A 2% payment gateway fee sounds small until you do the math. On Rs 1 lakh in monthly sales, that is Rs 2,000 gone, every month, Rs 24,000 every year. For a small online business operating on thin margins, that is the difference between profitable and struggling. When you create an online store in India, you should not have to surrender 2% of every sale to a card gateway. A zero-fee payment setup using UPI can change this, if you set it up correctly.
Whether you want to make an e-commerce website free of gateway fees, configure a UPI payment gateway for creators, or simply find the best gateway for small retail stores, this guide walks you through the entire process. We cover how to configure zero-commission direct UPI payments on an Indian e-commerce storefront, from understanding why UPI is different from card gateways to setting it up on your store and calculating the annual savings.
Why UPI is different from card gateways
Traditional payment gateways charge a percentage on every transaction because they route through card networks, which charge interchange fees. UPI is a direct bank-to-bank transfer, there is no card network in the middle, which means the cost structure is fundamentally different. Many UPI payment configurations allow zero or near-zero transaction fees. This is not a hack or a loophole, it is how the UPI rails were designed by NPCI. Direct bank-to-bank transfers do not have intermediary fees because there is no intermediary.
How zero-fee UPI works for e-commerce
When a customer checks out, they see a UPI payment option, either a QR code they scan, or a UPI deep link that opens their payment app directly. They approve the payment, the amount lands in your linked bank account, and your store marks the order as paid. No intermediary holding your money, no weekly payout cycle, no 2% cut. The customer experience is seamless, they scan, approve, and the order is confirmed. You get the money instantly, not after a 7-day settlement cycle.
Direct vs aggregator UPI
Some UPI aggregators still charge a small fee (0.5% to 1%) for handling the payment flow. Direct UPI, where the customer pays directly to your UPI ID, can be genuinely zero-fee. The trade-off is that direct UPI requires more setup, while aggregators offer a plug-and-play checkout. Choose based on your sales volume: if you do more than Rs 50,000 per month, the setup effort of direct UPI pays for itself quickly. Below that, an aggregator is simpler and the small fee is negligible.
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Start freeHow do I configure zero-commission direct UPI payments on my Indian e-commerce storefront?
To configure zero-commission direct UPI, link your UPI ID or bank account to your store builder. When a customer checks out, they see a UPI option, either a QR code or a deep link that opens their payment app. They approve the payment, the amount lands in your bank account directly with no intermediary, and the store marks the order as paid. Platforms like BharatGo have this built in, you link your account once and the checkout flow is configured automatically.
Setting it up on your store
If you use a modern Indian store builder, UPI payments are often built in, you link your bank account or UPI ID once, and the checkout flow is configured automatically. You do not need to apply for a merchant account, submit KYC documents, or wait for approval. You can start accepting UPI payments the same day you create your store. This is a fundamental difference from traditional platforms like Shopify, where you must integrate a third-party payment gateway and pay its fees on top of the platform subscription.
Offering UPI alongside cards
Not every customer wants to pay with UPI. Offer both: UPI for zero-fee direct transfers, and cards for customers who prefer credit or debit. The key is to make UPI the default, most Indian shoppers will choose it if it is presented first and clearly. A checkout page that shows UPI first, cards second, and COD third will see 60-70% of customers choose UPI, saving you the gateway fee on the majority of your orders.
Display the savings
Add a small note next to the UPI option: "No payment gateway fees." Customers appreciate transparency, and many will choose the zero-fee option when they understand it saves you, and indirectly them, money. Some platforms even pass the savings to the customer as a small discount for choosing UPI, which further increases the UPI adoption rate.
What is the best payment gateway for small retail stores in India?
The best payment gateway for small retail stores in India is one that supports direct UPI payments with zero or near-zero transaction fees, settles money to your bank account instantly (not after a 7-day cycle), requires no KYC or merchant account application, and is built into your store builder rather than requiring a third-party integration. BharatGo includes built-in UPI and card payments with direct bank settlement, no separate gateway setup needed.
The annual savings calculation
If your store does Rs 5 lakh in annual sales and you switch from a 2% card gateway to zero-fee UPI for 70% of transactions, you save Rs 7,000 per year, purely from payment processing. That is money you can reinvest in products, marketing, or simply keep as profit. Scale to Rs 20 lakh in annual sales, and the savings become Rs 28,000, enough to fund a product launch, a marketing campaign, or a year of your store builder subscription.
Security and trust
UPI payments are regulated by NPCI and backed by Indian banks. They are as secure as any card transaction, often more so, because there is no card number to steal. The customer authenticates every payment through their UPI app with a PIN, and the transfer happens directly between their bank and yours. Display the UPI trust badges on your checkout page so customers feel confident choosing it. "Protected by UPI, regulated by NPCI" is a trust signal that increases conversion.
