Settlement · Guide
How the money from your sales reaches your bank account
A payment is approved in seconds, but the money moves later: in a batch, on the provider's schedule, after fees are deducted. That transfer is settlement. This guide explains the cycle, the deductions, the holidays that shift it, and how each credit is matched back to your orders.
- Observe: Thursday's captured payments, by provider. They're approved, but none of this money is in your bank account yet.
- Decide: Each provider batches on its own cycle. In this example Provider A settles on T+1 and Provider B on T+2, counted in banking days.
- Recover: Fees and GST on fees are itemised and refunds are netted. One payment captured on Provider B isn't in B's settlement file, so it's flagged, not lost.
- Failover: Settlement can't switch providers, because money comes from whoever collected it. What moves is the date: B's credit day falls on bank holidays, so it shifts to the next banking day.
- Complete: Provider A's credit lands with a UTR and matches all 412 payments. B's credit is scheduled for Tuesday, and one exception is open for follow-up.
Chapter 01
Transaction vs settlement
Two different events, often confused. The transaction is the customer paying and the bank approving it, which happens in seconds. Settlement is the money actually moving into your account, which happens later and in bulk.
- 01Customer's bank
Debits the customer when the payment is approved
- 02Network
UPI or the card network moves the money between banks
- 03Payment provider
Collects the day's payments and closes a batch
- 04Peneu
Itemises each batch and matches it to your orders
- 05Your bank
Receives the net amount, with a UTR
| Compared on | Transaction | Settlement |
|---|---|---|
| When | At checkout, in seconds | Later, on the provider's cycle |
| What moves | An approval, and the customer's money leaving their account | The net amount, into your bank account |
| Unit | One payment | A batch of many payments |
| Reference you see | Payment ID, bank RRN or UPI reference | Settlement ID and the bank UTR |
Chapter 02
From payment to credit
Between a customer tapping "Pay" and the money showing on your bank statement, a payment passes through seven stages. Only the first two happen while the customer waits. The rest run in the background, in batches, over the next banking day or two.
Knowing the stages tells you where to look when a number doesn't add up: a payment that failed at authorisation never reaches settlement, and a credit that arrives short has been netted somewhere between batching and payout.
| Stage | What happens | What you see |
|---|---|---|
| 1. Authorisation | The customer's bank approves the payment, or the customer approves it in their UPI app, and the money leaves or is held in their account. See how a payment is authorised. | A payment ID and a success or failure status, in seconds |
| 2. Capture | For cards, the approved amount is confirmed for collection, usually straight away. A UPI payment completes in one step. | The payment counts towards your sales |
| 3. Clearing between banks | The card network, or UPI through NPCI, settles the money between the customer's bank and the provider's bank on the network's own schedule. See UPI payments. | Nothing yet. This happens between banks |
| 4. Batching | At its cut-off time, the provider closes the day's batch of captured payments. | A settlement is created |
| 5. Netting | Fees, GST on fees, and any refunds, chargebacks or holds in the cycle are deducted. | Itemised lines on the settlement report |
| 6. Payout | The provider transfers the net amount to your registered bank account. | A credit on your bank statement, with a UTR |
| 7. Reconciliation | Orders, payments, settlement lines and bank credits are matched to each other. | Everything matched, or a short list of exceptions |
Chapter 03
Settlement cycles and cut-offs
A cycle is written as T+N: the transaction day plus N banking days. T+1 means the next banking day. One or two banking days is common, but each provider sets its own cycle per method, and the cycle in your agreement is the one that applies.
Cycles differ because the money itself arrives at the provider at different speeds. Card networks and banks settle with providers on their own schedules, and providers keep a risk buffer before passing money on. Faster cycles, including same-day, are possible only where the provider supports them.
Every batch also has a cut-off time, set by the provider. Payments captured after it roll into the next day's batch, so a sale at 11:50 pm can settle a banking day later than one made at 11 am on the same date. When you forecast credits, count from the batch a payment falls into, not from the moment it was paid.
| Paid on | Cycle | Credit expected | Why |
|---|---|---|---|
| Tuesday | T+1 | Wednesday | Next banking day |
| Tuesday | T+2 | Thursday | Two banking days later |
| Friday | T+1 | Monday (if a banking day) | Saturday and Sunday may not be banking days |
| Tuesday, after the cut-off | T+1 | Thursday | Falls into Wednesday's batch |
Chapter 04
Weekends and bank holidays
Settlement counts banking days, not calendar days. Banks in India don't work on Sundays or on the second and fourth Saturdays of the month, and holidays declared under the Negotiable Instruments Act differ by state. One long weekend can hold up a credit by several days.
