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School fee collection online: what it costs, and what the rules say.

A school collects fees online by connecting a payment gateway that takes each payment from the payer's card, net banking or UPI app and settles it to the school's own bank account, often by the next working day. The published charge at Razorpay is 2% of each payment plus GST,[1] and the charge rules for UPI and RuPay debit cards changed in September 2026.[2] State fee laws decide what a school may collect and how it may chase dues: Delhi's 2025 Act, for one, bans harassing students over unpaid fees at private unaided schools.[3] In ProEMS, students pay fees online on the web from the student login. Parents can't pay online, and the apps take no payments.

On this page

How does online school fee payment work?

The payer pays on the gateway's page, the gateway confirms the payment to the school's software, and the gateway later settles the money, less its charge, to the school's bank account.

  1. The payer opens the fee payment page

    The school software shows what is due and sends the payer to the gateway.

  2. The payer pays

    By card, net banking or a UPI app. The gateway collects the money from the payer's bank.

  3. The gateway confirms to the school software

    The software marks the fee as paid and issues a receipt.

  4. The gateway keeps its charge

    Razorpay's page says its fee and the GST on it are deducted from the payment at source.[1]

  5. The balance reaches the school's bank

    On Razorpay, settlement to the registered bank account is typically T+1 (the next working day) or instant.[1]

RBI calls a gateway that handles the money a payment aggregator: an entity that collects payments made by customers to merchants and then settles the funds to those merchants.[4] The school is the merchant, so it needs a gateway account in its own name.

What do payment gateways charge schools?

Razorpay, Paytm, CCAvenue and Stripe each publish a headline rate of about 2% per payment, with GST on top at three of them, and none charges a setup fee.

GatewayPublished rateOther terms on the page
Razorpay2% per payment, plus GST[1]No setup fee or annual maintenance charge. Fee deducted at source. Merchants taking over ₹5 lakh a month are invited to get in touch. When we read it, the page offered the first 90 days free.[1]
Paytm Payments1.99% platform fee on all transactions, plus 18% GST[5]Zero setup and no annual maintenance charge. A custom enterprise plan is also offered.[5]
CCAvenue2.00% platform fee on online payments, plus 18% GST[6]No setup fees. “Commercials may differ based on merchant categories.”[6]
Stripe2% for cards issued in India, 3% for cards issued outside India. The page does not mention GST.[7]No setup fees. Standard pricing is by invite.[7]
Headline online-payment rates from each gateway's own pricing page, read on 21 October 2026. Your quote can differ.

At 2% plus 18% GST, a ₹5,000 term fee costs the school ₹100 plus ₹18 GST, so ₹118 in all, and ₹4,882 reaches the bank. On ₹10 lakh of fees collected online, the charge is ₹20,000 plus ₹3,600 GST. That is our arithmetic from the published rate.

Published rates are a starting point. CCAvenue says its terms vary by merchant category, and Razorpay, Paytm and Stripe all send larger merchants to a custom quote.[1, 5, 6, 7] A school collecting several lakh rupees a month online has room to negotiate.

Think before passing the charge to parents

RBI's direction says any charge a merchant adds to the price must be shown to the payer before the transaction.[4] Under the new UPI framework, banks have been advised to ensure that merchants do not pass MDR on to customers.[2] Delhi's Act defines fee as “any amount, by whatever name called, collected directly or indirectly by a school” and bars collecting more than the fixed or approved fee.[3] Ask your lawyer before you add a convenience fee. Absorbing the gateway cost is the simpler route.

What is changing for UPI and RuPay card charges in 2026?

As of 21 October 2026, RuPay debit cards and UPI payments up to ₹2,000 are notified as charge-free, and a new fee on UPI payments above ₹2,000 has been announced but not started. This is moving fast, so read it as a dated snapshot.

PaymentWhat the sources sayStatus
RuPay debit cardFinance Ministry notification S.O. 5067(E) of 14 September 2026 specifies RuPay debit cards as a charge-free mode under section 10A of the Payment and Settlement Systems Act, so banks and system providers cannot charge for it.[2]Notified
UPI, up to ₹2,000Covered by the same notification. The MDR framework endorsed by the NPCI-led UPI steering committee also charges no MDR up to ₹2,000.[2]Notified
UPI, above ₹2,000A law-firm summary of the framework gives a general rate of 0.4%, capped at ₹300 from ₹75,000, and a flat ₹5 per transaction for “industry programme” categories, education included.[2]Start deferred until after Diwali[8, 9]
Other cards, net bankingNot covered by the notification or the UPI framework. The gateway's own rate applies.[2]See your rate card
UPI and RuPay debit charges as reported on 21 October 2026.

