Instant Settlement Payment Gateway: Ensuring Steady Cash Flows For Businesses

Instant settlement payment gateway such as Cashfree Payments helps merchants access their customer funds instantly. Read this blog to understand how it can help merchants conduct seamless business operations.

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Best businesses try to achieve a healthy liquidity which helps them remain operationally efficient.

A steady cash flow helps a business meet its inventory requirements, pay dues on time, and have enough capital to keep business operations running smoothly. 

However, customer payments are disbursed to the merchants based on their standard settlement cycle of T+2* working days. This is even more painful when there are banking holidays in between which keep businesses from accessing their funds for a longer period.

(*Settlement cycle is subject to bank approval and can vary based on transaction type, business category/model, risk parameters and other factors )

Switching to an Instant Settlement Payment Gateway like Cashfree Payments can help solve this issue. 

Before we dive deeper into how it can benefit your business, let’s get to the basics.

What Do You Mean By Instant Settlements?

Every business operating in the online space, at some point, needs a payment partner that helps collect funds, settle business payments and reconcile accounts. 

For this, a business can either partner with:

1. Traditional players like banks  
2. New-age payment service providers like Cashfree Payments 

Usually, traditional banks follow tedious processes despite their recent attempts to offer better services to merchants. Their ideal fund settlement time is about T+2* days (T = transaction; +2 Days = additional 2 bank working days) which can painfully extend to almost T+5 days (including weekends and holidays). Meaning, a merchant can access their funds (payments received from customers) only after two to five working days from the day of receipt.

(*Settlement cycle is subject to bank approval and can vary based on transaction type, business category/model, risk parameters and other factors )

That’s extremely inconvenient.

Why should a business wait that long to access its own money?

An advanced payment gateway like Cashfree Payments, offers a more streamlined settlement process. They enable businesses to access their payment collections much faster compared to banks. 

Backed by advanced technology, partnership with all leading financial institutions, and compliance-ready, payment service providers enable businesses to retrieve and use their funds immediately.

This is exactly what’s called instant settlement. 

Instant settlement means immediate access to funds captured by a payment gateway partner on your behalf. No wait time, no capital loss, and easy account reconciliations.  

Standard Settlements Are Slowing Down Your Business Operations

Standard settlements are a feasible option for businesses who have enough capital to survive and also meet any ad-hoc business requirements. But, what about small and medium-sized businesses?

MSMEs often run their businesses on a cash-in-hand basis. This creates stress on working capital, often leaving them cash strapped and, in turn, miss out on great business opportunities.

For such businesses that cannot afford to have their settlements blocked for days, Instant Settlements is the ideal solution.  

Listed below are some distinguishing features that make instant settlements a better option than standard settlements.

	Standard Settlements	Instant Settlements
Settlement frequency	Settlements that are ideally processed in T+2* or more days	Settlements that are processed almost instantly, ideally minutes after payment capture
Settlement days	Happens only on bank working days	Happen even on weekends and on bank holidays
Flexibility	Low flexibility in terms of fund withdrawal	High flexibility in terms of fund withdrawal
On-demand settlement	No such option is available	Avail immediate settlements, anytime,  only on the required amount from the total unsettled balance

What Is Instant Settlement Payment Gateway?

An instant settlement payment gateway is one that settles a merchant’s funds in their respective accounts instantly, as soon as the payment is captured.. 

For example, a merchant using Cashfree Payments as their payment gateway can, 

• Avail instant settlements for all your transactions or withdraw on-demand 
• Access funds even on weekends and bank holidays
• Get a full report of their settlements for easy reconciliation

Let’s now take a look at how an instant settlement payment gateway works.

1. A merchant onboards a payment gateway to handle all its payment collections.
2. When a customer makes a purchase on the merchant’s website or app, funds from different sources are collected into the payment gateway’s bank account
3. The payment gateway aggregates the amount to be settled to the merchant
4. It then settles the funds to the merchant’s bank account based on the settlement cycle

Here’s how a merchant can opt for instant settlements and get their money in their bank accounts instantly with Cashfree Payments.

1. A customer enters the payment details in Cashfree Payment’s checkout page
2. They’ll get a one-time authentication code
3. Once the transaction is authenticated, Cashfree Payments collects the payment and then settles it in the merchant’s registered bank account instantly

Note, a nominal fee is levied to process instant settlements.

