After UPI and Aadhar based payments, the next solution that can create a massive impact on fintech industry is e-Mandate. It is the next level of National Automated Clearing House (NACH) aiming to create better ecosystem for facilitating clearing services.
e-Mandate is a digital payment tool that fast tracks recurring payments by replacing physical mandates. e-Mandate once registered takes away the hassle of premium paying responsibility from the individual customer and puts the responsibility on the corporate to collect premium on the due date. Compared to other modes it is cost effective. It is secure and ensures the money is remitted only to the concerned corporate, which is a challenge in case of RTGS/NEFT/IMPS/UPI payments, as these are prone to typing errors while making the transactions.
e-Mandate will manage fast, convenient and digital payments by reducing processing time by 80%. It authorises banks, other financial institutions, utility companies, etc, to debit the required amount from your bank account automatically, which makes it hassle free for customers. It works well in case of Equated Monthly Installments for loans, rental payments, utility bill payments and other financial services.
Earlier, the mandates were filled and shared with banks manually under NACH and erstwhile ECS (Electronic Clearance Service) modes. Due to the manual intervention and physical movement of forms, the turnaround time was higher and usually resulted in mandate rejection due lack of data and bank account validation.
Compared to the manual mandate registrations, e-mandate not only reduces the turnaround time, but also lowers the operational risk arising because of manual validation and physical movement of forms.
The writer is founder, zipNACH