NACH e-Mandate: How It Work, Benefits & Full Form in Banking

NACH e-mandate: Everything you must know

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By Pine Labs | August 01, 2022

The recurring payment collection process was once known as a cumbersome, time-consuming and exhaustive process for banks, financial institutions and corporate houses. With the advent of e-NACH and e-mandate, the process has become effortless for organisations and businesses. Since the e-mandate does away with manual intervention, including physical forms and signatures, it has helped businesses to be more productive and facilitated core banking principles across the country eliminating the local barriers.

The National Payments Corporation of India introduced the National Automated Clearing House or NACH to relieve corporate houses of the burden of recurring payment collection. It has proved beneficial to businesses and India's financial sector. NACH has made it easy for businesses to smoothly conduct bulk transfers like salaries to employees, pensions, subsidies, and insurance premiums.

This blog post will explain NACH e-mandate, its benefits and how Pine Labs can help you address the specific payment needs that your business has

What is an e-mandate?

An e-mandate is a process whereby a customer has authorised a company to collect recurring payments from their bank.

How does NACH e-mandate work

As compared to ECS, NACH e-mandate is easier to use. For businesses, setting up an e-mandate is a smooth process and can be done from the company's website via net banking transaction. To enable the functioning of an e-mandate, the customer will need to initiate a one-time net banking transaction authorisation. Once this is done, the subsequent payments will be deducted automatically. No intervention will be required from the customer, making it an ideal feature for the customer and the business owner.

The difference between NACH and ECS

The amount of paperwork required is one of the most significant differences between these two platforms. ECS stands for Electronic Clearing System and is an offline process that requires an excessive amount of paperwork. The entire process is done manually, starting from filing the documents to verifying them.

NACH, which has largely replaced ECS, is an online process. Minimal paperwork is required in this system as everything is done digitally. Unlike ECS, which takes around 30 days to activate, e-mandate registration happens within a day. The minimal amount of paperwork and fast activation makes NACH a convenient and hassle-free method for businesses.

Here are a few benefits of NACH e-mandate.

Enables businesses to build a loyal customer base

In an e-mandate, the customer authorises the company to collect recurring payments from their bank. Since the account is automatically debited monthly, your customers can enjoy uninterrupted and smooth services. Besides providing the customers with a hassle-free service experience, e-mandate also ensures that you get a loyal customer base. Furthermore, since the payment approvals are quick, you will be able to build a better relationship with your customers.

Easy to activate

NACH e-mandate is one of the most user-friendly platforms. You do not need complex programs or highly experienced staff to activate the process. All you need is your customer's bank account details or debit/credit card information. With these details, you can easily on-board customers looking for seamless recurring payments.

Simplified payment process

NACH e-mandate has simplified the processes for businesses and banks because there is no need to clear cheques.

Besides the benefits mentioned above, NACH e-mandate lessens friction in the payment process, is cost-effective as you need not purchase costly tools, is compatible with banks, corporates and government establishments, and is user-friendly, among others.

Who is using e-mandates?

Given the numerous benefits of e-mandates, the system is being used by many companies in different segments. Some industries that have switched over to e-mandates include:

  • The system is widely being used by wealth management companies for investments that require recurring payments.
  • Non-Governmental Organisations (NGOs) have benefited from e-mandates as it enables them to receive donations and funds regularly.
  • Life insurance companies as it enables them to get premiums on time.
  • Lending industry
  • Financial institutions
  • Government bodies
  • Digital subscription platforms

Integrating your business with Pine Labs

If you plan to make your recurring payment mode easier, you can set up NACH payments with Pine Labs. The process of setting up a NACH physical mandate or a NACH e-mandate with Pine Labs is very convenient and user-friendly.

Conclusion

NACH mandate is safe, and easy to set up, and the charges are also very nominal. There is also no limit on the setting up of e-mandates. Set up your e-NACH or e-mandate with Pine Labs to automate recurring payments. This will simplify your payments and offer your complete peace of mind.