Rates differ by method: UPI is often very cheap or free for small merchants in India, cards and wallets cost more, and international cards cost the most. GST of 18% is charged on the fee itself, which is easy to forget.
Use your gateway’s settlement reports rather than a flat estimate. A change in payment mix, such as more card payments during a sale, changes your blended fee rate.
Formula
Fee cost = Payment amount × Fee rate × (1 + GST on the fee)
Example
A ₹2,000 card payment at a 2% fee costs ₹40 plus ₹7.20 GST, or ₹47.20.
CM1, CM2, CM3 and EBITDA per order and per month, with RTO, COD, channel comparison and a board-ready report.
Related terms
- Settlement cycleA settlement cycle is the time between a customer paying and the money arriving in…
- Contribution margin (CM1, CM2, CM3)Contribution margin is the revenue left from a sale after the variable costs of…
- COD to prepaid conversionCOD to prepaid conversion is the practice of moving customers who would pay cash…
Where this comes up
How to calculate contribution margin for a Shopify storeA step-by-step guide to CM1, CM2 and CM3 for D2C brands: what goes in each layer, the costs most brands miss, and how to turn it into a daily number.Part of the growth marketing glossary by Shiva Sharma.