How Paytm Payment Gateway’s T+1 Settlement Solves Online Startups’ Cash Flow Problems


Cash management is one of the important aspects of running a business. It indicates the financial health of your business and prepares you for any unforeseen situations that may arise in the future.

Businesses incur different types of expenses at different stages, and positive cash flow is important to be able to run a business smoothly. Two factors determine a company’s ability to effectively manage its cash flow.

  1. Cash Flow Frequency: How often does a business receive money from its customers and how quickly does that money arrive in the merchant’s bank account. Late and infrequent credits to your bank account will cause discrepancies between invoices and account statements that will need to be manually reconciled later.
  2. Cash flow predictability: Every business needs to know exactly when cash will arrive in its bank accounts to accurately plan business expenses and investments. The ability to reliably forecast your income and expenses during the year is essential.

More often than not, late and unpredictable settlement of business transactions can lead to cash flow problems for companies selling online and is one of the main reasons why many online businesses shut down abruptly.

According to some reports, 82 % of failed businesses cite lack of cash as a contributing factor to closure.

How do payment settlements work?

It is often observed that even if a customer pays on time, the payment gateway takes a while to credit the money to the merchant’s account. Indeed, there are several steps between the payment event and the amount actually credited to the company’s bank account. These steps are as follows:

  • Customer initiates a payment on your website or app
  • Customer transaction information is then securely encrypted and authenticated by the payment gateway and payment processor
  • This transaction information is then transmitted to the issuing bank and the transaction is approved (or not)
  • Once approved, the funds then travel through the payment network to your merchant account

Timely Settlement: Need Time

Most payment gateways offer T+2, excluding holidays, as the standard settlement time (T being the day a transaction is initiated). However, if further analysis is done, it usually takes more than two days to settle a transaction in the business owner’s account.

  • T+2 indicates the transaction plus two business/working days. Thus, if a transaction is initiated towards the end of the week, settlement takes longer than two days.
  • Festivals and other occasions can prolong free time and your funds can virtually get stuck for up to six days before reaching you.
  • Holidays may further delay the settlement time.
  • The T+2 regulation is likely to be violated on 47% of the days of the year, which means that your money will not reach you on time for almost half of the year.
  • According to Paytm analysis, settlement time will be more than four days to 113 days next year. That’s about a third of the year!

This becomes detrimental to a company’s ability to manage cash flow, especially if you’re a startup with low margins.

Paytm payment gateway to the rescue

Startups should opt for faster ways to settle the transaction. One of the easiest ways to solve this problem is to choose a better payment gateway partner. Paytm, for example, has a facility that offers T+1 settlement standard throughout the year without any hassle. As a pioneer and leading payment gateway, Paytm believes in payment priority for online businesses regardless of holidays and weekends. Here is a comparative analysis that gives you an idea of ​​how Paytm settles transactions faster than any other payment gateway.

As observed above, Paytm’s T+1 settlement cycle (no holidays) is much faster than other payment gateways and is a better alternative for online merchants. With a proven track record of faster settlements, Paytm empowers merchants to make financial decisions without worrying about their late payments.

A trusted payment partner

While settlement time is one of the most important factors to look for in a payment gateway partner, other factors contribute significantly to a company’s growth journey.

The Paytm payment gateway along with fast settlements also offers a range of benefits for businesses, such as safe and secure transactions, an interactive dashboard with data and information, a high payment success rate, etc. . Therefore, more and more startups choose Paytm as a trusted payment gateway partner for their business. You can read more about them on their payment gateway website.


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