Paytm’s T+1 Payment Gateway: Cash Flow Settlement Just Got Quicker

How will Paytm's T+1 payment gateway help businesses with improved cash flow management and quicker settlement?


Founded in the year 2015, Doodhwala was one of a kind grocery startup that disrupted the unorganised grocery space by introducing a subscription-based service that delivered milk, fresh dairy products, groceries, and other daily essentials directly at consumer’s doorstep. Sadly, the venture failed to take off as its cash flow was severely impacted due to operating on low margins with excessive usage of cashback and discounts.

When we describe that a business is doing good, it is synonymous with having a steady cash flow. Cash flow management is one of the integral aspects of running a business that showcases the financial health of a company and readies for any unexpected or uncalled situation. Most businesses in India grapple with the cash flow issue. According to research done by U.S. Bank, around 82 percent of small businesses shut down due to cash flow mismanagement. For any venture to flourish, cash is the oxygen to a business. Amid the harsh months of covid-19 and lockdowns, around 1107 companies were on the brink of closure, and in 2019-20 3380 companies had wound up the operations due to heavy losses and stuck cash.

Paytm’s new payment gateway of T+1 structure will be aiding online businesses to deal with the irregularities of cash flow. 

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According to research done by U.S. Bank, around 82 percent of small businesses shut down due to cash flow mismanagement.

How does the payment gateway in India work?

A question must be popping in mind how can a payment gateway aid in managing cash flows for an online business? The answer lies here. When a customer uses online payment mode through a credit/debit card, wallet, net banking, etc, the payment gateway conveys about the happening transaction to the website, the business owner, and the issuing bank with the help of payment processors and card network. Once the transaction is successful the amount is deposited in the business owner’s account after subtracting the payment gateway charges.

Most payment gateways in India assure a settlement of T+2 days, 2 here is the number of working days required to deposit the amount directly into the bank account of the merchant. But, if there are festivals or weekends, or bank holidays occurring in between it will be added to the minimum settlement period of 2 days, further delaying the process of depositing in the bank. For instance, say a transaction took place on 23rd Jan falling on a Wednesday, ideally, the amount should have been deposited on 25th Jan, now consider that it is a festival day, the bank would remain closed. The following 26th Jan being a national holiday and weekends would take the settlement period up to 6 -7 days.

This results in fewer funds being deposited in the bank and impeding the continuity of business activities such as paying bills, the salary of employees, wages of workers, purchasing raw material, etc. Therefore, faster settlement of transactions is essential for online businesses. 

Paytm’s T+1 payment gateway for quick settlements

Paytm’s payment gateway will offer T+1 settlement throughout the year, which will take only one extra day for depositing the amount in the bank. Unlike T+2 payment gateways, Paytm’s payment gateway will take a minimum of one business working day to deposit the amount irrespective of bank holidays and festivals. There will be zero times when the settlement period will exceed 6 days. Instant settlement by payment gateways will help small to mid-sized startups or businesses to better engage with their vendors and suppliers with liquid cash in hand and aid make an advance payment to procure raw materials. Low settlement periods are a boon to the businesses such as online grocery where the inventory turnover demands a continuous restock that requires a steady flow of cash or where the business model involves cash transfers in the form of awards, rewards, cashback, etc.

Shalmoli Sarkar
Shalmoli Sarkar
An MBA in marketing and a BTech in chemical engineering, Shalmoli writes on marketing strategies and business technology for new and aspiring entrepreneurs.

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