Payment reconciliation: A guide for growing businesses

Payment reconciliation is the discipline of matching what customers paid against what your bank actually received. The gap between the two is rarely zero. Fees, taxes, refunds, and chargebacks adjust every settlement, and timing differences mean a payment captured on Tuesday might land net of charges on Thursday. For growing businesses in India, where settlement takes place on different cycles, that gap is the difference between knowing your revenue and guessing it.

The volume makes it matter. UPI alone processed over 23 billion transactions in May 2026, up around 24%year-on-year, most settling to merchants in batches that need order-level reconciliation. As channels diversify and settlement cycles compress under the new RBI Payment Aggregator framework, reconciliation has shifted from a monthly chore into a daily or weekly operating discipline.

What payment reconciliation matches

Reconciliation matches three sets of records:

• the orders or invoices in your sales system,

• the settlement reports from your gateway, payment aggregator, or marketplace,

• the credits that arrive in your bank account.

The match is rarely one-to-one. A single bank credit typically represents a batch of customer payments, settled together at T+1 or T+2 with several deductions taken out before the net amount lands. A reconciliation cycle is complete when every order is either matched to a settlement and a bank credit, or documented as a known exception with a reason and a resolution date.

Why payments collected don't match payments settled

Between the moment a customer pays and the moment money credits to your bank, several deductions happen. On a typical settlement report, Indian merchants encounter five common ones:

1. MDR of 1.5–2.5% on credit card and prepaid wallet transactions. Debit cards, RuPay, and UPI person-to-merchant flows are zero-MDR by mandate.

2. 18% GST on the MDR amount itself, not on transaction value, shown as a separate line.

3. Refunds netted against future settlements rather than reversed against the original transaction.

4. Chargebacks clawed back up to 120 days after a sale, with the deduction appearing on a settlement weeks or months later.

5. Rolling reserves of 5–10% on high-risk transactions, held 30 to 180 days against future chargebacks.

Marketplaces add a sixth: 1% TCS under Section 52 of the CGST Act, deducted on net taxable supplies before remittance.

Reconciling means tracing each layer from gross to net and confirming that what the bank received matches what should have arrived after every deduction.

Reconciliation under the RBI Payment Aggregator framework

India's standard for payment reconciliation has shifted from informal practice to formal regulation. The RBI's Master Direction on Regulation of Payment Aggregators, issued on 15 September 2025, applies to any non-bank entity processing payments on behalf of merchants in India. Four of its provisions matter most for reconciliation:

• T+1 settlement is the default for most domestic payments from 1 April 2026; T+2 is retained for cross-border and FEMA-related transactions.

• Payment aggregators must hold escrow accounts at scheduled commercial banks and run daily reconciliation between transactions and the escrow balance.

• Aggregators file monthly escrow reports plus a quarterly auditor's certificate with RBI.

• Settlement reports must carry every field a merchant needs to reconcile: transaction ID, order ID, payment method, gross amount, MDR, GST on MDR, refund offsets, chargeback deductions, net settled amount, and bank UTR.

For merchants, the impact is that settlement files now have to carry the data needed for accurate reconciliation. If your provider's report omits any of these fields, your reconciliation has a gap the regulation is designed to close on the provider's side.

Building a reconciliation workflow that scales

Spreadsheet-based reconciliation works at low volume but breaks once orders pass a few hundred a day, or once settlement cycles diverge across UPI, cards, COD remittances, and marketplaces. The mechanics of how a payout arrives in the merchant's account, net of fees and on a specific cycle, are what make reconciliation harder at scale, not the matching logic itself.

A workflow that holds at scale has five steps:

1. Ingest. Pull each gateway, aggregator, and marketplace's transaction-level settlement report, plus the bank statement, into a common schema.

2. Match. Reconcile settlement lines to orders, then settlement totals to bank credits. UTR is the matching key for NEFT, RTGS, and IMPS; UPI uses the UPI reference number.

3. Unpack deductions. Confirm `MDR, GST on MDR, refund offsets, chargebacks, and any reserve releases against your contracted rates.

4. Resolve exceptions. Missing COD remittances, RTO claims, weight disputes, or any other mismatches need a documented reason and an owner.

5. Close out. Post the reconciled balances, file the period, and roll any unresolved items forward with timestamps.

Reconciliation inside Zoho Payments

Inside Zoho Payments, every transaction-level export carries the fields you need to reconcile end-to-end: gross amount, MDR, GST on MDR, refund offsets, chargeback deductions, net settled amount, and the bank reference ID for matching against credits. Webhooks push settlement events into Zoho Books and the rest of the Zoho Finance Suite as they happen, so transactions, refunds, and tax credits land in one ledger by default. For merchants reconciling across multiple channels, that removes a layer of integration work without changing the underlying matching logic.

Conclusion

For most of the last decade, payment reconciliation in India was a finance-team chore: monthly, manual, and tolerant of variance. That's no longer the standard. With T+1 the new default and the RBI Payment Aggregator framework setting the data shape your provider has to deliver, reconciliation lives closer to the operating week than the month-end close. The matching logic itself hasn't changed; what's changed is what the regulator, and your own cadence, now expect of it.