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Gateway settlements deduct fees that are rarely checked against the contracted rate, so small excess charges go unnoticed for months.
For each settlement, recompute fee as sales by payment method times the agreed rate, add 18 percent GST on the fee, and compare with the actual deduction.
The merchant agreement rate card, the gateway settlement report with payment method per transaction, and the bank credit for the settlement.
A per-settlement variance between expected and actual deductions, with any excess raised with the gateway.
Recalculate one settlement from your contract. Multiply the sales in the settlement by the agreed rate to get the fee, add GST at 18 percent on that fee, and compare the total with what the gateway actually deducted. Anything more, after refunds and chargebacks are taken out, is a difference to raise with the gateway.
On the Seven Classes of Reconciliation Leakage, this is Fee & commission leakage: the most common class, and the easiest to check yourself.
Which lines can legitimately appear on a settlement?
| Line | What it is | Check against the contract |
|---|---|---|
| Fee (MDR) | Percentage of each transaction | Rate for each payment method: domestic card, international card, net banking, wallet |
| GST on fee | 18 percent of the fee | Should be exactly 18 percent of the fee line, not of sales |
| Refund adjustment | Money returned to a customer, netted from the batch | Matches refunds you approved |
| Chargeback | Disputed payment held back, plus any chargeback fee | Dispute reference and fee as per contract |
| Rolling hold or reserve | Percentage held for a period, if your contract has one | Rate and release date as agreed |
Anything that is not one of these, or a fee rate higher than the rate card, needs a question.
Worked example: ₹630 too much on one settlement
Kavya Crafts sells online and has an agreed fee of 2 percent on domestic cards. One settlement covers ₹4,50,000 of card sales, with no refunds or chargebacks.
| Step | Calculation | Amount |
|---|---|---|
| Fee at 2 percent | ₹4,50,000 × 2 percent | ₹9,000 |
| GST at 18 percent on fee | ₹9,000 × 18 percent | ₹1,620 |
| Expected deduction | ₹9,000 + ₹1,620 | ₹10,620 |
| Actual deduction in settlement report | ₹11,250 | |
| Difference to query | ₹11,250 − ₹10,620 | ₹630 |
Expected bank credit: ₹4,50,000 − ₹10,620 = ₹4,39,380. Actual: ₹4,50,000 − ₹11,250 = ₹4,38,750.
Working back, ₹11,250 is 2.5 percent of sales including GST, which suggests a fee of about 2.12 percent was applied. The likely cause is that some transactions were tagged as a higher-rate method, or a rate change was applied that was never agreed. Ask the gateway which.
Why do small differences go unnoticed, and what do they cost?
Because every settlement is net. The bank credit arrives, it is close to what you expected, and nobody recomputes. But small rate differences add up. An extra 0.1 percent on ₹5 crore of card sales a month is ₹50,000 a month, or ₹6,00,000 a year.
How do you check it every month?
- Keep your signed rate card where the accountant can find it.
- Download the settlement report with the payment method for each transaction.
- Group sales by payment method and apply each agreed rate.
- Add 18 percent GST on the fee, and allow for refunds, chargebacks and holds.
- Compare with the actual deduction and the bank credit.
- Raise any difference with merchant support, quoting the settlement ID.
- Check that the gateway’s monthly GST invoice matches the GST deducted, so you can claim the input tax credit.
UPI charges are a separate topic: NPCI has postponed the start of the new UPI merchant charges to after Diwali 2026, so recheck your UPI lines once the new charges start.
Payment gateway settlement reconciliation is on the TransactIG roadmap; see payment gateway reconciliation.
What to read next
- Platform fee leakage on Razorpay and PayU
- MDR fee reconciliation
- Why is my Razorpay payout less than my sale total?
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →