Best Payment Gateways for Shopify Dropshipping in India (2026 Guide)
Choosing the right payment gateway is one of the most important decisions for a Shopify dropshipping store in India. A good gateway improves conversion rate, supports COD + UPI, reduces payment failures, and ensures smooth settlement of your money.
This guide explains the best payment gateways for Shopify dropshipping in India, how they work, their pros & cons, and which one is best for beginners vs scaling sellers.
Why Payment Gateways Matter in Indian Dropshipping
India is different from global markets. Customers here prefer UPI, COD, and wallets over cards.
If your payment gateway is not optimised for Indian buying behaviour, it can lead to high checkout drop-offs, failed COD verification, delayed settlements, and refund or RTO issues.
This is why successful Shopify dropshippers in India focus not just on choosing a payment gateway, but on building a complete India-ready dropshipping setup, aligned with local customer behaviour and logistics realities.
What Indian Customers Prefer (Data Snapshot)
| Payment Method | Usage in India | Importance |
|---|---|---|
| UPI | Very High | ⭐⭐⭐⭐⭐ |
| Cash on Delivery (COD) | High | ⭐⭐⭐⭐⭐ |
| Debit Cards | Medium | ⭐⭐⭐ |
| Credit Cards | Medium | ⭐⭐⭐ |
| Wallets | Medium | ⭐⭐⭐ |
Must-Have Features in a Shopify Payment Gateway (India)
Before choosing any gateway, ensure it supports these:
| Feature | Why It’s Important |
|---|---|
| Shopify integration | Easy setup & automation |
| UPI support | Maximum conversions |
| COD compatibility | Essential for dropshipping |
| Fast settlements | Healthy cash flow |
| Refund automation | Better customer experience |
| Low failure rate | Fewer lost orders |
Top Payment Gateways for Shopify Dropshipping in India
Comparison Table (Quick Overview)
| Gateway | Best For | UPI | COD | Settlement |
|---|---|---|---|---|
| Razorpay | Beginners & scaling | ✅ | ✅ | T+2 |
| Cashfree | COD-heavy stores | ✅ | ✅ | T+1 |
| PayU | Established businesses | ✅ | ⚠️ | T+2–3 |
| Stripe | International payments | ❌ | ❌ | T+7 |
1. Razorpay – Best Overall for Shopify Dropshipping
Razorpay is the most widely used payment gateway by Shopify sellers in India.
Why Razorpay Works Well
| Advantage | Details |
|---|---|
| Easy Shopify setup | Official integration |
| UPI + Cards | All major methods |
| Trust factor | Widely known brand |
| Dashboard | Beginner-friendly |
Limitations
| Issue | Impact |
|---|---|
| COD handled via courier | Needs Shiprocket / logistics |
| Slightly higher fees | Acceptable for beginners |
Best for: New and mid-level dropshipping stores
Recommended if: You are just starting Shopify in India
2. Cashfree – Best for COD & Fast Settlements
Cashfree is preferred by sellers who deal with high COD volumes.
Why Cashfree Is Popular
| Feature | Benefit |
|---|---|
| Fast settlement | T+1 days |
| COD friendly | Strong logistics tie-ups |
| UPI success rate | Very high |
| Scalable | Works well at volume |
Limitations
| Issue | Impact |
|---|---|
| Dashboard complexity | Slight learning curve |
| Approval process | Needs documents |
Best for: COD-heavy Shopify dropshipping stores
Recommended if: You face RTO and COD reconciliation issues
3. PayU – For Established Indian Businesses
PayU is an older gateway used by many large Indian brands.
Pros & Cons
| Pros | Cons |
|---|---|
| Stable infrastructure | Slower onboarding |
| Good UPI support | UI feels outdated |
| Trusted by enterprises | Less beginner-friendly |
Best for: Registered businesses with steady volume
Not ideal for: First-time dropshippers
4. Stripe – Only for International Payments
Stripe is not ideal for Indian-focused dropshipping but useful for global customers.
When Stripe Makes Sense
| Use Case | Suitable? |
|---|---|
| India domestic sales | ❌ |
| COD / UPI | ❌ |
| International USD payments | ✅ |
Use only if: You target US/EU customers
Avoid if: Your audience is India
COD in Shopify Dropshipping – Important Truth
Payment gateways do not directly process COD. COD is handled by logistics partners.
How COD Actually Works
| Step | Explanation |
|---|---|
| Order placed | Customer selects COD |
| Courier collects cash | On delivery |
| Courier settles | With seller account |
| Gateway role | Only for prepaid orders |
Tip: Choose gateways that integrate smoothly with Indian courier platforms.
Recommended Gateway Based on Seller Type
| Seller Type | Best Gateway |
|---|---|
| Beginner | Razorpay |
| COD-heavy | Cashfree |
| Scaling brand | Razorpay + Cashfree |
| International focus | Stripe |
Common Mistakes Shopify Sellers Make (India)
| Mistake | Result |
|---|---|
| Ignoring UPI | Low conversion |
| No COD option | Lost sales |
| Slow settlement gateway | Cash flow issues |
| Multiple gateways early | Operational confusion |
FAQ
Razorpay and Cashfree are the most reliable for Indian Shopify dropshipping.
Yes, but beginners should start with one to avoid confusion.
Yes, through Indian gateways like Razorpay and Cashfree.
Not compulsory, but highly recommended for better conversions.
Usually between T+1 to T+3 working days, depending on the gateway.