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A mid-size D2C brand processing 3,000 Razorpay orders per month receives a single bank credit every 2 days. The settlement report lists 1,500 orders, MDR deductions, GST on MDR, and refund adjustments — all netted before the bank credit arrives. Razorpay settlement reconciliation starts with unpacking that net figure order by order, not matching it directly as a lump sum. This article is for finance teams responsible for closing payment gateway books accurately and on time.
What Razorpay Settlement Is
Razorpay is a payment aggregator regulated by the Reserve Bank of India. When a customer completes a payment on a merchant’s platform, Razorpay captures the transaction and records it in the merchant’s settlement ledger. At each settlement cycle, Razorpay batches all captured transactions from the prior period, deducts its charges, and initiates a single NEFT credit to the merchant’s bank account.
The net payout reflects three layers of deduction: MDR (typically 2% for standard card transactions, lower for UPI), GST on MDR at 18%, and any refunds or chargeback recoveries netted in the same batch. For a ₹10,000 transaction, the net settlement after standard MDR and GST is ₹9,764. Razorpay issues a GST-compliant tax invoice monthly for the MDR charged; this invoice is the basis for claiming ITC on the GST on MDR component.
How Razorpay Settlement Reconciliation Works
Step 1: Obtain the Settlement Report
The Razorpay Dashboard provides settlement reports in CSV and Excel format under the Settlements section. Each report is keyed by settlement_id — the batch identifier Razorpay assigns to each payout. The report lists individual transactions, gross amounts, MDR, GST on MDR, refund deductions, and the net per-transaction amount that contributes to the settlement total.
Step 2: Match the Settlement Batch to the Bank Credit
The bank statement shows an NEFT credit from Razorpay’s nodal account. The narration format is typically: NEFT CR: [bank name] [UTR] RAZORPAY SETTLEMENT. The UTR in the bank statement is issued by the correspondent bank, not by Razorpay. The correct match key is the settlement_id, not the UTR — the settlement_id in the Razorpay report corresponds to the bank credit’s settlement date and net amount.
Step 3: Match Transactions to Orders
Once the bank credit is confirmed against the settlement batch, each transaction row in the settlement report must be matched to the corresponding order in the order management system (OMS). The match key at this level is the Order ID or Razorpay Payment ID. Transactions that appear in the settlement report but not in the OMS — or OMS orders whose payment IDs are absent from the report — form the exception queue.
Settlement Component Breakdown
| Component | Description | Example (₹10,000 transaction) |
|---|---|---|
| Gross transaction amount | Customer payment captured | ₹10,000 |
| MDR (Merchant Discount Rate) | Processing fee — 2% standard card | ₹200 |
| GST on MDR | 18% GST applied to MDR | ₹36 |
| Refund deduction | Customer refunds netted in batch | ₹0 – ₹N |
| Net settlement amount | Amount credited to bank account | ₹9,764 |
Exception Types in Razorpay Reconciliation
| Exception Code | Cause | Resolution |
|---|---|---|
| FEE_DEDUCTION | MDR rate applied differs from contracted rate | Check Razorpay pricing plan and confirm rate per instrument |
| TAX_DEDUCTION | GST on MDR variance | Verify against Razorpay monthly tax invoice |
| ROUNDING | Sub-rupee rounding in fee calculation | Accept with tolerance policy or classify as ROUNDING |
| PARTIAL_PAYMENT | Refund reducing gross settlement | Match refund entry to original Order ID |
| UNEXPLAINED | Settlement reference absent from OMS | Investigate whether order was created outside main system |
India-Specific Compliance in Razorpay Reconciliation
Razorpay operates as a payment aggregator under RBI’s PA/PG guidelines. The GST treatment of MDR is a compliance requirement: GST at 18% is charged on MDR, and the invoice Razorpay provides must be reconciled against the deductions in the settlement report each month. A mismatch between the GST on MDR shown in the settlement file and the amount on Razorpay’s tax invoice is an exception that must be resolved before the ITC claim is filed.
For merchants using Razorpay on a marketplace or platform structure (where Razorpay is integrated into a larger operator’s stack), TCS deductions under Section 52 of the CGST Act may also appear — at 1% on the taxable value — if the operator qualifies as an e-commerce operator. Pure direct-to-consumer merchants using Razorpay as a payment gateway do not attract TCS on their Razorpay settlements.
Finance teams that have moved from spreadsheet-based matching to structured payment gateway reconciliation tooling consistently report match rate improvements from the 51% range (manual VLOOKUP) to 88% or above. End-to-end reconciliation software India handles Razorpay settlement file ingestion, order-level matching, exception classification, and audit trail generation without custom development.
The Reserve Bank of India regulates Razorpay’s settlement timelines and nodal account requirements, which set the operational boundaries that determine when credits appear in merchant bank accounts and how settlement disputes are escalated.
Frequently asked questions about Razorpay settlement reconciliation are answered below.