Payment Gateways on Shopify in India: How They Connect, Fees, UPI, Failed Payments and Refunds

On this page

1. Shopify payment gateway in India: why a third-party provider
2. How a third-party gateway connects to Shopify
3. Fees: what you pay and to whom
4. UPI on Shopify checkout
5. Failed payments and pending orders
6. Refunds, partial refunds and settlements
7. A payment setup checklist
8. Quick check: test payments on a real phone
9. When to get help
10. FAQs

Indian Shopify stores take online payments through a third-party provider, because Shopify's own payment service is not offered in India at the time of writing. You open an account with a provider, pass its KYC checks, install or activate it in Shopify's payments settings and test it; UPI, cards, net banking and wallets then appear at checkout through that provider. Two sets of fees can apply, the provider's own and possibly a Shopify transaction fee, so compare both.

This guide explains how the connection works and what to watch once orders start: failed payments, refunds and settlements. Choosing between providers is covered in the guide to comparing Indian payment gateways. If you want the provider connected and checkout tested on a phone before launch, that is part of my Shopify store setup service.

Shopify payment gateway in India: why a third-party provider

In countries where Shopify Payments is available, it is the default way to accept cards, and Shopify has not charged its own transaction fee to stores using it. In India, at the time of writing, that option does not exist, so every store that wants online payments connects an outside provider. Razorpay, PayU, Cashfree and PhonePe are examples of providers Indian stores use with Shopify; which ones are listed for your store, and on what terms, can change, so check the payments settings in your own admin.

The provider holds the merchant account, so the relationship, the KYC and the payouts are between your business and them. Shopify only passes the shopper to the provider and records the result.

How a third-party gateway connects to Shopify

1. Open the provider account. Apply in your business name. KYC usually asks for business registration, PAN, bank details, GSTIN if you have one, and a working website with contact details and policy pages. Apply early; approval can take longer than the store build.
2. Find the provider in Shopify. In the payments settings, look for the option to add a payment provider and search for yours. Providers now connect mostly as payment apps that you install and authorise, though older connections may still ask for API keys.
3. Link the accounts. Sign in to the provider or paste the keys it gives you, then choose which payment methods to show.
4. Use test mode first. Place orders in the provider's test mode or with Shopify's test gateway, including a failed payment, before switching to live.
5. Place one real order. A small live order, then a refund, confirms that money moves and that the refund reaches the shopper.

Some providers show their payment form inside Shopify's checkout; others send the shopper to their own hosted page and back. A redirect is not a problem in itself, but the return trip is where some payments go astray, as the section on failed payments explains.

How many outside providers you can run at once depends on how Shopify classifies each one. Check in your admin before planning to offer two gateways side by side.

Fees: what you pay and to whom

Fee	Charged by	What to check
Transaction fee per payment	The payment provider	Rates by method: UPI, domestic cards, international cards, net banking, wallets
GST on the provider's fee	Added by the provider	How it appears on their invoice; ask your CA about input credit
Transaction fee on outside providers	Shopify, at the time of writing	The rate on your plan; it falls on higher plans and has changed before
Setup or annual charges	Some providers	Whether the standard plan has any, and what triggers them
Refund and chargeback handling	The provider	Whether the original fee is returned on a refund, and the charge on disputes

To compare, take a typical month of orders and work out the total from both rows that charge per order. The Shopify fee is easy to forget because it does not appear on the provider's statement. What a Shopify store costs in India puts these alongside the plan and app costs.

UPI on Shopify checkout

UPI usually reaches Shopify checkout through your payment provider rather than as a separate Shopify option. How it appears depends on the provider's integration:

• on a phone, the shopper may pick a UPI app and be sent into it to approve the payment, then return to the browser;
• on a computer, the shopper may see a QR code to scan or be asked for a UPI ID and approve the request on the phone;
• some providers show UPI first on mobile, which suits Indian shoppers well.

The weak point is the hand-off between the browser and the UPI app. If the shopper approves the payment but the browser tab has been closed or the phone switches apps badly, the provider receives the money but the shopper may not land on the thank-you page. Test UPI on both Android and iPhone, with a couple of common UPI apps, before you launch.

Failed payments and pending orders

Two different things get called a failed payment, and they need different responses.

The payment was declined or abandoned

The shopper's bank declined it, the UPI request timed out, or the shopper gave up. No money moved. In Shopify, a checkout that never completed appears as an abandoned checkout rather than an order, and Shopify can send a reminder email with a link back to the cart. Check that the reminder is switched on and that the wording suits your brand.

