A customer pays for an order on your Shopify store. The order total says one thing. A few days later, the money that lands in your bank account says something smaller, and your Shopify bill at the end of the month has a line called “transaction fees” that you did not quite expect. Nothing has gone wrong. You are seeing two different companies each take their share of the same payment.
Shopify transaction fees in India confuse people because two separate fees are involved, they are charged by different businesses, and they reach you through different routes. This post follows one order from checkout to bank account so you can see where each deduction happens, then shows you how to work out your own cost per order. We do not quote rates here; Shopify’s pricing page and your gateway agreement hold the current ones.
The two fees an Indian Shopify store pays on a payment
In many countries, Shopify stores can use Shopify’s own payment processing. That service is not offered to stores in India, so an Indian store connects a third-party gateway such as Razorpay, PayU, CCAvenue or Cashfree to accept cards, UPI, net banking and wallets.
That leads to two fees on an online payment:
- The gateway’s fee. Your gateway charges for processing the payment. This happens on every platform, not just Shopify.
- Shopify’s third-party transaction fee. On plans where it applies, Shopify charges its own fee for orders paid through an outside gateway. The rate is tied to your plan and is shown on Shopify’s pricing page.
The first is the cost of moving money. The second is a platform charge. Keep them in separate columns, because the things that reduce one do not reduce the other.
Following one order through
Imagine a customer places an order and pays by UPI through your gateway.
Step 1: the customer pays the full amount
The customer is charged the order total. As far as they are concerned, the transaction is finished.
Step 2: the gateway deducts its fee before settling
The gateway holds the payment, deducts its processing fee and the GST it charges on that fee, and settles the rest to your bank account on its settlement schedule. You will see the gross amount, the fee and the net amount in the gateway’s settlement report. That is the only place this fee is visible. It never appears on your Shopify bill. The timing of that transfer varies by gateway; see how long a gateway takes to settle funds for what decides it.
Step 3: Shopify records its transaction fee
Shopify notes its own fee for the order, if your plan carries one. It is not deducted from the payment. Instead it builds up on your Shopify bill and is charged with your subscription and apps, usually to the card on file.
Step 4: you reconcile
Your real income from that order is the order total minus the gateway fee and its tax, minus Shopify’s fee, minus shipping and packaging. Many new store owners only see the first deduction, because it happens before the money arrives, and forget the second because it shows up weeks later on a different bill.
Shopify payment fees explained, method by method
Not every order carries the same fees.
- Cards, UPI, net banking and wallets through your gateway. Both fees can apply. Gateways often price these methods differently, so your gateway fee depends on which method the customer chose.
- Cash on delivery. COD is set up in Shopify as a manual payment method. No gateway is involved at checkout, so there is no gateway fee on that order. Your courier usually charges for collecting the cash, and returned COD parcels cost you shipping both ways. Check Shopify’s help centre for how its own fees treat manual payment methods on your plan.
- International cards. If your gateway has international payments enabled, these often carry a different gateway rate. Your gateway dashboard and agreement will show it.
So a store with many COD orders and one with mostly UPI orders can sell the same amount and pay very different fees.
What happens to fees on refunds and failed payments
This part surprises many owners.
- Gateway fees on refunds. Whether a gateway returns its processing fee when you refund an order depends on that gateway’s terms. Some do not. Read the refund section of your agreement, or ask the gateway’s support team directly, and write down the answer.
- Shopify’s fee on refunds. Shopify’s help centre explains how its transaction fees are handled when an order is refunded. Check it for your plan rather than assuming the fee is reversed.
- Failed payments. A payment that fails at the bank is not a completed sale, and generally no processing fee is charged on it. If the customer’s money was debited anyway, that is a separate issue between the bank and the gateway, and usually resolves through the gateway’s reversal process.
- Chargebacks. If a customer disputes a card payment, gateways can charge a dispute fee in addition to holding the amount. That cost sits with the gateway agreement, not with Shopify.
Work out your real cost per order
Do this with last month’s numbers, or a realistic guess if you have not launched.
- Add up the gateway fees and the GST on them from your settlement reports.
- Add the Shopify transaction fees from your Shopify bill.
- Add courier COD collection charges, if you offer COD.
- Divide the total by your number of orders.
That gives you your payment cost per order. Compare it with your average margin per order. If the payment cost takes a large bite out of a low-price product, that is a pricing decision to face now, not a fee problem to solve later.
For the full monthly bill with these fees alongside the plan, apps and domain, see our line-by-line Shopify running cost worksheet.
Ways to lower what you pay, honestly
There is no trick that removes these fees, but several choices change them.
- Compare plan against volume. Higher Shopify plans generally carry a lower third-party transaction fee. At low volume, the cheaper plan wins. At higher volume, the saving on fees can outweigh the higher subscription. Work out the point where they cross using Shopify’s current figures and your own order count.
- Negotiate with your gateway. Once you have a steady volume, gateways may offer better pricing. Ask. The worst answer is no.
- Raise your average order value. Fixed elements of a fee hurt small orders most. Bundles or a free shipping threshold can raise the order size so each fee is a smaller part of it.
- Manage COD carefully. COD avoids gateway fees but can cost more through returns. Confirming orders before dispatch and limiting COD where returns are high often matters more than the gateway rate.
Where these fees fit in the bigger cost picture
Like every payment cost, these fees grow with sales, unlike the one-time build. If you are comparing quotes for a new store, the guide to the cost of a shopify website in india separates one-time and recurring charges so the two do not get mixed up. If the platform charge is what bothers you most, the comparison of WooCommerce and Shopify for Indian businesses explains how a self-hosted store handles payments without a platform fee on top.
What to write down before you launch
- Your Shopify plan and the third-party transaction fee shown for it today.
- Your gateway’s fee for each payment method you will offer, and how GST is applied to it.
- The gateway’s settlement schedule and its refund and chargeback terms.
- Your courier’s COD charges and its return-to-origin charges.
Keep that note with the date on it. When a rate changes, you will know what it changed from.
Reading the gateway’s settlement report
Many owners never open this report, yet it answers most fee questions. Every gateway lays it out a little differently, but you will usually find these columns or something close to them:
- Gross amount, what the customer paid.
- Fee, the gateway’s processing charge for that payment.
- Tax on fee, the GST the gateway charges on its own fee.
- Net or settled amount, what was actually sent to your bank.
- Settlement ID or UTR, the reference you can match against your bank statement.
Download it for a full month and compare the settled total with your bank credits. If they do not match, the difference is usually a refund, a chargeback hold or a settlement that has not arrived yet. Matching the two once a month means you notice a fee change or a missing settlement while it is still easy to raise with the gateway.
Where we fit
If you would like the gateway connected, each payment method tested and a short record left of who charges what, our Shopify development service covers that setup. If you are setting this up yourself, follow one real test order all the way to your bank before launch day. Seeing the money arrive teaches more than any fee table.
Next in this series: Shopify Store Maintenance: A Calendar You Can Keep