- Thu12
Payments captured on A and B
- Fri13
A credited (T+1)
- Sat142nd Saturday
B due (T+2): banks closed
- Sun15Sunday
- Mon16State holiday
Still closed
- Tue17
B credited
For the dates that matter this year, see settlement holidays, and your provider's own calendar.
Chapter 05
Fees, GST and the net amount
What reaches your account is the gross amount minus fees, minus GST on those fees, minus any refunds or chargebacks the provider nets from the same batch. Each piece should be itemised, so you can check it against your agreement.
RuPay debit card payments, and UPI payments up to ₹2,000, carry zero MDR under government rules. Until 14 October 2026 every UPI payment does; from 15 October 2026, NPCI sets 0.4% on UPI merchant payments above ₹2,000, capped at ₹300. Providers may still charge for other services. Peneu pricing is quoted per business, so the numbers below are illustrative, or your own.
- Card payments in the batch
- Fee at an illustrative 2%
- GST on the feeAt the rate on your invoice
- Refund netted in this batch
- Net settlement
Your numbers, your rates
Enter an amount, your percentage fee and the GST rate on your invoice to see the breakdown.
Calculated only from the numbers you enter. It isn't a Peneu quote or a Peneu rate.
Chapter 06
Refunds, chargebacks and adjustments
Fees aren't the only thing taken out of a settlement. Anything that sends money back to a customer, or holds money back from you, appears as an adjustment against a batch. Most short credits that look like errors are adjustments that simply weren't expected.
Exactly when each adjustment is applied is set by your provider and your agreement. The pattern below is the common one; your agreement is the version that counts.
| Adjustment | When it usually hits settlement | What you'll see |
|---|---|---|
| Refund, before the payment settled (see refunds) | Netted from the batch the payment would have settled in | A negative refund line in that batch |
| Refund, after the payment settled | Netted from the next batch after the refund is processed | A negative line that references the original payment |
| Chargeback (a disputed card payment) | Debited when the dispute is raised, or when it's decided against you, depending on the provider | A chargeback debit against the original payment |
| Chargeback won | Credited back in a later batch | A reversal line restoring the amount |
| Reserve or hold | Only if your agreement includes one: a share of each settlement kept back for a set period to cover future refunds or disputes | A hold line, and a matching release line later |
| Fee correction | When a wrongly applied rate is fixed | A credit or debit with a reason, referencing the affected payments |
- Payments captured today
- Fee at an illustrative 2%
- GST on the feeAt the rate on your invoice
- Refund of last week's order
- Batch totalNegative: nothing is credited today
Ask these before you go live
- When refunds are larger than a day's sales, is the shortfall carried forward against later batches, or collected from you?
- Is any reserve or hold applied to your settlements? If so, what share, and for how long?
- Are chargebacks debited when they are raised or when they are decided, and how are won disputes credited back?
Chapter 07
Settlement statuses
A settlement batch moves through a few states. The names vary between providers; the meaning doesn't.
- created
The batch has been formed from captured payments.
- processing
Fees are applied and the transfer to your bank has started.
- processed
Your bank has received the credit, and the UTR is known.
- failed ← from processing
The transfer couldn't complete, often because the bank account is inactive or its details are wrong. It's retried once the details are fixed.
Chapter 08
Reading a settlement report
A settlement report lists every payment in a batch, with what was deducted from each. These are the columns that matter and what to check in each one.
| Payment | Your reference | Type | Gross | Fee | GST on fee | Net |
|---|---|---|---|---|---|---|
| pay_7Hq2 | order-10234 | payment | ₹2,450.00 | ₹49.00 | on invoice | ₹2,401.00 − GST |
| pay_7Hq9 | order-10235 | payment | ₹1,200.00 | ₹24.00 | on invoice | ₹1,176.00 − GST |
| rfnd_31K | order-10198 | refund | − ₹800.00 | — | — | − ₹800.00 |
Other columns worth having: settlement ID, provider, method, UTR, settlement date.
