What Is An eMandate? How Does It Work?

In the recent past, we have seen a sharp inclination toward digital payments. From investing in securities to paying a monthly electricity bill, we have started paying everything online, including recurring payments. The introduction of eMandate has eased the online payment process for various types of recurring payments like SIP, OTT (over-the-top) platforms, insurance, and more.

Let’s explore eMandate, one of the most convenient ways of regular investing. But before that, learn what recurring payments are.

What are recurring payments?

A recurring payment is a series of ongoing transactions authorized by a customer, billed on a predetermined date. SIPs, telephone, electricity, and OTT media services bills are a few examples of recurring payments.

What is an eMandate?

A mandate is a standing order that a person gives to an issuing bank to permit them to automatically deduct a certain sum from his or her bank account.

“eMandate” refers to the electronic version of mandates businesses use to manage periodic payments easily. The eMandate approach avoids the inconveniences of reminding consumers and requesting penalty fees, ultimately proving beneficial to both parties.

The National Payments Corporation of India (NPCI) and RBI (Reserve Bank of India) introduced this digital payment service. They offer businesses in India the underlying IT infrastructure they need to accept recurring payments.

The two most widely used eMandate systems in India are Electronic Clearing System (ECS) and the National Automated Clearing House (NACH). Much paperwork is needed for the offline e-mandate process known as ECS, including filing and document verification. On the other hand, NACH is an entirely online procedure involving little paper effort. The ease of a hassle-free, paperless approach is increasing NACH acceptance.

Latest regulations related to eMandates

As per the RBI announcement on 08-Jun-22, the limit for card eMandates would increase to INR 15,000 from INR 5,000 per transaction. This indicates that for recurring payments up to INR 15,000, a customer will not be required to enter an OTP to authorize each transaction.

What are the advantages of eMandate?

• To collect recurring payments

eMandate functions as the fundamental framework for businesses in India to automatically collect recurring payments.

• Automatic deduction

It lets you give your bank ongoing instructions to automatically deduct a certain amount from your bank account against a particular purchase of products or services.

• All payments under one platform

Loan EMIs, credit card payments, subscription fees, insurance premiums, SIPs, and other payments can be made on time and without delays or defaults, thanks to eMandate. It also makes it easier and hassle-free for you to check on recurring payments.

• More transparency

All eMandate transactions occur online, enhancing transparency between companies and their clients. Furthermore, businesses are trusted more when no additional or hidden fees exist.

• More customer retention

The advantages of a one-time digital authentication are provided so clients can get on with their products or services without interruption. It improves client loyalty and retention while decreasing unpleasant interactions with collection agents. Furthermore, this helps your firm draw in more clients.

How to set up an eMandate at Angel One?

You can set up an eMandate at Angel One for SIPs to ensure timely payments. Follow the below steps to set up the same.

1. Click on ‘Set Up Autopay’ once you have created SIP or do it later in the SIP section of the app
2. Select ‘Net Banking’ as your autopay method
3. Choose either ‘Debit Card’ or ‘Net Banking’ as your authentication method
4. Add your debit card/net banking details, and you are done!

Conclusion

Introduced by RBI, eMandate is one of the most suitable emerging techniques for companies and customers to pay for goods or services that are billed on a recurring basis. The facility ensures that both customers and businesses may continue using their preferred goods and services without interruption.

Disclaimer

1. This blog is exclusively for educational purposes
2. Investments in the securities market are subject to market risks, read all the related documents carefully before investing