- 78% of Indian businesses would switch payment gateways for better AI features
- AI-driven fraud detection is the most sought capability among surveyed companies
- Payment failures and time-consuming reconciliation are major operational challenges
Artificial intelligence is emerging as a major factor in India's business payment decisions, with 78% of surveyed businesses saying they would switch their primary payment gateway for better AI capabilities, according to the Indian Merchant Payments Survey 2026 by Zoho Payments.
The survey covered more than 700 businesses across India and found that companies are looking beyond basic payment processing. AI driven fraud detection emerged as the most sought after capability, followed by automated reconciliation and smart payment routing.
The demand reflects some of the biggest operational challenges businesses face. Payment failures were identified as the biggest payment related challenge by 56% of respondents.
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Reconciliation also remains a major time consuming task. Around 61% of businesses spend one to three hours every day on reconciliation, while another 20% spend three to six hours. Only 14% complete the process in less than an hour.
Fraud is another growing concern. About 54% of surveyed businesses said they had experienced UPI social engineering fraud, making AI based fraud detection a key priority.
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Settlement And Integration Also Drive Choices
AI is not the only factor influencing payment gateway decisions. Same day settlement was cited by 62% of respondents as a reason that could make them switch providers. Lower fees or merchant discount rates followed at 56%, while 50% pointed to better reconciliation.
Integration is equally important for retaining businesses. Around 65% said pre built integrations with accounting, billing or ERP systems with native AI capabilities were the top reason to stay with their existing provider.
The survey indicates that payment providers are increasingly being judged on the wider financial workflow surrounding transactions.
Businesses want payments to succeed, funds to settle quickly and transactions to flow smoothly into accounting and billing systems. They also want less manual work and stronger protection against fraud.
The findings suggest that AI could increasingly become a deciding factor in the payment gateway market as businesses seek payment infrastructure that supports their operations beyond the transaction itself.
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