New Delhi [India], July 26: For India's 64 million-strong MSME sector, cash flow isn't just a metric; it's the very oxygen they breathe. Yet, this vital lifeline is often squeezed by an invisible foe: outdated payment cycles. While sales are made in seconds, the journey of that money into a business's account is a different story, creating a frustrating and often dangerous gap between earning revenue and actually using it.
Understanding the T+2 Hurdle and Its Impact on Cash Flow
At the core of this delay is the "T+2 settlement cycle", shorthand for "Transaction date plus two business days." When a customer pays an SMB, the funds don't arrive instantly. Instead, they embark on a 48-hour (or longer) journey through the banking system.
This isn’t a minor inconvenience. For a sector already facing a staggering working capital gap estimated at over $530 billion, this built-in delay is a constant drag. It means the revenue from a busy weekend sale might only become available mid-week, forcing business owners into a perpetual state of waiting and making immediate financial planning nearly impossible.
The Shift to Instant: Core Benefits for Modern Businesses
Instant settlements turn sales revenue from a future promise into immediate capital. For SMBs, this is a game-changer—enabling them to access funds within seconds instead of waiting days. This liquidity allows businesses to:
- Reinvest Faster: Restock high-demand inventory overnight.
- Cover Costs Quickly: Manage payroll, rent, and expenses without relying on credit.
- Seize Opportunities: Act on supplier discounts or marketing campaigns without delay.
Speed builds trust across the value chain. Instant refunds turn negative customer experiences into loyalty boosters—62% of consumers are more likely to repurchase after a smooth return. For suppliers, timely payments foster stronger relationships, better credit terms, and a competitive edge.
Best Instant Settlement Payment Gateway in India in 2025
Switching to real-time payments starts with choosing the right payment gateway. It’s not just a tool for accepting money but a key driver of speed, reliability, and cash flow. With India’s digital payments evolving, many providers now offer solutions beyond the outdated T+2 cycle, giving businesses direct control over their funds.
1) Razorpay
A dominant force in the Indian fintech sector, Razorpay, known for its payment gateway with instant payment settlement approach and strong developer focus. Processing an annualized Total Payment Volume (TPV) of $180 billion in FY24, the company underscores its massive scale. Its ‘Instant Settlements’ feature allows businesses to bypass the standard settlement cycle and access funds on-demand, 24/7, including on bank holidays.
This is particularly valuable for businesses needing constant access to working capital to manage operations in real-time. Beyond just speed, Razorpay focuses on performance, with features like Turbo UPI designed to be 5x faster and boost payment success rates by up to 10%. By empowering millions of businesses, from startups to large enterprises, with these tools, Razorpay demonstrates how immediate access to funds directly translates into enhanced operational firepower and growth potential.
2) CCAvenue
As one of India’s pioneering payment gateways, CCAvenue has built a reputation for its reliability and comprehensive suite of features. It offers an extensive range of over 200 payment options, catering to a diverse customer base. While the standard settlement is T+2 days, CCAvenue provides an ‘Express Settlement’ service that enables merchants to receive funds on the same day in scheduled batches for an additional fee. This makes it a veteran player that has adapted to the market’s demand for faster liquidity, offering stability combined with flexible, faster access to funds for eligible businesses.
3) Billdesk
A titan in the Indian payments landscape, Billdesk has long been the backbone for bill payments, processing a significant share of the country's recurring payment transactions. Its primary strength lies in its deep integration with banks and a vast network of billers. While traditionally operating on standard settlement cycles (T+2/T+3), its established infrastructure ensures high reliability for large-volume transactions. For many enterprises and government bodies, Billdesk's value proposition is its robustness, security, and proven track record in managing systematic and scheduled payments rather than focusing on instantaneous, on-demand merchant settlements.
4) PayPal
For Indian businesses focused on the global market, PayPal remains an indispensable leader. It simplifies the complexity of cross-border transactions, allowing businesses to accept payments from over 200 countries in multiple currencies. While it doesn't offer instant domestic settlements like local gateways, it solves a critical need for exporters and freelancers. In compliance with Indian regulations, PayPal automatically transfers funds to the linked Indian bank account daily. Its globally recognized brand, strong buyer protection policies, and ease of use for international customers make it the default choice for businesses prioritizing global reach over domestic settlement speed.
Moneycontrol Journalists are not involved in creation of this article.
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