| Column | What to check |
|---|---|
| Your reference | Every line maps to an order in your system. Missing references are the most common source of manual work |
| Fee | Matches the rate in your agreement for that method and card type |
| GST on fee | Charged on the fee only, at the rate on your invoice |
| Type | Refunds and chargebacks appear as negative lines against their original payment |
| UTR | The same UTR appears on your bank statement for the batch total |
Chapter 09
Reconciliation
Reconciliation proves that every order was paid, every payment was settled and every credit arrived. It works as a three-way match. Everything that matches needs no attention, and only the exceptions go to a person.
| Match | On what | What a mismatch means |
|---|---|---|
| Order ↔ payment | Your reference on the payment | A payment with no order, or an order marked paid without a payment |
| Payment ↔ settlement line | Provider reference, amount, date | Captured but not settled, or a fee that doesn't match |
| Settlement batch ↔ bank credit | UTR and batch total | A credit that never arrived, or arrived short |
How Peneu runs this across providers: Reconciliation. A shorter primer: understanding payment reconciliation.
Chapter 10
Exceptions
The short list of things that don't match, what usually causes them, and who needs to act.
| What happened | Usual cause | On whose side | Retry on another route? | What to tell the customer |
|---|---|---|---|---|
| Captured, not settled | Provider delay or a missing line in the file | Provider | Raise it | No customer impact; follow up with the provider |
| Settled, but no matching payment | A payment made outside your system, or a late success after a timeout | You | Check | If it's a duplicate, refund the customer |
| Fee different from agreement | Wrong rate applied, or the card type differs | Provider | Raise it | No customer impact |
| Refund not deducted, or deducted twice | Timing between refund and batch | Provider | Check | Confirm the customer's refund status |
| Chargeback debit | A customer disputed a card payment | You and the provider | Respond | Respond to the dispute with order evidence |
| Transfer to your bank failed | Inactive account or wrong details | You | Fix details | No customer impact; update bank details |
Chapter 11
Several providers, several credits
With more than one provider, one day's sales arrive as several credits, sometimes split by method too, each on its own cycle and with its own UTR. That's normal. What matters is that each credit is matched to its batch.
| Credit | From | Covers | Reference |
|---|---|---|---|
| ₹9,74,260.00 | Provider A | Thursday's cards and UPI (T+1) | UTR SETL0913A… |
| ₹2,18,900.00 | Provider B | Wednesday's netbanking (T+2) | UTR SETL0913B… |
| ₹41,300.00 | Provider C | Thursday's international cards | UTR SETL0913C… |
Chapter 12
Reports, API and your books
Settlement data is available as downloadable reports for finance, and by API for teams that feed it straight into an accounting system or ERP.
Whichever route you use, the same few rules keep the import clean. Most reconciliation problems that reach a finance team started as an import that keyed on the wrong thing.
| Rule | Why it matters |
|---|---|
| Key on IDs, not dates: payment ID, settlement ID and UTR | A settlement dated Friday can contain Wednesday's and Thursday's payments. Dates drift; IDs don't |
| Make the import repeatable: importing the same settlement again replaces it, never duplicates it | Files get re-sent and jobs get re-run. A duplicated batch looks like money you never received |
| Store amounts as whole numbers in paise | Rounding drift across thousands of lines turns into a mismatch that nobody can find |
| Keep the provider's original files | When a dispute or an audit comes up, the raw file is the evidence |
| Read cut-off and settlement times in the provider's time zone | Otherwise late-evening payments land in the wrong day |
| Treat a settlement notification as a prompt to fetch the data, not as the record itself | Notifications can arrive late, twice or out of order; the report or API response is the record |
For developers
Illustrative shape. Field names are confirmed in the API reference that comes with sandbox access.
