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Junior accountants book authorised or failed gateway payments as sales or cash, so revenue and bank balances drift from what is actually settled.
Only captured payments flow into settlement; authorised-only payments lapse or are released, failed payments never move money, and settled status marks money paid to the bank.
Export the gateway's payment list with the status column daily and filter to captured for sales and settled for cash.
Sales match captured payments, the gateway receivable equals captured but unsettled amounts, and bank receipts equal settled amounts.
Authorised means the customer’s bank has approved the payment and set the money aside. Captured means you (or the gateway on your behalf) have claimed that money. Settled means the gateway has paid it into your bank account. Only settled money is cash you can use, and only captured payments go into your next settlement.
What does each dashboard status mean?
| Status | Plain meaning | Counts as a sale? | In your bank yet? |
|---|---|---|---|
| Created | The customer opened checkout but has not paid | No | No |
| Authorised | The customer’s bank approved and blocked the amount | Not yet | No |
| Captured | You have claimed the amount; it will be settled | Yes, normally | No, it sits with the gateway |
| Failed | The bank declined or the payment timed out | No | No |
| Refunded | A captured payment was returned to the customer | Reversed | Deducted from a later settlement |
| Settled | Included in a settlement paid to your bank | Yes | Yes |
Status names vary a little between gateways, but the order is the same.
Why are authorise and capture two separate steps?
For cards, splitting them lets a business hold an amount before it is sure the order can be fulfilled. Hotels and cab services use this. They authorise at booking and capture the final amount later. Many online shops set the gateway to capture automatically, so both steps happen within seconds. UPI payments are usually captured automatically on success.
What happens to a payment that is authorised but never captured?
It lapses. After a window set by the gateway or the card network, the authorisation is released and the blocked money returns to the customer’s available balance. You never receive it. Meanwhile the customer may see the amount as “pending” on their card and think they have paid. That is a common source of “I paid, where is my order?” complaints.
If your gateway is set to manual capture, check daily for authorised payments that should be captured. Otherwise sales are lost quietly.
Worked example: three ₹5,000 orders in one day
On 10 October an electronics shop receives three ₹5,000 orders:
| Order | Status at end of day | Goes into the next settlement? |
|---|---|---|
| ORD-881 | Captured | Yes, ₹5,000 |
| ORD-882 | Authorised only (manual capture missed) | No |
| ORD-883 | Failed (card declined) | No |
Orders placed: 3 × ₹5,000 = ₹15,000. Captured: ₹5,000. Next day’s settlement is based on ₹5,000 gross. With an illustrative 2 percent fee (₹100) and 18 percent GST on it (₹18), the bank credit is ₹5,000 − ₹118 = ₹4,882.
If the accountant had booked ₹15,000 of sales from the order list, the books would be ₹10,000 ahead of reality. ORD-882 can still be saved by capturing it before the authorisation lapses. ORD-883 cannot. Twenty missed captures of ₹5,000 in a month would be ₹1,00,000 of sales that never reach the bank.
At which status should I record the sale and at which the cash?
Use two steps:
- On capture (and dispatch or service, for most businesses): Gateway receivable Dr ₹5,000; Sales Cr ₹5,000 (with GST on the sale split out as your rules require).
- On settlement: Bank Dr ₹4,882; Gateway fees Dr ₹100; GST input Dr ₹18; Gateway receivable Cr ₹5,000.
At any month-end, the gateway receivable balance should equal captured payments not yet settled. If it does not, something is missing or duplicated.
What to read next
- Next in this series: how to record a payment gateway settlement in your books
- How captured payments roll into settlement batches: what is payment gateway settlement?
- A gateway walkthrough: Razorpay settlement reconciliation
- When matching becomes daily work: payment gateway reconciliation
Payment-gateway settlement reconciliation is on the TransactIG roadmap.