The framework was to take effect on 15 October 2026.[2] On 13 October a news report said NPCI had deferred it to “immediately after Diwali”, with the date to be notified separately, and Akashvani News reported the same on 15 October.[8, 9] We could not open NPCI's own documents, so these rows rest on a law-firm summary and news reports.

Ask your gateway one question

Razorpay's page says standard UPI payments carry zero MDR but still attract a 2% platform fee, and that RuPay debit cards carry no MDR.[1] The amended law bars banks and system providers from any direct or indirect charge on the charge-free modes, and the summary we read doesn't say whether a gateway's platform fee counts.[2] Ask in writing what you would pay on a ₹25,000 fee paid by UPI, today and after the new MDR starts.

One more limit matters for large fees. In December 2023 RBI proposed lifting the UPI limit for payments to educational institutions from ₹1 lakh to ₹5 lakh per transaction.[10] A news report says NPCI then told banks, payment providers and UPI apps to apply the higher limit by 10 January 2024 for verified merchants only, with the acquiring bank or gateway adding merchants to the verified list after due diligence.[11] Ask your gateway whether your school is on that list, and keep net banking or cards available for large annual fees.

What do RBI's payment aggregator rules mean for a school?

They set the ground rules for the money in transit and for your contract. RBI's Master Direction of 15 September 2025 requires a non-bank payment aggregator to hold RBI authorisation, to keep merchants' money in a separate escrow account at a scheduled commercial bank, and to credit merchants as its agreement says.[4]

  • Settlement timeline. The agreement “should be fair, equitable and must transparently mention the settlement timelines”. Get the timeline in the contract.[4]
  • Refunds and failed payments. Agreements must cover refunds, failed transactions, the return policy, grievance redressal and reconciliation, and refunds go back to the original payment method.[4]
  • Your documents. The aggregator must do due diligence on each merchant. Merchants onboarded up to 31 December 2025 had one year from the Direction to comply, so expect your gateway to ask for your KYC documents if it hasn't already.[4]
  • Where the money goes. The aggregator must have checks so that funds due to a merchant are credited only to the merchant's own bank account.[4]
  • Gateway or aggregator. A payment gateway that only provides technology and never handles funds is defined separately and sits outside the Direction. Ask which kind your provider is.[4]

Is GST charged on school fees and on the gateway's charge?

Services a school gives its own students are exempt from GST, but the gateway's charge to the school is not.

The Finance Ministry's circular of 1 January 2019 says services by an educational institution to its students, faculty and staff are exempt under Sl. No. 66 of Notification 12/2017-Central Tax (Rate).[12] The notification, as amended up to 2017, defines an educational institution as one providing pre-school education and education up to higher secondary or equivalent, education leading to a qualification recognised by law, or an approved vocational course.[13] An institute outside those categories should ask its CA whether its fees are exempt.

The gateway is a separate supplier to the school. Razorpay, Paytm and CCAvenue all quote their charge plus GST, and Paytm and CCAvenue name it as 18%.[1, 5, 6] Whether the school can claim that GST back is a question for your CA. Our school ERP cost guide covers the same question for software invoices.

What do state fee laws say about collecting fees?

We found no single national fee rule for private schools. The RTE Act bans capitation fees at admission, CBSE's bye-laws make state fee laws bind the schools it affiliates, and each state sets its own regime. Rules differ by state, so treat the table as examples and not as your answer.[14, 15]

RuleWhat it says about feesApplies to
RTE Act 2009, section 13No school or person may collect a capitation fee, meaning any donation, contribution or payment other than the fee notified by the school, while admitting a child. The fine can reach ten times the amount.[14]Schools for children aged 6 to 14
CBSE Affiliation Bye-Laws 2018, chapter 7No capitation fee or donation for admission (7.1). Fees only under heads the state prescribes (7.3). Fee laws of the Centre and of the state or Union territory apply to CBSE-affiliated schools too (7.6).[15]CBSE-affiliated schools
Delhi Fee Act 2025No fee above the fee fixed or approved under the Act (section 3). “Fee” means any amount, by whatever name called, collected directly or indirectly (section 2(6)). Coercive recovery is banned (section 13).[3]Private unaided schools in Delhi
Gujarat Fees Act 2017No fee above what the Fee Regulatory Committee fixed (11(1)). No donation, capitation or deposit under any head (11(3)). One separate bank account per registered school, with parents paying the prescribed fees directly into it and receiving a bank counterfoil or school acknowledgement (11(4)).[16]Self-financed schools in Gujarat
Four fee rules, read in their published texts on 21 October 2026. We have not covered other states.