Money was taken but no order appeared

This is the one that causes angry messages. The provider captured the payment, but the confirmation did not reach Shopify, often because the shopper did not return from a redirect or a UPI app. Good integrations recover this automatically by notifying Shopify from the provider's side. When one does not:

• search the provider's dashboard for the payment by the shopper's phone number or email;
• check Shopify's abandoned checkouts for the same shopper;
• either create the order manually and record it as paid, or refund the payment and ask the shopper to order again;
• raise the case with the provider's support with the payment ID, so the root cause gets fixed.

The guide to fixing failed payments on WooCommerce is written for the other platform, but its section on reconciling the provider's records with the store's applies here too.

Refunds, partial refunds and settlements

When you refund an order from Shopify's order screen, a properly integrated provider receives the refund instruction and sends the money back to the original payment method. Check this with your provider during testing, because the behaviour differs and some refunds still need to be started from the provider's dashboard.

• Partial refunds for a returned item from a larger order should be processed in Shopify, so stock and reports update, and then confirmed in the provider's dashboard.
• COD orders have no online payment to reverse; refund by bank transfer or UPI and record it in Shopify. Cash on delivery on Shopify covers this.
• Settlements arrive in your bank account on the provider's cycle, net of their fees. Reconcile them weekly against Shopify orders so that a missing payment shows up quickly.
• Chargebacks come through the provider. Keep proof of delivery from your courier, because it is the evidence you will be asked for.

Orders taken on WhatsApp still need to be paid through your gateway, usually with a payment link or a draft order. Shopify WhatsApp ordering in India shows how to keep those payments matched to orders.

A payment setup checklist

1. Provider account opened in your business name, KYC complete, settlement bank account confirmed.
2. Policy pages, contact details and a working checkout live before the provider's review.
3. Provider connected in Shopify's payments settings, with the methods you want enabled.
4. Shopify's current transaction fee for outside providers on your plan noted in your budget.
5. Test orders placed: a card, UPI on Android and iPhone, net banking and a deliberately failed payment.
6. One real low-value order placed and refunded, with the refund confirmed in the provider's dashboard.
7. Abandoned checkout emails switched on and the wording checked.
8. A weekly routine to match settlements to orders and look for payments without orders.
9. COD set up separately as a manual method, if you offer it.

Payments are one part of the launch. Setting up a Shopify store in India puts them in order with domain, GST and shipping, GST invoices on Shopify covers the tax side, and Shopify shipping in India covers delivery. If you are still choosing a platform, see WooCommerce vs Shopify in India. For help connecting and testing a gateway, see my WordPress and Shopify developer services across India.

Quick check: test payments on a real phone

1. In Shopify admin, open Settings > Payments and confirm which provider is active and that it is out of test mode.
2. On a phone, place a small real order with UPI and confirm it shows as Paid under Orders.
3. Refund that order from Shopify and check the refund reaches the account.

Gateway fees are only one part of the budget; see the full e-commerce website cost in India.

When to get help

Get help when payments succeed but orders do not appear, when UPI fails on some phones, or when you are switching gateways. Shopify development covers gateway set-up and testing. You can also send the details through the contact form.

FAQs

Which Shopify payment gateway in India should I choose?

Choose the Shopify payment gateway in India that is available as a Shopify integration, accepts your business type at KYC, supports the methods your buyers use (UPI first, then cards, net banking and wallets), settles on a schedule your cash flow can live with and handles refunds cleanly. Compare the provider's fees together with any Shopify transaction fee. Payment gateways in India compared covers the criteria in more detail.

Is Shopify Payments available in India?

Not at the time of writing. Indian stores connect a third-party provider instead. Check Shopify's current help pages, as availability by country changes.

Which payment gateways work with Shopify in India?

Providers such as Razorpay, PayU, Cashfree and PhonePe have offered Shopify integrations, among others. Your admin shows which ones are currently available to your store.

Does Shopify charge extra if I use Razorpay or another Indian gateway?

At the time of writing, Shopify may charge a transaction fee on orders paid through an outside provider, at a rate depending on your plan. It is separate from the provider's fee.

Can customers pay by UPI on Shopify?

Yes, through a payment provider that supports UPI. Test it on several phones and UPI apps, as the return from the UPI app to the browser is the most fragile step.

Why was a customer charged but no order created?

Usually the payment confirmation did not reach Shopify after a redirect or UPI hand-off. Find the payment in the provider's dashboard, then create the order manually or refund it, and report the case to the provider.