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Domestic prepaid cards in India ride the gateway's standard domestic card slab — Cashfree explicitly includes them in the 1.6% promo set alongside UPI, credit/debit cards, NetBanking and wallets, and Razorpay and PayU bill them at the same 2% blended domestic rate. But the gateway taxonomy and the upstream wallet/super-app flow frequently mis-classify a card-form-factor prepaid transaction as PPI/wallet, which sits on a different schedule (0.5%–1.1% interchange above ₹2,000 on UPI, or the gateway's wallet rate off UPI). The slab is not the leakage source. The classification is.
Reconciliation joins the gateway settlement file against the merchant order management system and the bank statement, then runs four checks per cycle. Check one isolates every transaction the gateway has labelled prepaid card and verifies the BIN is on a Visa, Mastercard or RuPay scheme issued by an Indian bank or domestic PPI issuer. Check two flags transactions where the parent rail is wallet or PPI but the underlying instrument BIN identifies as a card — that mismatch determines whether the transaction belongs in the card slab or the PPI interchange schedule. Check three cross-references the international card BIN list against any prepaid card billed at the international slab. Check four reconciles the per-instrument effective rate (fees divided by per-instrument volume) against the contracted domestic card slab and isolates any cohort where the effective rate exceeds the contract by more than 0.15 percentage points. Every check carries GST on MDR as a separate line.
Gateway settlement-file ingestion with payment_id and order_id joins to the OMS; an instrument-classification rule set distinguishing domestic prepaid card from PPI/wallet using BIN, network code and instrument sub-type fields; a domestic-card slab benchmark per contracted gateway (Cashfree 1.95% standard or 1.6% promo, Razorpay/PayU 2% standard, enterprise negotiated rates carried separately); a PPI/wallet interchange schedule (0.5%–1.1% above ₹2,000 on UPI, gateway wallet rate off UPI); an international BIN list cross-reference; per-instrument effective-rate computation; refund non-reversal check; and a monthly GST invoice matcher for input tax credit.
A monthly prepaid card fee scorecard with per-BIN-cohort effective rate, an exception list of every transaction labelled PPI/wallet where the underlying instrument was a card (or labelled card where the underlying instrument was a non-card PPI), a domestic-versus-international classification audit, a refund-MDR drag estimate, a reconciled GST-on-MDR claim ready for GSTR-2B, and an annual exposure number the controller can take into the next quarterly gateway review.
Domestic prepaid cards are one of the quietest leakage cells in Indian payment-gateway settlement. The cost itself is unremarkable. Every major payment aggregator — Cashfree, Razorpay, PayU — bills a domestic prepaid card on the same blended standard domestic slab as a credit card, a debit card, NetBanking, or a wallet. Cashfree’s published pricing page is the most explicit on this point: domestic prepaid is named in the same 1.95 percent standard rate (and the 1.6 percent 10-year-anniversary promo) that covers UPI, domestic cards, NetBanking and wallets. Razorpay and PayU package the same instrument inside their flat 2 percent plus GST domestic standard rate. The slab is not where the leakage starts.
The leakage starts at classification. A prepaid card in this context is a card-form-factor instrument — a corporate prepaid card, a gift card, a forex prepaid card, or a co-branded prepaid card carrying a Visa, Mastercard or RuPay BIN. A PPI, by contrast, is a prepaid payment instrument like Paytm wallet, PhonePe wallet, MobiKwik, Amazon Pay or Freecharge, which is processed either through the wallet rail or through UPI under the NPCI 24 March 2023 wallet-interoperability circular. The two are different instruments on different cost schedules — but the gateway taxonomy sometimes collapses both into a single parent “prepaid” or “wallet” label, and the upstream super-app flow can mis-route a card-form-factor prepaid transaction onto the wallet rail. For a quick-commerce business clearing ₹1.8 crore of monthly card-equivalent volume, the gap between the standard card slab and the PPI interchange schedule lands as a recurring monthly variance in the settlement file. It is invisible to a blended-rate scorecard. It surfaces only when reconciliation runs against the BIN, not against the gateway’s parent rail label.
Quick-reference: prepaid card MDR by classification
| Classification | Network MDR | GST | Source |
|---|---|---|---|
| Domestic prepaid card (Visa/Mastercard/RuPay BIN) — Cashfree promo | 1.60% | 18% on MDR | Cashfree pricing page, 10-year-anniversary promo set |
| Domestic prepaid card — Cashfree standard | 1.95% | 18% on MDR | Cashfree pricing page, standard rate |
| Domestic prepaid card — Razorpay / PayU standard | 2.00% | 18% on MDR | Razorpay / PayU domestic flat rate |
| PPI / wallet on UPI — ticket Below ₹2,000 | 0.00% | 18% on MDR (where applicable) | NPCI 24 Mar 2023 wallet-interop circular |
| PPI / wallet on UPI — ticket Above ₹2,000 | 0.50%–1.10% | 18% on MDR | NPCI 24 Mar 2023 wallet-interop circular |
| Wallet off UPI (gateway wallet rate) | Per gateway wallet card | 18% on MDR | Gateway pricing page |
| International prepaid card (foreign BIN) | 2.69%–2.99% + forex | 18% on MDR | Cashfree / Razorpay / PayU international card slab |
Each row is a different cost basis. The reconciliation engine has to know which row a given transaction belongs in before it can compute a meaningful effective rate or fee variance.