Delhi's Act is in force but under challenge. The Supreme Court directed that it not be implemented for 2025-26, and in February 2026 the Delhi High Court let private schools collect the previous year's fee for 2026-27 until their fee is fixed under the Act, subject to the outcome of the case.[17] The challenge was still pending in July 2026.[18] Check the current position with your lawyer.

Where a law says how fees must be paid or acknowledged, as Gujarat's does, ask the state's fee committee or your lawyer whether payment through a gateway into the school's account meets it. We found no source that answers that.

How do you reconcile gateway settlements with the bank and student dues?

Match three records: the fee ledger (what students paid), the gateway's settlement report (what it collected, less its charge) and the bank statement (what arrived). Because the gateway deducts its fee at source, each bank credit is smaller than the fees it covers.[1]

  1. Get the settlement report

    Ask the gateway for a report that lists, for each bank credit, the payments in it and the charge and GST deducted.

  2. Match each bank credit to a settlement

    Gross payments, less the gateway charge, less GST, should equal the credit on the statement.

  3. Match every payment to a student

    Each gateway payment should map to one receipt in your fee ledger, by admission number and fee head.

  4. List the exceptions

    Paid at the gateway but not in the ledger, in the ledger but not at the gateway, refunds, and wrong amounts. Clear them before month-end.

  5. Book the charge

    Ask your accountant how to book the gateway charge and its GST, so that fee income shows the gross amount.

A simple Excel sheet for this has one row per gateway payment. Run it weekly in the busy fee weeks and monthly after that.

ColumnWhat goes in it
Payment dateThe day the payer paid.
Gateway payment IDThe reference the gateway shows for that payment.
Admission numberThe student's unique ID, so one payment maps to one student.
Fee head and termFor example, tuition, term 2.
Gross amountWhat the payer paid.
Gateway charge and GSTThe deduction, as the settlement report shows it.
Net amountGross less the deduction.
Settlement date and bank referenceTaken from the bank statement.
StatusMatched, or the reason it is not.
Columns for a gateway reconciliation sheet in Excel.

How should a school handle fee defaulters?

Chase dues with clear reminders and a published late-fee policy, not with sanctions on the child. Delhi's 2025 Act, which covers private unaided schools in the city, says no school shall harass or coerce a student over non-payment or delayed payment of fees, and lists striking the name off the rolls for non-payment of fees not fixed under the Act, withholding examination results, denying access to education, classes or activities, and public humiliation or psychological harassment. The penalty is ₹50,000 per violation against every student.[3] The Act is under court challenge, as set out above.

Other states differ. CBSE's bye-laws say a student who leaves owes dues only up to the month of discontinuance, unless the state provides otherwise.[15] Whether a school may withhold a transfer certificate over dues is disputed, and we set out the sources on our transfer certificate page.

  1. Publish the rules first

    Put due dates, instalments, the late fee and your concession policy in the fee schedule given at admission.

  2. Remind before the due date, and on it

    Keep each reminder short and factual. Our parent communication guide has wording.

  3. Write the notice like an account statement

    Student name and class, amount due, due date, late fee under your policy, how to pay and who to call. No threats about exams or the TC.

  4. Offer a way out

    An instalment plan or a fee concession under your policy settles many accounts without a dispute.

  5. Escalate in steps

    A phone call, a meeting with the principal, then a written notice from management. All addressed to the parent, not the child.

  6. Keep names private

    No defaulter names on notice boards or class groups. Delhi's Act names public humiliation as coercion.

  7. Record every contact

    Date, who spoke, what was agreed. You will need it in a dispute.

We found no clause in the Delhi Act or the Gujarat Act that sets a late-fee amount.[3, 16] Check your state's rules and your approved fee structure before you charge one.