GET /v1/settlements/stl_0913A
{
"id": "stl_0913A",
"provider": "provider_a",
"cycle": "T+1",
"utr": "SETL0913A…",
"gross": 100000000,
"deductions": {
"fees": "…",
"tax_on_fees": "…",
"refunds": 450000
},
"payments": 412
}Chapter 13
The finance team's routine
Settlement stays predictable when it's checked a little every day instead of all at once at month-end. This is the routine that works for most teams, whether reconciliation is done in a spreadsheet or automatically across providers.
| When | What to do | Why |
|---|---|---|
| Every banking day | Match each bank credit to its settlement on the UTR, and clear new exceptions | A one-day gap takes minutes to explain; a month-old one can take days |
| Every banking day | Check that refunds and chargebacks are tied to their original payments | So netting never looks like a short credit |
| Weekly | Review open exceptions by age and chase any that haven't moved | Captured-not-settled items get harder to recover the older they are |
| Before long weekends | Check the bank-holiday calendar and forecast which credits will slip | A Thursday sale can reach you the following Tuesday |
| Monthly | Audit fee lines against your agreement, method by method, and check the provider's tax invoice for fees against the settlement reports | Wrongly applied rates are cheaper to fix early |
| Monthly | Post settlements to your books: sales at gross, fees and GST on fees as their own lines, and each credit clearing what the provider owed you | Revenue, costs and cash stay separately visible. Your accountant decides the exact treatment |
If faster settlement matters
FAQ
Settlement questions
What is settlement?
Moving the money your customers paid from the payment provider to your bank account, after fees and GST on those fees are deducted.
Why isn't money in my account as soon as the customer pays?
Approval takes seconds, but the money itself moves later. Providers collect a day's payments, close a batch and transfer the net amount on their settlement cycle.
What does T+1 mean?
One banking day after the transaction day (T). Weekends when banks are closed, and bank holidays, don't count.
Which settlement cycle will I get?
It depends on the payment method and the provider, and is set out in your agreement before you go live. One or two banking days is common.
Why is my settlement less than what customers paid?
Fees and GST on those fees are deducted, and refunds or chargebacks processed in the cycle can be netted from the same batch. Each is itemised on the settlement.
Why did I get three credits today instead of one?
Each provider settles separately, and sometimes separately by method. More providers means more credits, each with its own UTR.
What is a UTR?
The Unique Transaction Reference a bank assigns to a transfer. It's printed on your bank statement, and it's how a settlement batch is matched to the credit in your account.
What if a payment was captured but never settled?
It shows up as an exception in reconciliation. Raise it with the provider, quoting the payment reference; most turn out to be delays or file errors.
What is a settlement cut-off time?
The time at which a provider closes the day's batch. Payments captured after it roll into the next day's batch, so a late-evening sale can settle a banking day later than a morning one.
What happens if refunds are more than a day's sales?
The batch goes negative and nothing is credited that day. Depending on your agreement, the shortfall is carried forward against later batches or collected from you.
What is a settlement reserve or hold?
Some agreements keep back a share of each settlement for a set period to cover future refunds and disputes, then release it. If one applies to you, it's written in your agreement and appears as its own line.
When is a chargeback deducted from my settlement?
It depends on the provider. Some debit it when the dispute is raised, others when it's decided against you. If you win, the amount is credited back in a later batch.
Can I get settled faster?
Some providers offer faster cycles for some methods. Where that's possible, it's agreed as part of your setup.
Do bank holidays differ by state?
Yes. Holidays under the Negotiable Instruments Act are declared by region, so a holiday in one state can delay a credit that would arrive on time in another.
How it works underneath
- Reconciliation & ReportingMatch payments & settlements across providersView details
- Multiple Payment ProvidersGateways, aggregators & acquiring banksView details
- Unified APIOne request & status modelView details
- Provider Performance OptimizationSuccess rate, latency & cost by providerView details
Related products
Sources
- RBI — Holiday matrix (holidays under the Negotiable Instruments Act, by regional office)Holidays differ by region; banks observe the second and fourth Saturdays as holidays.
- RBI — Banks to observe second and fourth Saturdays as holidays (from 1 Sep 2015)
- PIB — zero MDR on RuPay debit cards and BHIM-UPI
- NPCI — Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions: FAQs (15 Sep 2026)From 15 Oct 2026: UPI merchant payments up to ₹2,000 stay at zero; above ₹2,000, 0.4% capped at ₹300, with a flat ₹5 for railways, telecom, insurance, fuel and utility bills.
Last reviewed . Examples, rates and traces marked illustrative are not Peneu figures.
Walk us through your month-end
Show us how you reconcile settlements today. We'll show you the same month with every credit itemised and matched.