Cash on delivery and UPI work differently in Shopify, and confusing them is the most common setup mistake. The short answer for anyone evaluating Shopify COD UPI India options: COD is a manual payment method configured under Settings > Payments, where you add the method, write the payment instructions the customer sees, and manually mark orders paid after the courier collects the money. UPI is a gateway payment method, supplied by an Indian payment gateway you connect to Shopify, and it only appears at checkout once that gateway is active and has UPI enabled. The third fact that shapes everything for Indian merchants: Shopify Payments is not available in India, so you are always on a third-party gateway and the third-party transaction fee is permanent. This guide covers the setup order, the fees, and the operational work COD actually creates.
Key Takeaways
• Shopify's manual payment methods documentation lists Cash on Delivery (COD) among the suggested manual payment methods, and states you are not charged third-party transaction fees for manual payments.
• A COD order appears on the Orders page as Pending until you mark it paid. COD is a receivables workflow, not a payment integration. "Cash on Delivery (COD)" is also a reserved name, so pick the suggested method rather than a custom one.
• Shopify Payments is not supported in India. Shopify's supported-countries list covers 38 countries and India is not among them, so you must use a third-party payment provider.
• Official Shopify India pricing, retrieved 26 September 2026: Basic ₹1,499/month annual billing carries a 2% third-party transaction fee, Grow ₹5,599/month carries 1%, Advanced ₹22,680/month carries 0.6%, Plus from ₹1,75,000/month carries 0.2%.
• Razorpay's public India rate card, last updated May 2026, lists a 2% platform fee per successful domestic transaction plus 18% GST, with zero setup fee, zero AMC and zero refund processing fee. UPI is MDR-free per RBI policy; the 2% is a platform fee, not MDR. See Razorpay pricing.
• India's revised UPI MDR framework applies 0.4% on person-to-merchant UPI transactions above ₹2,000, capped at ₹300 for transactions of ₹75,000 and above, with effect from 15 October 2026. Small merchants under the P2PM framework remain exempt.
• Multi-currency display of manual payment methods requires Shopify Payments plus international sales tools, so a manual COD method is not automatically localised per market.
COD and UPI are different subsystems
The most useful thing to understand before configuring anything is that these two labels sit in different parts of Shopify.
COD lives in the manual payment methods layer. Shopify's documentation describes it this way: customers who do not want to pay by card "can still place their orders online if you set up a manual payment method", and the merchant can send an invoice, receive payment, and then manually approve the order. Common manual payment types listed are cash on delivery, money orders and bank transfers. Three consequences follow:
• The order is not paid when the customer places it. Shopify states that orders using a manual payment method are marked as unpaid, and that when a customer uses one, the order is marked as Pending on the Orders page.
• You are not charged Shopify's third-party transaction fee on it. Shopify's manual payment methods page states: "You aren't charged third-party transaction fees for manual payments." That is a real economic argument for COD — but read on before treating it as free money.
• You collect the money, not Shopify. The gateway is not involved; your courier partner is.
UPI lives in the gateway layer. UPI appears at checkout only if the payment provider you have connected offers it and you have activated it. Shopify Payments is the layer that supplies local payment methods automatically, which is why most Indian stores get UPI through a domestic gateway such as Razorpay, PayU or CCAvenue. The two labels are therefore complementary rather than alternatives in a technical sense: one is a manual promise to pay, the other an automated charge. What they share is the same checkout screen, which is exactly where the confusion starts.
