There are 850 million millennials and Gen Z-ers enjoying the age of smartphone and internet. The young customers demand digitization of their everyday living whether related to home or work. With substantial increase in internet penetration, customers expect their financial services also to be managed straight from their digitized channels with paperless and cash less means.
Today, fintech industry is working rapidly to solve the complexities of financial management system in the country. It is presenting the industry with innovative business models and technologies to ensure efficiency with fewer regulations in every process it undertakes. It is adopting the newly innovative mandate process which is digital to ensure convenience in recurring payments.
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 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. Validated through Internet banking id and Password, through Debit card and Pin or even through UPI handle.
The impact of e-Mandate is going to be huge in terms of efficiency that it will manage fast, convenient and digital payments by reducing processing time by 80%. This automated process serves as a time efficient payment service between the banks and financial institutions. Several financial institutions are also eagerly waiting for e-mandate for standardizing their operations and reducing error possibilities.
It authorizes the banks, other financial institutions, utility companies etc. to debit the required amount from your bank account automatically that makes life of the customer hassle free. It works well in case of loans, EMI, rental payments, Utility bill payments and other financial services.
Earlier, the mandates were filled and shared with banks manually under NACH & Erstwhile ECS modes. However, 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. Automating the time consuming mandate process is proving to be one of the most efficient and easy alternatives.
e-Mandate is expected works efficiently for corporate houses and other businesses. They can schedule their recurring payments like utility bills, SIPs, credit card bills and others with automated mandate that opens up immense scaling possibilities and opportunities for them.
By Varun Burman, Founder, zipNACH....