Convenience is the key in today’s world. People look for ways to simplify their lives and use technology to make it happen. e-Mandate is one example that has revolutionised how you make recurring payments in India. For instance, services like loans, insurance plans, SIPs, etc., need you to make payments regularly. Rather than remembering the due dates and making the payments manually, you can activate the e-Mandate to get the amount transferred from your account to the service provider automatically on the due date. Besides saving time and effort, automatic payments ensure you never miss a payment due to negligence.
In this article, we will discuss what e-Mandate is, how it works, and how you can benefit by activating it.
What is e-Mandate?
Electronic mandate (e-Mandate) is a secure and convenient way of making recurring payments to your service providers requiring fixed payments at regular intervals. While it allows you to make periodic payments on time and eliminates the hassle of manual processing, it also saves you from remembering the due dates, avoiding missed payments and related penalties. Simply put, it is an electronic version of a bank mandate, a standing instruction you can give to your bank to transfer a fixed amount from your account to the service providers on a particular date.
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) initiated this service to reduce payment processing times and make them more efficient and streamlined. Therefore, with an e-Mandate, you can easily authorise automatic payments at regular intervals by using your debit card or net banking credentials.
How Does e-Mandate Work?
You can activate the e-Mandate if you avail of a service that requires fixed payments at regular intervals, such as investing in SIP, purchasing an insurance policy, or repaying a loan. When you avail of such a service, fill out an online form to provide your bank name, account number, and payment details. The service provider checks your bank’s NPCI registration and asks for your net banking credentials.
After verifying your bank account, the destination bank will confirm the mandate and retrieve the due amount from your account at specific intervals. Although e-Mandate simplifies the recurring payment method and saves you from paying manually at regular intervals, you must maintain a sufficient balance in your account to avoid rejection.
What are the Features >What are the Features & Benefits of E-Mandate?amp; Benefits of E-Mandate?
1. Perhaps the most appealing feature of an eMandate is the fact that it puts power in your hands. Customers are responsible for initiating the process of eMandate online through whatever channel they are comfortable with. It gives you the power to authorize your identity and kick-start the eMandate process.
2. Contrary to popular belief, an eMandate is very safe; in fact, it is safer than a physical mandate. Your data travels through a secured line and remains only between you, the corporate, and your bank. No unwanted party can intercept that information.
3. In case of physical mandates, there is always the chance that the destination bank (where you hold your account) might reject the application and thus refuse to issue a mandate. However, eMandate is always assured once the necessary authorization is complete.
4. The eMandate process begins as soon as the transaction takes place and generally completes within 48 hours, as opposed to the normal 7-8 days in case of physical mandate.
5. The entire process of getting an eMandate is simple and hassle-free. Maximum convenience is provided to the customer, making it much more efficient vs. a physical mandate.
Eligibility Criteria for the e-Mandate
Now that you understand what is e mandate, you must fulfil the following eligibility conditions to initiate the activation process:
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You must have a bank account with a financial institution that offers the e mandate facility.
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You must have a valid Aadhaar card.
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Your Aadhaar card must be linked with your mobile number and bank account.
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Your bank must be registered for offering NACH services.
If you are eligible, you must provide the following documents to activate the e mandate:
To avoid rejection, ensure that the bank is registered to provide NACH services. Before submitting the activation form, confirm all the details you provide are correct, including the linked information and folio number. Double-checking these details before initiating the e mandate activation process will avoid rejection and help your transactions complete without delays or troubles.
Types of E Mandate
Understanding the e mandate meaning is not enough. You must also know the types of e mandate before opting for one. Depending on the transaction type, it can be of two types:
1. Debit E Mandate: When you activate a debit mandate, you allow the bank or merchant to deduct a specific amount from your account each month before a due date. These could be loan EMIs, SIPs, insurance premiums, etc. A debit e mandate can be of two types: fixed and variable. In a fixed mandate, the monthly deduction amount is fixed with a pre-determined due date. In a variable mandate, the due amount changes each. Activating a debit mandate ensures timely payment while preventing late charges and penalties.
2. Credit E Mandate: Credit mandate auto-credits a fixed amount into your account regularly. For instance, if you receive a fixed payment from a business partner each month, the credit mandate will auto-debit it from their account and credit it to your account at specified intervals. You may also activate this mandate to receive insurance claims, loan amount, FD monthly interest, etc., into your account.