Why domestic prepaid cards sit in the standard card slab
The Indian payment-aggregator pricing pages are consistent on this. Cashfree’s published rate card groups UPI, domestic credit and debit cards, NetBanking, wallets, and domestic prepaid cards into a single bucket at 1.95 percent standard, with the 10-year-anniversary promo dropping the same bucket to 1.6 percent for new merchants signing up between 18 September 2025 and 30 April 2026 (subject to the 40 percent UPI mix requirement, ₹1 crore monthly GTV cap, and 12-month lock covered in the Cashfree-specific reconciliation article in this cluster). Razorpay and PayU collapse domestic credit, debit, NetBanking, UPI and wallet into a flat 2 percent plus GST standard rate that the prepaid card falls inside. None of the three publishes a per-instrument percentage that differentiates domestic prepaid from domestic credit or debit on a published-rate card. The instrument is, on paper, indistinguishable from a domestic card from a slab perspective.
That uniformity does not extend to the contracted enterprise rate. A merchant processing crores per month negotiates a bespoke schedule that typically runs 1.4 to 1.6 percent on cards and may carry a different rate on prepaid cards depending on the network and acquirer arrangement. The reconciliation baseline therefore has to be the contracted rate per instrument cohort, not the published headline. For most merchants on standard published rates, the domestic prepaid slab is the same as the domestic card slab and the leakage check collapses to BIN classification.
Why PPI / wallet is a different schedule and why it matters
The NPCI 24 March 2023 wallet-interoperability circular created an interchange on PPI merchant transactions on UPI — 0.5 to 1.1 percent on tickets above ₹2,000, nil at or below ₹2,000. That schedule does not apply to a card-form-factor prepaid card. It applies to a PPI like Paytm wallet, PhonePe wallet, MobiKwik, Amazon Pay or Freecharge when processed over the UPI rail. Off UPI, the same wallet is billed at the gateway’s published wallet rate (which for Cashfree, Razorpay and PayU lands inside the standard domestic blended bucket). A prepaid card, processed through the card networks, never touches the PPI interchange schedule and never benefits from the nil-below-₹2,000 carve-out. The two are different instruments on different rails and on different cost bases.
The practical consequence is sharp. If a gateway’s settlement file labels a domestic prepaid card transaction as PPI/wallet, two things break. First, the deduction on the settlement may not match the contracted card slab, and the variance is invisible unless reconciliation runs against the BIN. Second, the merchant cannot claim the nil-below-₹2,000 carve-out for any of these transactions, because they are not in fact PPI — they are cards. The audit trail is broken in both directions.
Quick-commerce worked example: ₹1.8 crore monthly card-equivalent volume
A Bengaluru-based quick-commerce business runs ₹1.8 crore of monthly card-equivalent volume (the share of GTV that is not bank-account UPI). Method-mix is reported by the gateway dashboard as approximately 4 percent prepaid card — about ₹7.2 lakh of monthly volume. At the contracted standard slab of 1.95 percent, the expected MDR on this cohort is ₹14,040 per month (₹7,20,000 × 1.95% = ₹14,040), with ₹2,527 of GST on MDR (₹14,040 × 18% = ₹2,527), and a total monthly deduction of ₹16,567 for the prepaid card cohort alone.
The first check is whether the gateway has classified the cohort as prepaid card or as PPI/wallet. If the gateway settlement file places these transactions in the parent UPI rail under a wallet sub-type — because the underlying flow routed through a wallet super-app — then the PPI interchange schedule applies at the network level: 0.5 to 1.1 percent above ₹2,000, nil below. For a quick-commerce business with an average order value of ₹450, almost the entire cohort sits below the ₹2,000 threshold, and the PPI schedule would produce a near-zero deduction. The card slab at 1.95 percent applied to the same cohort produces ₹14,040 of monthly deduction. The variance between the two classifications is the entire ₹14,040 — and the merchant has no defensible basis for claiming the lower figure if the underlying BIN is in fact a card, because the gateway will, on audit, reclassify the cohort back to the card slab and book the back-fee against future settlements.
The second check runs the other way. If the cohort is a genuine wallet/PPI on UPI flow — Paytm wallet, PhonePe wallet, MobiKwik or Amazon Pay loaded from a bank account — and the gateway has billed it at the 1.95 percent domestic card slab, the merchant is over-paying. At ₹7.2 lakh of monthly volume, almost all below the ₹2,000 threshold, the correct interchange is close to zero and the gateway should be charging the gateway wallet rate, not the card slab. The over-recovery again lands at ₹14,040 monthly and accumulates to ₹1.68 lakh annually before GST.