Why India has no Shopify Payments, and what that costs
Shopify's supported countries for Shopify Payments page lists 38 countries, from Australia through the United States. India is not on the list, and Shopify's payments overview states that Shopify Payments is "only available to online stores in certain countries and regions". This matters because Shopify's pricing is built around it. On the official India pricing page, retrieved 26 September 2026, the third-party transaction fee is a plan-tier feature, not an add-on:
• Basic — ₹1,499/month annual (₹1,994 month-to-month), 2% third-party transaction fee
• Grow — ₹5,599/month annual (₹7,447 monthly), 1%, up to 5 staff accounts
• Advanced — ₹22,680/month annual (₹30,164 monthly), 0.6%, up to 15 staff accounts
• Plus — from ₹1,75,000/month, 0.2%, unlimited staff accounts
Stack your gateway's own fee on top and the arithmetic matters. Razorpay's public India rate card, last updated May 2026, lists a 2% platform fee per successful domestic transaction with 18% GST on that fee, and zero setup fee, zero annual maintenance charge and zero refund processing fee; see Razorpay pricing. The same document states that UPI is MDR-free per RBI policy and that Razorpay's 2% is a platform fee, not MDR.
Take a ₹2,000 order on Basic as a labelled illustration, not a quote: a 2% Shopify third-party fee is ₹40, and a 2% Razorpay platform fee plus 18% GST on that fee is ₹47.20 — roughly ₹87 of a ₹2,000 order going to payment processing before a single product cost. Moving to Grow reduces the Shopify side to 1%, which is ₹20. That is the calculation that should drive your plan decision, not the headline subscription price, and it also decides whether a subscription programme can carry those two percentage fees on every renewal — see our Shopify subscriptions guide. One caution on comparison: headline rate is not total cost. Razorpay's own rate card notes that a gateway with a lower headline rate but a lower success rate can cost far more in lost revenue, so compare authorisation and success rates, settlement cycles, chargeback handling, refund fees and support load alongside the percentage.
Setting up COD correctly
Shopify's documentation gives two routes: use one of the suggested manual payment methods, or create a custom manual payment method.
For COD, use the suggested one. Shopify's list of reserved names that cannot be used for a custom method includes Bank Deposit, Cash, Cash on Delivery (COD), custom, External Credit, External Debit, Gift Card, Money Order and Store Credit. Trying to build a custom "Cash on Delivery" and finding it rejected is an avoidable afternoon lost. The documented setup, via Settings > Payments:
• In Payment providers, select one of the available manual payment methods.
• In Additional details, enter what will display next to the method at checkout — the text a customer reads before choosing COD. Use it to name the COD fee, not to advertise trust.
• In Payment instructions, enter what the customer must do to pay. Shopify notes these display on the order confirmation page, so check with your courier partner exactly what is required; a generic instruction produces support tickets.
• Click the activate payment method button.
Two operational details matter on day one. Your COD orders sit as Pending, so build a daily routine around Orders filtered to unpaid, because the money you are owed is invisible in revenue reporting until you mark it. And when a customer refuses delivery, the order is a receivable you will not collect, so track refusal rate by pin code rather than overall. High refusal in specific pin codes is solvable; a store-wide COD percentage hides it.
Setting up UPI, and the fee change coming
UPI is enabled in your gateway, not in Shopify. The Shopify-side work is connecting the provider and activating it under Settings > Payments; whether UPI appears at checkout then depends on the gateway's own enablement and on your store currency and market configuration.
The cost outlook just changed. India's revised UPI Merchant Discount Rate framework introduces 0.4% MDR on person-to-merchant UPI transactions above ₹2,000, capped at ₹300 per transaction for transactions of ₹75,000 and above, with effect from 15 October 2026. Small merchants classified under the person-to-peer merchant framework — UPI receipts up to ₹1 lakh per month — remain exempt, and person-to-person transfers stay free. The Department of Financial Services' published FAQ on MDR on select UPI P2M transactions states the 0.4% rate is "significantly lower than alternative payment processing channels such as credit cards or payment gateways", and that around 95% of current UPI person-to-merchant volume stays unaffected.
What this means practically: your average order value decides your exposure. A ₹900 average order sits entirely below the ₹2,000 threshold; a ₹4,000 average order is above it on most orders. The cap also helps high-value orders, since above ₹75,000 the effective rate falls. And do not treat 0.4% as the whole cost — on many gateways, MDR and the provider's platform or technology fee are separate line items, and GST applies to the provider's fee. Ask your gateway for a written breakdown of a UPI transaction above ₹2,000 after 15 October 2026, and model your absorb-or-pass-on decision before you need to.
