If you have bought an insurance policy for yourself or your family, you need to make periodic payments to your insurer of what is called ‘premium’. Same is the case if you buy any goods such as heavy electronics appliances on an EMI basis. It would be highly inconvenient to have to manually keep a track of such different payment responsibilities, isn’t it? E-mandates are something that were designed exactly to help you avoid predicaments such as this.
The terms e-Mandate and e-NACH (Electronic National Automated Clearing House) refer to payment systems initiated by the RBI and the National Payments Corporation of India for facilitating the collection of recurring payments in India. E-Mandates/e-NACH enable customers to seamlessly transact/trade on a real-time basis and also allow periodically recurring transactions between two parties without requiring user intervention at the time of transaction.
The following are the features of e-Mandates:
- Once a bank or merchant is authorized by a customer to collect payments on a recurring basis, the procedure of deducting the specified amount from the customer’s bank account and transferring the same to the other party happens in an automated manner.
- This eliminates the requirement for any further customer intervention for making the subsequent payments (unless the payments have to be paused/stopped).
- The identification of different persons and institutions that would be stakeholders in the e-Mandate transactions would happen on the basis of the already existing identification procedures. Thus, banks, merchants, and customers can seamlessly transition to using the e-Mandate systems.
- The e-mandate, once initiated by the authorization of customer, is routed by the destination bank or corporation to the sponsor bank along with the attributes of customer authentication depending on how the e-mandate was initiated and for what purpose. This facilitates a quick, easy, and highly secure channel for conducting recurring transactions.
Setting up of e-mandates could be done directly through net-banking from merchant websites. To do this, a customer would need to perform a single one-time authorization for periodic transactions at a pre-specified frequency in terms of number of days/months/dates. After this, all subsequent payments would happen without any customer intervention. While the concept is similar to ECS, the latter is an offline process in which physical documents need to be filed and verified manually as against e-mandates which are paperless online processes. E-mandates have thus reduced processing times from the previous 21 days to mere 2 working days for a majority of cases.
A key benefit of e-mandates is the fact that anyone with an Aadhar-linked back account is eligible to apply for and create e-mandates. More importantly, one can create as many e-mandates as is required to serve his or her requirements. The payments through the e-mandate route are reflected as NEFT bank transfers from customer account to merchant accounts.
By providing a host of benefits such as ease of use, automated transactions, real-time settlement of transactions, and by enabling users to manage such transaction from the convenience of smartphones, e-mandates are certainly transforming the digital payments system in India.
Evolvus Solutions has been a specialist in helping clients in setting up feature rich flux e-signed e-mandate verification services. Our e-mandate solutions are platform-agnostic and easily integrable with all payment mechanisms. Not only do they have a high level of security due to signature, certificate, and data integrity checks, they also enable high visibility with process queue mandate tracking and interactive dashboard views and detailed downloadable MIS reports. Also, 24×7 operations and auto-enabled SMS and email alerts allow for a high degree of customer-centricity.
Balaji is the co-founder and Chief Executive Officer of Evolvus Solutions Pvt Ltd. He plays a critical role in anchoring strategic priorities for the company to gain leadership position in the payments domain.