Both directions require the same reconciliation: classify the cohort by BIN and network code, not by the parent rail label. The merchant’s monthly fee scorecard isolates the prepaid card volume, verifies the BIN class, computes the per-instrument effective rate (fees divided by per-instrument volume), and compares it to the contracted slab. Where the BIN is a Visa, Mastercard or RuPay card issued by an Indian bank or domestic prepaid card issuer, the standard card slab applies. Where the underlying instrument is a non-card PPI, the PPI interchange schedule or the gateway wallet rate applies. Either way, the gateway classification is checked against the BIN evidence, and any drift is flagged before it accrues.
Compute your effective MDR across instruments and flag mis-classified cohorts
Enter your monthly volume by instrument — prepaid card, domestic credit, debit, UPI, wallet — and the contracted rate per instrument. The tool computes a blended effective rate, isolates any cohort where the gateway-billed rate diverges from the contract by more than 0.15 percentage points, and surfaces the prepaid-card-versus-PPI classification gap as a discrete monthly exposure number.
Open the tool →Detection workflow: four checks per settlement cycle
The reconciliation routine for prepaid card volume runs four parallel checks against every settlement file the gateway issues.
The first check isolates every transaction the gateway has labelled prepaid card and verifies that the BIN matches a Visa, Mastercard or RuPay scheme issued by an Indian bank or by a domestic prepaid card issuer. The BIN-to-issuer table is sourced from the acquirer or, where available, from the network’s published BIN ranges. Any transaction labelled prepaid card where the BIN does not resolve to a domestic card issuer is held for manual review — it is the first signal that the gateway taxonomy has collapsed something it should have kept separate.
The second check is the reverse. For every transaction the gateway has labelled wallet or PPI on UPI, the engine inspects the instrument sub-type field and, where available, the BIN. If the underlying instrument BIN identifies as a card, the transaction is reclassified into the prepaid card slab for reconciliation purposes and the gateway-billed rate is compared to the contracted card slab. If the underlying instrument is a non-card PPI (a Paytm wallet, PhonePe wallet, MobiKwik, Amazon Pay or Freecharge identifier), the PPI interchange schedule applies and the engine verifies the deduction matches 0.5 to 1.1 percent above ₹2,000 or nil below.
The third check cross-references the international card BIN list against every prepaid card transaction. A prepaid card with a foreign-issued BIN — a forex prepaid card loaded abroad, or a non-resident’s prepaid instrument — should be billed at the international slab (2.69 to 2.99 percent plus forex assessment under Cashfree, 3 percent under Razorpay and PayU). A prepaid card with a domestic BIN billed at the international slab is over-recovery, and the gateway has to be challenged. A foreign BIN billed at the domestic slab is rare but possible — it usually indicates a mis-routed transaction that the gateway will, on audit, reclassify back to the international slab.
The fourth check is the per-instrument effective-rate computation. For each instrument cohort (prepaid card, domestic credit, debit, UPI, wallet), the engine divides total monthly fees by total monthly per-instrument volume and compares the result to the contracted slab. A divergence exceeding 0.15 percentage points triggers an audit. At ₹1.8 crore of monthly card-equivalent volume, 0.15 percentage points works out to ₹27,000 of monthly variance, which compounds quickly to a board-relevant exposure.
Every check carries GST on MDR as a separate line and reconciles to the monthly gateway GST invoice. Refund-MDR drag (covered in the cluster article on MDR not reversed on refunds) is computed and surfaced as a discrete line, not folded into the per-instrument rate.
Where this sits in the cluster
The prepaid card classification check is the upstream gatekeeper for a cluster of related rails. The PPI/wallet-on-UPI interchange article in the same cluster covers the 0.5 to 1.1 percent schedule above ₹2,000 in depth and the gateway settlement fields that flag wallet-on-UPI volume as a separate child of the UPI parent bucket. The Cashfree MDR reconciliation article covers the 1.6 percent promo set that the domestic prepaid card sits inside and the 40 percent UPI mix lock that rescinds it. The flat-rate MDR article covers the broader pattern of headline rates concealing per-network cost differences — a flat 1.95 or 2 percent blended quote conceals that a prepaid card mis-classified as PPI/wallet would carry a structurally different schedule. The leakage cornerstones in this cluster (MDR charged on zero-MDR UPI, domestic BIN charged at international rate, premium and commercial cards billed at the premium slab) all share the same underlying discipline: reconcile against the BIN and the contracted instrument slab, not against the gateway’s parent rail label.
Continue reading in this cluster
- Cashfree MDR reconciliation and the 1.6% promo set — the conditional terms behind the rate band that prepaid card sits inside.
- PPI / wallet-on-UPI interchange at 1.1% above ₹2,000 — the schedule that prepaid card is most often mis-classified into.
- Flat-rate MDR concealing per-network cost — why a single blended headline rate breaks per-instrument reconciliation.
- Merchant fees cluster index — full coverage of MDR, interchange, gateway pricing and leakage patterns for Indian merchants.
- Payment gateway reconciliation — the umbrella money page.
External authority: the Cashfree Payments published pricing page is the primary public source for the domestic prepaid card slab and the 1.6 percent promo set referenced throughout this article.