An E-Mandate (electronic mandate) allows individuals or organisations to authorise recurring payments to be carried out electronically. This does not involve the need for physical paperwork or signatures.
In simple terms, e-mandates have become a crucial component as it helps streamline the process of setting and managing recurring payments, reducing administrative overhead, enhancing security, among other things.
What is E-Mandate?
E-mandate or digital mandate is a digital payment service that was introduced by RBI (Reserve Bank of India) and National Payments Corporation of India in 2018.
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The sole purpose of this digital authorization system is to simplify the banking process between the customer and the service provider. Also taking loans from Digital Lending Platforms is a bit easier now days.
For instance, the focus on collecting recurring payments like insurance premiums seamlessly without any human intervention makes the entire process convenient and easy.
How Does E-mandate Work?
An e-mandate process revolutionizes the traditional way of making payments. Instead of following the process manually, digital technology is employed to automatically take care of recurring transactions. Here’s how the complete e-mandate registration process looks like:
1) Initiation
The customer starts the process by picking a service such as loan repayment or insurance premium, to name a few. These are the services which they want to set up recurring payments. They then fill an e-mandate form on the app, website or merchant store.
2) Authentication Process
After selecting the service, the customer authenticates the mandate. This is commonly done using multi factor authentication methods like OTPs being sent to registered email addresses or mobile numbers. After successful authentication, the mandate is considered verified.
3) Agreement
Once verified, the customer agrees to the terms and conditions which includes the amount, frequency and the duration for recurring payments.
4) Approval
The bank then reviews the mandate to check whether it meets all the said criteria for approval.
5) Activation
Upon approval, the mandate becomes active and the specified amounts are debited automatically from the customers’ account at regular intervals.
6) Notification
Customers receive notification before and after each transaction. This is an important process as it helps keep customers informed.
7) Modification and Cancellation of Mandate
Customers have the flexibility to modify or even cancel the mandate at any given time. However, certain conditions may apply for the same.
What Are The Various Benefits of E-mandate?
Some of the key benefits of using e-mandate online services are:
| 1) Ease of use: The first and foremost benefit of e-mandate is its ease of use. This results in a timely transaction as well as saves from the hassle of logging in to the business website and paying the due amount. |
| 2) Timely Payments: E-mandate contributes to timely payment, particularly by reducing manual interventions. |
| 3) Cost savings: Administration cost is lowered as compared to paper based mandates, thus making e-mandate a cost saving method. |
| 4) Security: E-mandate offers enhanced protection with security features like digital signatures. This helps against fraud and unauthorized access. |
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Places Where You Can Activate/Use E-mandate
E-mandate is used wherever recurring payments are involved. Here are some common places where you can use the same:
- Insurance Premiums
- Subscription Services
- Loan Repayments
- Utility Bills
- Rent Payments
- Education Fees
To conclude, e-mandates have made a positive reform for businesses and individuals looking for efficient and secure digital payment solutions. In the past years, numerous businesses have adopted the e-mandate and witness advantages including cost savings, better security, timely payments, to name a few.
FAQs
What is the maximum limit for e-mandate through one account?
While there is no limit on the number of e-mandates set up via one account, it is recommended to check with the concerned provider and review the related terms and conditions.
Are there any charges for e-mandates?
The charges associated with e-mandate vary based on the service provider, the types of transactions etc. For instance, Zerodha doesn’t charge for E-mandate registrations at the moment.
How much time does it take to process e-mandate approval?
Generally, the turnaround time for e-mandate approval process is 5 to 7 days.