{"id":2905,"date":"2020-04-29T10:56:36","date_gmt":"2020-04-29T05:26:36","guid":{"rendered":"https:\/\/rzpwp.blog\/?p=2905"},"modified":"2025-03-21T16:08:56","modified_gmt":"2025-03-21T10:38:56","slug":"pg-payment-settlement-process","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/pg-payment-settlement-process\/","title":{"rendered":"Why Are Payment Gateway Settlements Not Instant?"},"content":{"rendered":"

Every business or enterprise expects its customer’s transaction to reflect in their account directly. But even today, in the era of digital-first platforms, these settlements are not instant. To give you more clarity on the payment gateway settlement process, let us show you what happens behind the scenes.\u00a0<\/span><\/p>\n

Settlement process: A business’s perspective<\/span><\/h2>\n

Settlements is a process through which a business receives a certain amount paid by their end-users via online transactions<\/a> for a particular product or service. <\/span><\/p>\n

In this case, an individual pays via a payment gateway on the business’s website or app, and that amount is transferred to the business’s account by the payment gateway.\u00a0<\/span><\/p>\n

Here’s what a typical settlement process looks like:<\/span><\/p>\n

Step 1<\/b>: The cardholder inputs their bank account or card details on the Razorpay checkout form to pay for a product or service\u00a0<\/span><\/p>\n

\"Payment<\/p>\n

Step 2<\/b>: After successful authentication via OTP or 3D secure<\/a>, the money is debited from the cardholder’s account, and the individual receives a confirmation notification for the same<\/span><\/p>\n

\"Payment<\/p>\n

Step 3<\/b>: The transaction amount is routed via the card networks<\/a> to Razorpay’s acquiring banking partners <\/span><\/p>\n

\"Payment<\/p>\n

Step 4<\/b>: Once Razorpay receives the amount, it is settled to the seller’s bank account after the deduction of a specific fee<\/span><\/p>\n

\"Payment
\n<\/b><\/p>\n

Why don’t settlements happen instantly?\u00a0<\/span><\/h2>\n

Payment settlements may look like a very straight-forward process, but they are not. The primary reason why settlements are not instant is that money movement at every step of the process is not immediate.<\/span><\/p>\n

Also, the underlying complexities of reconciliation is an additional challenge that stands in the way of instant settlements.\u00a0<\/span><\/p>\n

Well, reconciling transactions can be a nightmare for accountants, and here’s why:\u00a0\u00a0<\/span><\/p>\n