E-NACH and E-Mandate

Have you been typing ‘what is enach’ or ‘what is emandate’ but not sure what they are? Then this article is for you.

Essentially, E-NACH and E-Mandate are payment services that allow those with bank accounts to automate their recurring payments easily. These services allow merchants and customers to manage bills and payments such as insurance, SIP, utility bills that are recurring without having to manually initiate or process payment. This eliminates the need for manual payments, verification, multiple reminders or even late fees.

A Brief History About E-NACH & E-Mandate

The importance of E-NACH and E-Mandate can be understood when we take a look at the circumstances that led to its introduction.

Imagine owning an online business (B2B or Saas) that relies on recurring payments such as for a subscription service. Before E-NACH or E-Mandate, these payments were collected manually generally through ECS mandates.

What is the ECS Mandate Process

Prior to E-NACH and E-Mandate, ECS or Electronic Clearing Services were used for payments. This is where a mandate is submitted to the respective bank or company through a physical form. The steps were cumbersome and time-consuming. For example, if you wish to invest in an SIP the steps involved were -

• The SIP instructions and mandate form would have to be filled manually and submitted to the fund house which would then be sent to the respective bank
• The bank would verify the applicant’s signature and register ECS debit instructions

However, for the next SIP, this step would have to be done all over again. These steps would also have to be repeated if the bank rejected the application for whatever reason.

All of this changed with the coming in of the National Payments Corporation of India or NPCI which brought in multiple technological innovations in retail payment systems for better efficiency and reach. One of the services/systems offered is the National Automated Clearing House or NACH which is an offline system for bulk transactions. All electronic mandates are registered on this platform thereby enabling the process of online payments. You can read more about this here.

Electronic payment services such as E-NACH and E-Mandate are a boon to a number of companies dependent on recurring payments as well as to customers who can enjoy seamless payment options. Not only is the process hassle-free and simple, a number of broader services can also be offered due to the benefits provided by these two payment options. The digital payment space in India is changing at a rapid pace and technological advancements are necessary to ensure this.