Payment technology has evolved considerably in India over the last decade. The Indian payment gateway market was valued at Rs. 73 billion in 2021 and is expected to grow at a 20.11% CAGR by 2027 (Source: MarketResearch). Rapid digitalization paired with the promotion and adoption of cashless payments in the country has led to these growing numbers. It also indicates the growing reach of online payments in the lives of both merchants and customers. More and more businesses are integrating reliable and secure payment gateways to facilitate online transactions with their customers.
However, the business face of the coin of digital payment has certain concerns related to payment gateway adoption, one of which is real-time bank settlements. In reality, there is a time gap that exists between accepting a prepaid order and receiving the corresponding payment in the merchant’s bank account.
If you are a business owner and have integrated a payment gateway to your website or app, you might have thought why the amount that customers pay reaches your bank account after a certain period. For many businesses like yours, not having payments credited on time can impact the cash flow. This is where real-time bank settlements come into the picture.
If you are wondering how to get the payments into your linked bank account as soon as a customer pays you, you have come to the right place.
What does real-time bank settlement mean?
In simple terms, real-time bank settlement refers to the process of receiving payments from a customer’s bank or card to your (merchant) bank account instantly and in real time. Here, the reference for emphasis is the delay that usually occurs while receiving payments through a payment gateway.
With a real time bank settlement facility, you will have the total order amount transferred into your bank account, which can then be reused for various business needs. Whether it is about paying for inventory refilling, utility bills, or employee salary, having the cumulative order amount and profit reach your bank account timely does help a lot. This is particularly useful when you have recently started a business and do not have significant funds to manage the capital flow unless you get what you have invested back with profits.
Now that you know about instant bank settlements, you might also want to know –
Is real-time bank settlement different from payment gateway settlements?
Before we get to the difference between the two, if any, let’s cover the payment gateway settlement cycle in detail –
A payment gateway settlement cycle gets completed when the payment received from the customer reaches the merchant’s bank account. While the process seems simple and straightforward, it has several sub-steps involved, which are:
Step 1: A customer initiates an online payment using a preferred payment option – UPI, credit card, debit card, etc.
Step 2: Payment gateway, being the technology that empowers payment processing, takes this information from your website to both acquiring bank and issuing bank.
Step 3: Once the transaction is successful, the payment gateway charges are deducted from the amount received, and the rest reaches the merchant account first.
Step 4: At the final step, the balance in the merchant account is transferred to your linked bank account as per the default settlement cycle of the integrated payment gateway.
Recommended Read: The underlying reason behind settlements-related delays
Some payment gateways have the default settlement cycle of T+2 or T+3 working or business days, where T stands for the date of payment capture from the customer’s bank or card. For example, if you receive an order today, you will receive its payment in your bank account after the next two working days with the T+2 settlement cycle.
By now, you must have got a fair idea of the usual payment gateway settlement cycle. This is where real-time bank settlements stand apart and can benefit your business in the long run. Unlike the default settlement cycle of a payment gateway, you can benefit from having the funds transferred to your bank account in real time.
Again, the next important question you might want to ask is –
How can you get the benefit of real-time bank settlements for your online business?
This again, depends on the payment gateway provider you select. Eventually, the payment processing that occurs on your website or app passes involves a payment gateway. Hence, you can only benefit from real-time settlements if your payment gateway supports the same.
Paytm Payment Gateway makes real-time bank settlements possible for you
Breaking out from the default settlement cycle becomes easier when you have Paytm Payment Gateway by your side. It comes with a real-time settlement feature that allows you to get money into your bank account instantly. The best part is – this facility is available 24x7x365, even on holidays.
This way, you need not succumb to the payment delays that often become a hurdle in maintaining business-related cash flow.
Other than real-time bank settlements, Paytm Payment Gateway also allows:
- Same-day settlements
- Batch settlements
- On-demand settlements
Paytm ensures the best-in-class payment success rate for settlements with various money transfer rails, including UPI, IMPS, NEFT, and RTGS.
Also Read: A Comprehensive Guide to IMPS
What more can real-time bank settlements do for you?
Improved liquidity
For every business, it is crucial to maintain a certain level of liquidity for continued operations. With real-time bank settlements, you will be in a better position to deal with cash flow and the financial side of operations/growth. As a result, you can plan to grow your business to the next level without worrying about delayed payments.
Enhanced operational efficiency
Whether it is about buying the raw material or paying the workforce, you cannot undermine the need for regular payment outflow in relation to your business. While the lack of payment availability can affect these business sides to some extent, you can maintain workplace productivity without fail by having a real-time bank settlements facility on your side.
No need for short-term loans
Lack of funds to maintain operations often pushes many business owners toward short-term loans that are available at very high interest rates. When you have real-time bank settlements easing the payment worries, you need not pay hefty interest charges for such loans. Besides this, Paytm Payment Gateway assures T+1 settlement cycle on working days to eliminate the need to borrow short-term loans.
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