E-mandate is a payment service actuated by the National Payments Corporation of India(NPCI) and Reserve Bank of India(RBI). With this, businesses in India have the underlying foundation to collect recurring payments. Through the e mandate, a person can permit a business to receive recurring payments from his bank accounts. A mandate is a customary directive provided to the issuing bank and other institutions. It allows them to debit the mentioned money from the customer’s bank account. Management of all recurring payments like SIPs, insurance premiums, loan installment collections becomes very easy through this. Thus, the fuss of reminders and penalties are avoided. Earlier, the customer had to fill a form and submit. This manual process was operationally expensive and time consuming. Thus, the NPCI introduced e-mandate about 5 years ago. Some advantages provided by e-mandate are reduced friction in payments process, higher customer retention, money savings with auto reconciliation.
E-mandate registration is the process followed by businesses to admit customers for a product or service. The customers have to pay fees periodically and timely.
9 Steps to register for e-mandate
Here’s how e-mandate registration works.
It is a complete digital process if you want to do SIP (Systematic Investment Planning) through e-mandate. The confirmation for the mandate comes within a couple of days.
The mandate registration details are as follows:
- Step 1: First log in to the website of the fund house and open the e-mandate form.
- Step 2: Fill in all the details of the form like account number, destination bank name, debit intervals etc.
- Step 3: Only five banks in the country are recognized by NPCI for e-mandate registration. Thus, your destination bank must be one the banks in the NPCI registered list. It is checked by the fund house. If so, then you can proceed ahead or else your application will be canceled.
- Step 4: If the condition meets, the fund house’s website redirects you to the official page of NPCI and to the authentication website of your chosen bank.
- Step 5: After this, for authentication of the bank, the customer has to use netbanking credentials.
- Step 6: Next, your account number and the net banking details filled by you are verified by the bank.
- Step 7: After verification, the mandate filled by the customer is displayed by the bank and two options are provided to him- he can either accept it or reject it.
- Step 8: If the customer accepts it, he is redirected to the NPCI’s website once and then again to the website of the fund house. The fund house’s website will show you the mandate approval.
- Step 9: The last step is the approval of the mandate! It generally happens by the end of the day.
Some RBI guidelines on e-mandates
- Irrespective of the amount processed, it requires a two-factor authentication process.
- If the transactions involve amounts more than Rs.5000, consent will be taken from the end-user before his card is charged.
- The customer will receive a notification 24 hours before the debit.
- AFA validation will be required in case of withdrawal of an e-mandate by the cardholder.
Thus, e-mandate registration doesn’t require any physical process.
For the second SIP in a certain fund house, you do not have to submit a fresh mandate. It is a onetime process. If the bank account of the customer falls short of funds, there will be no transaction. The regulatory concerns are low.
Some industries which have adopted e-mandate are Lending industry, wealth management platforms, life insurances and sponsorship.
E-mandate is a step towards a world of digital payments. Many business institutions have adopted this method and seen improvement in areas like cash flow management and customer retention.