78% of Indian Businesses Would Switch to Payment Gateways With AI Capabilities: Zoho Survey

Chennai: Zoho, the global technology company headquartered in Chennai, today announced findings from its Indian Merchant Payment Survey 2026, revealing that 78% of Indian businesses would switch their primary payment gateway if another provider offered the AI capabilities they expect. 

Businesses are turning to AI to improve fraud detection, reconciliation and reduce payment failures. Since these challenges extend beyond payments into the broader finance workflow, businesses want their payment operations to be deeply integrated with their accounting and ERP systems. Based on responses from more than 700 businesses, ranging from MSMEs to large enterprises, the survey highlights their evolving expectations of payment infrastructure.

"Indian businesses have moved well past asking whether digital payments work, to whether their payment infrastructure is fast, reliable and intelligent," said Sivaramakrishnan Iswaran, CEO of Zoho Payment Technologies, and Global Head of Finance and Operations BU, Zoho. "Moreover, businesses expect their payment stack to be deeply connected with their financial and ERP systems. Zoho Payments is built exactly for this, natively woven into every accounts receivable and payable transaction workflow across Zoho's finance and operations suite, including Zoho ERP, Zoho Books, Zoho Billing, while also being connectable with any external system. With our capabilities like AI-driven fraud and anomaly detection, bank reconciliation, and revenue forecasting, we are focused on making payments more intelligent and not just seamless."

AI is Becoming a Factor in Payment-Provider Choice

Nearly 60% of businesses are using AI-capabilities in their payment operations, and another 20% are actively evaluating them, which shows that only 1 in 5 are unaware of such capabilities. 

Among the AI capabilities businesses expect from payment providers were fraud detection followed by smart payment routing, and automated reconciliation. Other AI-driven features that businesses expect include risk assessment, chargeback and dispute settlement, and customer insights. 

Integrations Remain Important to Businesses

65% of businesses cited pre-built integrations with accounting, billing or ERP systems with native AI capabilities as the main reason for staying with their current payment gateway. Integration was particularly important among medium enterprises with annual revenues between ₹10 crores and ₹50 crores and large enterprises with revenues above ₹250 crores, both of which identified it as the main reason to remain with their current provider. 

Contrastingly, businesses identified same-day settlement as one of the main reasons for switching, followed by lower fees and MDR, and better reconciliation with payment insights. This indicates that businesses look for a combination of ease of integration and reconciliation, settlement speed, and better visibility beyond just pricing.

83% of businesses say they would be willing to pay a fee for a guaranteed same-day settlement for faster, and more predictable access to their funds, among which majority of them were micro and growth-stage enterprises. 

Payment Failures & Reconciliation Are Major Challenges Faced

The top 3 challenges faced by businesses when it comes to their payment operations are refund delays, payment failures and slow settlement. 56% of businesses mentioned payment failures as one of the major challenges they face. This is typically seen during high-traffic periods, including evening checkout hours, sales events and billing-cycle end dates, when payment failures can create both customer service issues and additional reconciliation work.

46% of businesses cited reconciliation as another challenge faced. With 61% spending 1-3 hours every day on reconciliation, and nearly 20% spending 3-6 hours. While only 14% complete reconciliation in less than an hour. Businesses use a mix of financial systems, including accounting software (41.5%), billing software (27.2%), ERP systems (22.8%) and spreadsheets (8%) for reconciliation.

Fraud is Driving Demand for Stronger Payment Protection 

Among businesses that had experienced fraud, UPI social engineering scams were the most commonly reported form of fraud, affecting 58%, followed by false chargebacks at 37.7%, COD return fraud at 30%, and identity fraud during customer onboarding at 16.7%.

The fraud patterns differ by industry, with 43% of retail facing false chargebacks and 52% manufacturers citing COD return fraud which involves empty or damaged deliveries on online transactions.

 Zoho Payments - Connecting Payments, Business Systems & AI

The survey reinforces a clear direction in which the merchant payment landscape is moving: Indian businesses are looking for payment infrastructure that is faster, more intelligent and deeply integrated within their broader financial ecosystem.

Zoho Payments is built around this approach, and is natively embedded into Zoho's finance suite, including Zoho ERP, Zoho Books and Zoho Billing, allowing businesses to embed payments into their accounts receivable workflows easily. Businesses can also connect Zoho Payments with any of their financial and ERP applications for a smooth payment flow. 

On the AI front, Zoho Payments utilises AI-driven fraud detection and prevention, which protects businesses by identifying fraud patterns and flagging abnormal transaction activities. AI-driven bank reconciliation provides automated suggestions for key fields like income and expenses to help categorise transactions faster. 

AI-powered revenue forecasting predicts trends based on past data for better financial planning, while anomaly detection flags inconsistencies in real time so businesses can spot errors immediately. Additionally, the solution recently introduced AI agent capabilities through Zoho MCP (Model Context Protocol), using which businesses can handle payments, payouts and refunds, and extend payment workflows into AI-driven tasks.