Authentication Channels
Due to the nature of bank transactions, a certain level of authentication is required before the mandate process is approved. The three most popular authentication channels for eMandates are:
1. Internet based: Perhaps the simplest authentication channel, the process involves the corporate website requesting the mandate online, which the bank later approves.
2. Mobile based (via UPI): Fast gaining popularity, this mode requires user authentication by via UPI (generally requiring an OTP on the customer’s registered mobile number). The authentication is treated valid by the bank and the mandate is issued.
3. Aadhaar based: Using Aadhaar data for mandates is a recent trend, but getting popularity due to higher security. The Aadhaar number and fingerprints are required to initiate the process, and the authentication is done by the bank.
eMandate Process
The process for getting an eMandate is easy and straightforward, with three simple steps:
1. Identification: The pre-process step to identify the corporate that will be deducting the amount on a monthly basis, along with the amount to be deducted and the purpose. Then the process of eMandate issuance is started.
2. Authentication: Through any channel mentioned above, details are sent by the user are used to authenticate the user’s identity. Post which, the data is sent to the destination bank or corporate.
3. Authorization: The corporate or destination bank (the bank that you hold your account in) then sends the eMandate to the sponsor bank. A sponsor bank is appointed by the NPCI and is responsible for carrying out the eMandate process. Once the sponsor bank authorizes the mandate, it is then finally sent to the destination bank. The entire process takes less than 2 days, and it is completely online.
As we move into an ever more digitized world, it is only natural for the physical mandate process to get replaced by a digital one. Fortunately, it benefits both the customer and the corporates/ organizations which need to process your payments. Imagine the convenience of being able to automate all your payments, such as insurance premiums, credit card/ mobile bills, school fees, utility payments and more. Life would become so much simpler, an eMandate brings with it – convenience, flexibility, and ease, which will help radically change the automated payments system.
List of Industries that Have Adopted e-Mandate
Several industries have adopted the e-Mandate facility to receive customer payments. These include the following:
Lending Industry: With the introduction of e-Mandate in the lending industry, paying monthly EMIs on time has become much easier than ever. For example - If you have borrowed a Personal Loan from Hero FinCorp, you must pay a fixed amount of EMI each month to repay the loan during the loan tenure. Since you may find it challenging to remember the due date each month, especially for long-term loans like Loan Against Property (LAP), the auto-debit feature supports timely EMI repayment without the need to remember manual payments each month.
Insurance Industry: If you buy insurance, you must pay recurring insurance premiums for several years ranging from 15 to 20 years. While most insurance plans need premium payments once a year, sometimes, you may opt to pay the premiums monthly, quarterly, or half-yearly. Whichever payment plan you choose, you can easily track your premiums by paying them on time automatically through e-Mandate. It reduces your chances of getting a claim rejected when the need arises.
Wealth Management Industry: Investing a certain percentage of your income towards a monthly investment plan is crucial to achieving your financial goals. For instance, if you invest in mutual funds through SIPs, you must invest a fixed monthly amount to purchase the units. Activate e-Mandate to invest at regular intervals to ensure your plan remains active.
Conclusion
e-Mandate is a convenient way to pay for services that need recurring payments at fixed intervals. The facility gives you uninterrupted access to the desired service without the hassle of remembering due dates and making manual payments. So, activate it now and enjoy the benefits without stressing about payments. At Hero FinCorp, activating e-Mandate will ensure your loan payments go on time, so you avoid any late payment fees. What’s more, timely payments will help you build your credit score.
Frequently Asked Questions
1. What is the use of e-mandate?
e-Mandate is used to pay recurring payments directly from your bank account to the recipient’s, saving you from the hassle of paying manually each time.
2. How do I stop an e-mandate payment?
Log in to your net banking account, select the e-Mandate you want to stop and choose the option to stop recurring payments from your bank account.
3. Is mandate registration safe?
Yes, mandate registration is completely safe with advanced security measures like two-factor authentication, encryption, etc.
4. Can the mandate be cancelled?
Yes, you can easily cancel your mandate by heading to your Payments Dashboard. You can also edit, downgrade, or upgrade the plan according to your requirement and capacity. When you edit or cancel a mandate, the service provider gets a real-time notification about the change.
