How to accept online payments in India: UPI, cards and COD explained

Getting paid should be the easiest part of running an online store, but for a first-time seller it is often the most confusing. What is a payment gateway? Should you offer UPI, cards, or cash on delivery? What do the fees actually cost you? This guide explains, in plain language, how online payments work in India and exactly what you need to start collecting money on your store.

What a payment gateway actually does

A payment gateway is the service that securely moves money from your customer's bank or UPI app into your bank account. When a shopper pays, the gateway verifies the payment, handles the security, and then settles the money to you a few days later.

The important thing to understand: with a proper gateway, the money goes from the customer straight to your own bank account. A good platform never sits in the middle of your money — it simply connects your store to the gateway so payments flow directly to you.

The payment methods Indian shoppers expect

India has its own payment mix, and offering the right options directly affects how many shoppers complete checkout.

• UPI — by far the most popular way to pay online in India. Fast, familiar, and low-friction on mobile. If you offer nothing else, offer this.
• Cards — debit and credit cards, still important for higher-value orders.
• Netbanking and wallets — a smaller but real share of shoppers who prefer them.
• Cash on delivery (COD) — not an online payment at all, but the option many Indian shoppers still want, especially outside metros and for first-time purchases from a new brand.

The rule of thumb: offer UPI, cards and COD at a minimum. Leaving out a method your customer trusts is a silent way to lose a sale.

What it costs: gateway fees and settlement

Every online payment carries a small gateway fee — a percentage of the order value that the payment provider charges. This is separate from any platform subscription and goes to the gateway, not to your store platform.

Two things to plan for:

• The fee scales with order value, so build it into your pricing rather than discovering it after the sale. Our guide on pricing your products for profit shows how to fold payment fees into your margin.
• Settlement takes a few days. Money is not instant — the gateway batches and transfers it on a schedule. Plan your cash flow around that gap, especially early on.

COD: convenient but not free

Cash on delivery wins trust with new customers, but it carries real costs — courier COD handling charges and the risk of return to origin (RTO) when a customer refuses or is unreachable. You pay shipping both ways and earn nothing.

Offer COD to widen your reach, but manage it deliberately: a small discount to nudge shoppers toward prepaid, and clear delivery expectations, both help. We cover the economics in detail in our COD guide for Indian sellers and how to cut failed deliveries in how to reduce RTO.

What a new store actually needs to go live

You need less than you might think:

1. A bank account for settlements.
2. A payment gateway account — signing up usually needs basic KYC (business or personal identity documents).
3. A store connected to that gateway so checkout can take payments.
4. Your payment methods switched on — UPI, cards, and COD if you want it.

On Nxcart, you connect your own payment account and money settles directly into your bank — it never passes through us, and we take zero platform transaction fees on your sales. UPI, cards and COD are all available at checkout, so you can start taking orders as soon as your gateway is verified.

Keeping payments secure and compliant

You do not need to be a security expert — that is exactly what a reputable gateway handles for you. It manages the sensitive card and bank data so it never touches your store, keeping you clear of the heaviest compliance burden. Your job is simpler: keep your store on HTTPS, keep your gateway credentials private, and make sure order and payment records reconcile so you always know what has actually been paid.

Getting started

Accepting payments in India comes down to a few clear decisions: connect a gateway, offer UPI and cards, decide how you will handle COD, and price so the fees don't eat your margin. Do that and the money side of your store runs quietly in the background while you focus on selling.

Ready to start taking payments the direct way, with no platform cut of your sales? Open your store on Nxcart and connect your gateway in minutes.