What COD actually costs you, and when to turn it off
COD's appeal is obvious: it removes payment friction and no Shopify transaction fee applies. The costs are operational rather than percentage-based. Cash handling and collection, because someone receives the money and it has to reach your bank account. Refusal and return-to-origin, which wastes the shipment twice if you re-attempt it. Working capital, because you pay the courier and the product before the customer pays you — on a 7-day COD cycle that is a month of inventory financed out of your own margin. And re-attempt economics, since a second delivery attempt on a high-value item often costs more than the item's contribution margin.
The right control is not on/off. It is conditional COD: enable it by pin code, by order value band, and by customer history. Shopify's shipping and payment rules give you the primitives; the discipline is deciding which segments still earn their place. Instrument refusal rate and net realised margin per pin code weekly, and turn COD off where it stops paying.
Two related cautions. Payment choice is only one part of checkout — cost surprise, checkout length and failed payments usually cost more orders than method availability does, so fix those first and instrument the split through QA and funnel work. And if you sell beyond India, Shopify's documentation states that accepting manual payments in multiple currencies requires Shopify Payments and the international sales tools, so your COD method is a single-currency mechanism; do not assume a COD label will localise itself for a Gulf or Southeast Asia market.
A setup and review order
• Get the gateway right first. Connect your Indian provider, activate UPI, cards and netbanking, and run real test transactions — not test mode — on a phone. Confirm the fee schedule in writing, including UPI above ₹2,000 after 15 October 2026.
• Add COD second, deliberately. Use the suggested Cash on Delivery (COD) method, write honest additional details, and write payment instructions that match what your courier actually asks.
• Set your plan deliberately. Compare Grow and Advanced against your real GMV, because the third-party transaction fee is 2% on Basic and 1% on Grow.
• Show the total cost early. Publish the COD fee and shipping before the payment step. Cost surprise is a bigger checkout problem than method availability.
• Instrument weekly. Read each order's timeline for gateway declines, and track COD refusal by pin code.
• Re-test the mix monthly against contribution margin, not order count. A payment method that grows orders while shrinking margin is not a win.
If your store needs custom checkout-adjacent logic, integrations, or automated reconciliation between gateway payouts and Shopify orders, that is custom app and integration work. For end-to-end store setup and configuration, see our Shopify website building service.
Frequently asked questions
Is cash on delivery available on Shopify?
Yes, as a manual payment method rather than a payment integration. Shopify lists Cash on Delivery (COD) among the suggested manual payment methods, configurable under Settings > Payments. Orders placed with it are marked Pending, and you mark them paid after the customer pays.
Does Shopify charge a transaction fee on COD orders?
No. Shopify's manual payment methods documentation states that you are not charged third-party transaction fees for manual payments. COD's costs are therefore operational — cash handling, refusals, re-attempts and working capital — rather than a Shopify percentage.
Can I add UPI to my Shopify checkout myself?
UPI is supplied by your payment gateway, not by Shopify. You connect and activate a payment provider in Settings > Payments, and UPI appears only if that provider offers it and you have enabled it. Since India is not supported for Shopify Payments, a third-party provider is required.
Should I offer COD if my order value is high?
High-value COD is usually a margin problem, because a refused delivery costs you the forward shipment, the return and the working capital, and the cash lands weeks later. The usual answer is to make COD conditional — restricted by order value band, pin code or customer history — rather than removing it outright or leaving it wide open.
Get the payment mix right before you scale the spend
Shopify COD and UPI in India is a configuration problem with an operations tail, and the order is simple: gateway first, COD second, plan third, then measure refusals and declines weekly. The fee environment changes on 15 October 2026, so budget with numbers recalculated at your real order values.
Want someone to audit your current payment setup, fee structure and COD rules? Talk to GrowMyStore about building or rebuilding your Shopify store.