How does ProEMS handle fee collection?

On the Gold plan (₹169 per student per year before GST), ProEMS sets up fees per class with heads, frequency, discounts, concessions and fines, and adds late fines automatically each night. Counter payments (cash, cheque, bank deposit and adjustment) get a PDF receipt to print. Gold also has a fee dashboard, forecast, head report, payment-history report and the day's collection report.

Students can pay online on the web from the student login, through the school's own Razorpay, Stripe, Paytm, HDFC (via CCAvenue) or PNB account. An online payment emails a receipt to the student and parent when email is set up, with no PDF attached. Gateway charges are passed on at cost.

Parents can't pay fees online

Only the student's login can pay, on the web. The Android and iOS apps show fees but take no payments. If your parents expect to pay from their own phones, that is a gap today.

Platinum (₹249) adds collection for any date range, a concession detail report and defaulter lists as PDF or Excel, from which staff can send SMS to defaulters through your SMS provider. ProEMS sends no automatic due-date reminders. The fee module also has suspense payments and a bank deposit upload from CSV or Excel. Ask in the demo how they work with your bank's statement format.

Before you tell students to pay online, run one small real payment through your chosen gateway. Check that the receipt and the ledger both update, then match it to the next settlement. The one-month free trial is the time to do it. See pricing for the full plan list.

Sources

Every fact on this page about rules, prices or other products comes from one of these. We read each one on the date shown and will update this page when they change.

  1. Razorpay. Payment Gateway Charges - Simple & Transparent Pricing (razorpay.com). Read 21 October 2026.Vendor pricing page. Its FAQ says standard UPI payments carry zero MDR but a 2% platform fee, and RuPay debit cards carry no MDR. When we read it, the page also offered the gateway free for the first 90 days.
  2. Fox Mandal & Associates. Govt Notifies Charge-Free Payment Modes Under PSS Act (foxmandal.in). 15 September 2026. Read 21 October 2026.Law-firm summary of Finance Ministry notification S.O. 5067(E) of 14 September 2026 and of the UPI MDR framework endorsed by the NPCI-led UPI and Services Steering Committee on 15 September 2026. We could not open the notification or NPCI's own documents.
  3. Government of NCT of Delhi (copy hosted by the Directorate of Education). The Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025 (Delhi Act 4 of 2025) (edudel.nic.in). Passed 8 August 2025; in force from 10 December 2025 (notification of 9 December 2025). Read 21 October 2026.Applies to private unaided schools in Delhi (section 2(13)). Private schools have challenged it in the Delhi High Court. Other states have their own laws.
  4. Reserve Bank of India. Master Direction on Regulation of Payment Aggregator (PA) (rbi.org.in). RBI/DPSS/2025-26/141, 15 September 2025. Read 21 October 2026.
  5. Paytm Payments Services Limited. Pricing (paytmpayments.com). Read 21 October 2026.Vendor pricing page.
  6. CCAvenue. Pricing Options for CCAvenue Payment Gateway (dashboard.ccavenue.com). Read 21 October 2026.Vendor pricing page. It says commercials may differ based on merchant category.
  7. Stripe. Pricing & Fees (stripe.com). Read 21 October 2026.Vendor pricing page. Standard pricing is by invite.
  8. The Free Press Journal. UPI MDR Charges Put On Hold Until After Diwali, NPCI Announces Big Decision Ahead Of Festive Season (freepressjournal.in). 13 October 2026. Read 21 October 2026.News report of NPCI's decision. We could not open NPCI's own notice.
  9. Akashvani News (News On AIR), Prasar Bharati. NPCI postpones implementation of MDR on select Person-to-Merchant UPI transactions (newsonair.gov.in). 15 October 2026. Read 21 October 2026.
  10. Reserve Bank of India. Statement on Developmental and Regulatory Policies (rbi.org.in). 20 December 2023. Read 21 October 2026.Item 4 announces the proposal. The NPCI circular that followed is reported in the next source.
  11. Business Standard. Comply with higher UPI transfer limit by Jan 10, NPCI directs members (business-standard.com). 2 January 2024. Read 21 October 2026.News report of an NPCI circular we could not open. Limits may have changed since.
  12. Ministry of Finance, Department of Revenue, Tax Research Unit. Circular No. 85/04/2019-GST: Clarification on GST rate applicable on supply of food and beverage services by educational institution (gstcouncil.gov.in). 1 January 2019. Read 21 October 2026.Paragraph 2.1: all services by an educational institution to its students, faculty and staff are exempt under Sl. No. 66 of Notification 12/2017-Central Tax (Rate).
  13. TaxGuru (convenience copy of the Central Government notification). Notification No. 12/2017-Central Tax (Rate), updated version as amended up to 14th Nov, 2017 (taxguru.in). 28 June 2017, as amended up to 14 November 2017. Read 21 October 2026.A private site's consolidated copy with no legal force, and it is out of date. We could not reach the official text, so check the current wording with your CA.
  14. Government of India (Gazette copy hosted by the Delhi Directorate of Education). The Right of Children to Free and Compulsory Education Act, 2009 (No. 35 of 2009) (edudel.nic.in). 2009. Read 21 October 2026.A scanned copy of the Act as first enacted, without later amendments. The Act covers children aged 6 to 14.
  15. Central Board of Secondary Education (CBSE). Affiliation Bye-Laws 2018, Chapter 7: School Fees (cbse.gov.in). Affiliation Bye-Laws 2018. Read 21 October 2026.A scanned PDF. We could not check whether later amendments changed it.
  16. Government of Gujarat (copy hosted by the Fee Regulatory Committee). The Gujarat Self-financed Schools (Regulation of Fees) Act, 2017 (Gujarat Act 20 of 2017) (frcgujarat.org). Gazette, 12 April 2017. Read 21 October 2026.A scanned copy of the Act as first gazetted. Later amendments, if any, are not shown.
  17. High Court of Delhi. Judgment on stay applications in W.P.(C) 122/2026 and connected petitions (Delhi School Education (Removal of Difficulties) Order, 2026) (delhihighcourt.nic.in). 28 February 2026. Read 21 October 2026.An interim ruling. The challenge to the Act itself was left for the final hearing.
  18. Press Trust of India, published by Careers360. Delhi high court seeks govt reply on private schools' plea against fee panel circular (news.careers360.com). 10 July 2026. Read 21 October 2026.

