eMandate: What is e-Mandate and Their Benefits?

India is at its peak growth potential this decade, and digital transformation supports this advancement from the core. To support

eMandate

India is at its peak growth potential this decade, and digital transformation supports this advancement from the core. To support this quest of advancing the country to the next stage, the government has focused on streamlining digital transactions between businesses, banks, and consumers.

Keeping that in mind, one of the newest inclusions to the concept is eNACH (Electronic National Automated Clearing House) and eMandate. They are methods of collecting recurring payments from a consumer’s bank account automatedly, without any manual interventions. They are ideal solutions for making SIP investments, loan interest payments, and insurance premium deposits easier.

The fact that people had to visit physical offices or financial institutions to make these payments will no longer be a hassle. The recurring payments are now made easier by these initiatives introduced by banks, NPCI and RBI.

The Need For eNACH and eMandate Services

Suppose you own a business that relies mostly on recurring payments, such as a subscription service. Before the introduction of eNACH or eMandate, your customers had to manually access your service portals to make the payment every month. Now, there are circumstances when consumers might forget the due date and miss out on a month’s subscription. Hence, even without being aware, their service experience with your business will be halted.

And that is something that will ruin your business process! But, with eNACH and eMandate, these recurring subscription payments can be automatically debited on due dates from the consumer’s bank account, with their consent. As a result, they will be able to use your service experience consistently. Similarly, loan EMIs, investment amounts, bill payments and other such expenses can also be automated through this process.

What’s the Difference Between eNACH and eMandate?

A lot of people and businesses who are keen on learning about or using these solutions often use eMandate and eNACH interchangeably. Even though the purpose of both systems allows the automation of payment collections, their origin and utilization aspects are different.

The eMandates are mostly offered by specific banks, whereas eNACH is solely governed by NPCI. Currently, eNACH mandate services can be availed from more than 40 banks across India, whereas eMandate is controlled & offered only by around 4 to 5 banks.

There is a very thin difference between these two systems, which is elaborated in the points below for your detailed understanding:

1. eNACH is more like a framework with an ECS (Electronic Clearing Services) network. The banks will be allowing the businesses to process the customer’s recurring payments easily.

2. The eMandate process demands the customers authorize the automatic debit of recurring payments for a merchant or business through a one-time transaction using net banking. Upon that, the businesses will get subsequent payments as per the due dates without the participation of customers.

Benefits For Businesses to Implement the eNACH and eMandate Services For Their Customers

These systems serve the same purpose, but the approach might differ slightly! In the end, they both contribute the same advantages for businesses, which includes:

1. Improved Customer Retention

As a business owner, it is right to expect that the customers are preoccupied with a lot in their life. And, there’s possibly some chance that they might be forgetting their recurring payments. Without these technologies, you send them constant reminders and calls, which might put them off. As a result, you might just be losing your customer.

Therefore, to ensure you get your payments on time and the customer experience doesn’t get hampered, you need to use eMandate or eNACH solution. Take the customers’ consent and set up these systems by integrating them with their bank accounts. This way, the customers won’t have to make those payments manually, and your customer experience will be on point for a better retention rate.

2. Provide a Better Payment Experience

Gone are the days when customers had to visit the bank or physical offices to fill out a form and pay their loan EMIs, electricity bills or insurance deposits. Online payments are now making it easy for them to process the amount through smartphones or laptops from the comfort of their home. It is definitely free from hassle but not a completely seamless approach.

It is because, with just the perk of making online payments for various aspects, a customer has to go through various touchpoints, such as:

1. Download the app or access the website
2. Enter credentials for logging in
3. Fill in the details of the receiver
4. Select the preferred payment method
5. Enter the associated details
6. Wait for OTP, and enter it
7. Process the payment

With constant digitalization at its peak, such payments can be made even more seamless. These steps can be eliminated, which is possible with eNACH and eMandate solutions. The customers’ consent and digital signature can be taken to make the automated payment system available. Thus, saving these efforts for customers will lead you to give them a great payment experience for your business.

3. Administrative Expenses Will Be Lowered

In a standard setup, the dedicated teams in a firm are instructed to send out frequent invoices or intimidations to customers to follow up on payments. Thus, it increases the overall operational effort, as businesses must hire people, train them and provide them with resources.

But, with eNACH or eMandate, such administrative costs will be eliminated for your business. The payments will be automatically debited from the customers’ accounts. Thus, the employees don’t have to send constant reminders before or after the due dates. With reduced operational efforts, administrative expenses will be lowered immensely.

Conclusion

These recurring payment collection systems are among the future technologies of the digital payments landscape in India. The entire process will be online and electronic, eradicating all barriers to manual processes. The businesses and the consumers will stay updated with every transaction made through an eNACH or eMandate contract. These systems are well-structured and are controlled properly to minimise disputes or settlement issues.

In case you want to learn more about eNACH or eMandate, and how it helps ease the recurring payment collection hassles for businesses, you can visit FidyPay, and get in touch with their team of consultants.

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