does not hold the money.
Should I compare payment fees by sales or by transactions?
Use both. Percentage gateway pricing is driven mainly by sales value, while PaymentSetu plan usage is measured in successful payment verifications. Average order value connects the two: monthly sales divided by successful payments gives the figure you need for a sensible comparison.
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