Top Payment Gateways for Dropshipping in India (2026) – UPI, COD, Low Fees

Q: Which payment gateway is best for dropshipping?

For India in 2026, Cashfree and Razorpay are the best payment gateways for dropshipping. Cashfree works better for COD-heavy dropshipping businesses, while Razorpay is ideal for beginners.

Q: Does Razorpay support dropshipping?

Yes, Razorpay supports dropshipping businesses. Cash on Delivery (COD) is usually enabled through logistics partners such as Shiprocket.

Q: Which payment gateway is best for Shopify?

Razorpay and Cashfree both integrate smoothly with Shopify stores in India. PhonePe is a good option for Shopify stores focused mainly on UPI payments.

Q: What is the payment method for dropshipping?

Dropshipping stores in India typically accept UPI, debit and credit cards, net banking, and Cash on Delivery (COD). A mix of prepaid and COD payment methods performs best.

Nitya
4 days ago
3 min read

Dropshipping in India is growing fast in 2026 — but payment gateways decide whether you scale or struggle.

Diagram showing Indian dropshipping payment gateway flow in 2026, comparing cash on delivery and digital payments to reduce RTO and improve cash flow

Many Indian dropshippers fail not because of products or ads, but because they choose the wrong suppliers instead of working with Top clothing vendors for dropshipping in India.

Overview graphic explaining Indian dropshipping payment challenges in 2026, highlighting COD barriers, top payment gateways, and a stacked payment solution.

❌ COD returns (RTO)
❌ Slow settlements
❌ Payment holds & account freezes
❌ Poor UPI success rate

📌 Why Payment Gateways Matter in Indian Dropshipping

India is different from global markets.

Chart showing India’s payment preference split with 70% cash on delivery dominance versus global prepaid markets, highlighting RTO, slow settlements, and account freezes.

Here:

70%+ buyers prefer COD
UPI dominates prepaid payments
Failed deliveries directly eat profit

Your payment gateway affects:

Order confirmation
COD conversion
Refund speed
Cash flow
Customer trust

👉 Choosing the wrong gateway = high RTO + blocked cash

🔑 What to Look for in a Dropshipping Payment Gateway (India)

Selection criteria matrix for Indian dropshipping payment gateways in 2026, highlighting UPI support, COD enablement, fast settlements, refund handling, and platform integration

Before selecting any gateway, check these non-negotiables:

Feature	Why It Matters
UPI Support	Highest success rate in India
COD Enablement	Boosts conversions
Fast Settlements	Keeps cash flow healthy
Refund Handling	Reduces disputes
Low Failure Rate	Saves ad spend
Easy Integration	WooCommerce / Shopify ready

🏆 Top Payment Gateways for Dropshipping in India (2026)

Infographic summarizing India’s top payment gateways for dropshipping, highlighting COD dominance, UPI prepaid growth, and a comparison of Razorpay, Cashfree, and PhonePe

🥇 1. Razorpay

Razorpay dashboard showing payments overview with collected amount, refunds, orders, and settlement trends for an Indian ecommerce store

Best for: Beginners + scaling brands

Overview of Razorpay as a payment gateway for Indian dropshipping, showing benefits, limitations, and technical specs like UPI support, COD handling, and T+2 settlements

Why Razorpay works well

Supports UPI, cards, net banking
Easy WooCommerce & Shopify integration
Good documentation
Trusted brand in India

Limitations

COD via logistics partner only
Account review can be strict

Feature	Details
UPI	✅ Yes
COD	⚠️ Indirect
Settlement	T+2
Best For	New stores

🥈 2. Cashfree Payments

Illustration of Cashfree Payments showing a successful UPI transaction on mobile, highlighting fast digital payments for Indian ecommerce and dropshipping

Best for: Dropshippers handling COD + prepaid together

Overview of Cashfree Payments as a payment gateway for Indian dropshipping, highlighting COD support, fast T+1 settlements, strong UPI success, and operational advantages

Why Cashfree is powerful

Excellent UPI success rate
Faster settlements
COD-friendly ecosystem
Fewer payment holds

Feature	Details
UPI	✅ Strong
COD	✅ Supported
Settlement	T+1 / T+2
Best For	COD-heavy stores

🥉 3. PayU India

PayU payment gateway dashboard showing transaction history, credited and debited amounts, refunds, and payment statuses for an Indian ecommerce store

Best for: Medium-volume stores

Overview of PayU India as a payment gateway for Indian dropshipping, showing key benefits, limitations, and technical specs like UPI support, limited COD, and T+2 to T+3 settlements.

Pros

Stable gateway
Card + UPI coverage
Decent support

Cons

Slower dashboard UX
Settlements may vary

Feature	Details
UPI	✅ Yes
COD	❌ Limited
Settlement	T+2 / T+3
Best For	Growing stores

⭐ 4. PhonePe Payment Gateway

Best for: UPI-first stores

Overview of PhonePe as a UPI-focused payment gateway for Indian dropshipping, highlighting fast T+1 settlements, strong UPI success rates, and no COD support

Why PhonePe works

Massive UPI trust
High success rate
Faster checkout

Limitations

Limited COD handling
Selective onboarding

Feature	Details
UPI	✅ Excellent
COD	❌ No
Settlement	T+1
Best For	Prepaid-focused brands

📊 Quick Comparison Table (2026)

Gateway	UPI	COD	Settlement	Best Use Case
Razorpay	✅	⚠️	T+2	Beginners
Cashfree	✅	✅	T+1/T+2	COD Stores
PayU	✅	❌	T+2/T+3	Mid-level
PhonePe	✅	❌	T+1	UPI Brands

🧠 COD vs Prepaid: What Works Best in 2026?

Confused about which payment model works best in 2026? Read our detailed guide on Prepaid vs COD dropshipping in India to reduce RTO and improve cash flow.

Illustration comparing cash on delivery and prepaid payments in Indian dropshipping, showing conversion benefits of COD, cash flow advantages of prepaid, and the hybrid balance strategy

Payment Mode	Pros	Cons
COD	Higher conversion	High RTO
Prepaid	Low returns	Lower trust
Hybrid	Balanced	Needs control

👉 Smart dropshippers push prepaid with incentives

₹50 discount on prepaid
Faster delivery messaging
Partial COD (₹99 advance)

🛠️ Recommended Gateway Stack (Pro Strategy)

Stacked payment architecture for Indian dropshipping, showing primary gateway, UPI accelerator, and logistics-led COD layer to reduce failures and account risk

Best practice in 2026:

Primary: Cashfree or Razorpay
UPI Boost: PhonePe
COD: Through Shiprocket / logistics

This reduces:

Payment failures
Gateway dependency
Account risk

❓ Frequently Asked Questions (People Also Ask)

Which payment gateway is best for dropshipping?

For India in 2026, Cashfree and Razorpay are best. Cashfree is better for COD-heavy dropshipping, while Razorpay suits beginners.

Does Razorpay support dropshipping?

Yes. Razorpay supports dropshipping businesses. COD usually works via logistics partners like Shiprocket.

Which payment gateway is best for Shopify?

Razorpay and Cashfree both integrate smoothly with Shopify in India. PhonePe works best for UPI-focused Shopify stores. If you’re new, this guide on How to Start Shopify Dropshipping in 2026 explains the complete setup step by step.

What is the payment method for dropshipping?

Dropshipping stores in India use:

UPI
Debit/Credit Cards
Net Banking
Cash on Delivery (COD)

A mix of prepaid + COD performs best.