FAQ

Common questions

Short answers. The sections above have the detail and the sources.

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Can a school charge parents the payment gateway fee?
The gateway charges the school. RBI's payment aggregator direction says a charge a merchant adds to the price must be shown to the payer before the transaction, banks have been advised under the new UPI framework to ensure merchants don't pass MDR on to customers, and Delhi's 2025 Act defines fee as any amount by whatever name called and bars collecting more than the approved fee. Ask your lawyer before adding a convenience fee.
How long does a gateway take to pay the school?
It depends on your agreement. RBI says the agreement must state the settlement timelines. Razorpay's page says settlement is typically T+1 (the next working day) or instant. Get yours in writing.
Is there a limit on how much a parent can pay by UPI?
Yes. In December 2023 RBI proposed raising the UPI limit for payments to educational institutions from ₹1 lakh to ₹5 lakh per transaction, and a news report says NPCI told banks and UPI apps to apply it by 10 January 2024 for verified merchants only. Ask your gateway whether your school is a verified merchant, and keep net banking or cards available for large fees.
Does a school need a separate bank account for fees?
In Gujarat, yes: the 2017 Act says each registered school must open and operate one separate bank account, and parents pay the prescribed fees directly into it. Other states differ, so check your state's fee law.
Can a school stop a child attending class or exams over unpaid fees?
In Delhi, no. The 2025 Act bars denying access to education, classes or activities, withholding examination results, striking the name off the rolls for fees not fixed under the Act, and public humiliation, with a ₹50,000 penalty per violation per student. Private schools are challenging the Act in the Delhi High Court. Other states have their own rules, so ask your lawyer.
What should a school fee defaulter notice say?
State the student's name and class, the amount due, the due date, the late fee under your published policy, how to pay and who to contact. Address it to the parent, send it privately and leave out threats about exams, results or the transfer certificate.
Can parents pay fees in the ProEMS app?
No. Students can pay online on the web from the student login. The Android and iOS apps show fees but take no payments, and parents can't pay online.
Does ProEMS charge extra for online fee collection?
Fee collection with online payment is part of the Gold plan at ₹169 per student per year before GST, with no setup fee. The gateway's own charges are passed on at cost.

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