With Instant settlements on payment gateways, merchants can have access to funds as per their requirement – be it instantly, within a day, or whenever they need it. 

They also enjoy greater flexibility, efficiency, and steer from the need to wait for days to access their own hard-earned money. We’ll talk about this in detail in the next section. 

How Instant Settlement Payment Gateways Work

Instant settlement payment gateways are designed to process transactions in real-time, providing immediate access to funds for merchants. Here’s how they work:

1. Transaction Initiation:

• A customer initiates a payment on a website or mobile app.
• The payment gateway collects transaction details, such as payment information and the amount.

2. Verification and Authorization:

• The gateway verifies the transaction, checking for any potential fraud or security issues.
• Once verified, the gateway authorizes the payment.

3. Instant Settlement:

• After authorization, the funds are instantly transferred to the merchant’s account.
• This process occurs within seconds, ensuring immediate fund availability.

4. Technology and Security:

• Sophisticated algorithms and secure connections are used to minimize fraud risks and ensure smooth transactions.
• The gateway integrates with various payment methods like credit/debit cards, digital wallets, and bank transfers.

5. Additional Features:

• Instant settlement gateways often include transaction reporting, analytics, and dispute resolution tools.
• These features help merchants efficiently manage their payment processes.

How to Integrate an Instant Settlement Payment Gateway

Integrating an instant settlement payment gateway involves several key steps:

1. Choose a Gateway Provider:

• Select a payment gateway provider that offers instant settlement services.
• Ensure the provider is compatible with your business’s existing platform or payment system.

2. Account Setup and API Credentials:

• Sign up for an account with the chosen provider.
• Obtain the necessary API credentials for integration.

3. Integration Process:

• Developers integrate the API credentials into your e-commerce platform or payment system.
• Configure the gateway to handle transactions specific to your business needs.
• Establish secure connections to protect customer data.

4. Testing:

• Conduct thorough testing to ensure the integration works smoothly.
• Testing helps identify and resolve potential issues before going live.

5. Ongoing Maintenance:

• Regularly monitor the gateway’s performance to ensure fast and secure transactions.
• Perform updates and maintenance to keep the gateway functioning optimally and secure.

Benefits of Using an Instant Settlement Payment Gateway 

Instant Settlement Payment Gateways like Cashfree Payments offer many benefits to their merchants. Let’s look at some of them. 

Better Cash Management

With instant settlements on payment gateways, businesses and merchants can enjoy complete control over their working capital and enjoy a continuous inflow of money. They can plan their cash reserves accordingly without facing any settlement uncertainties. 

Address Payment Dues

Since merchants can access funds almost instantly with instant settlement cycles, they can pay business dues such as ad-hoc operational expenses, vendor payments, loan repayments and staff salaries on time without any delay.

Faster Scalability

Instant access to funds enables merchants to respond better and faster to business opportunities and challenges. They also get the courage to explore new avenues to expand their business beyond limits.  

Manage Holiday Rush Payments Efficiently Through On-Demand Settlements

On-demand settlements are an excellent means for micro, small, and medium-sized businesses. The feature works like an ATM and MSMEs can withdraw their unsettled funds whenever they need it, with just a click of the button.

In fact, on-demand settlements are especially beneficial for businesses during the festive season rush. This is because, during festivities, sales are typically higher than usual. At this point, it’s highly critical to match supply with the market demand. 

The on-demand settlement makes this happen by ensuring that the business never runs out of cash. With cash in hand, a business can hold enough inventory to get through the festive season rush and maximise profits. 

By paying a small fee for your withdrawals, you get immediate access to funds even on holidays. 

Easy Account Reconciliations

Regardless of the type of settlements, a payment gateway ensures that it provides the merchant with a holistic view of transactions and settlements processed.  

Merchants can access and download settlement reports on a daily, monthly or custom basis and reconcile them in quick time. 

Conclusion 

Running a business, especially in today’s scenario, is tougher than ever. Moreso, maintaining a healthy cash flow and ensuring your business has enough inventory to match market demand is highly cumbersome.

However, features like instant settlements serve as a boon in such situations. Businesses can increasingly benefit from the increased availability of funds and keep the ball rolling. 

Moreso, they can use the funds at hand to improve operations, meet customer needs, develop better business models, and make way for overall economic growth. 

If the standard settlement timeline is hampering your business operations, switch to Cashfree Payments today and leverage instant settlements!