eMandates –Transforming India's Recurring or Repeat Payments

Innovation in payment solutions has been the crux of India’s journey towards digitization. The sole objective of these innovations is to ensure that Indians can transact easily – a goal that has been achieved to a certain degree by the launch of UPI and Aadhaar-based payments. The next biggest innovation has come in the form of an eMandate. In one stroke, eMandate has changed the world of direct debits – one of the quickest and easiest modes of payment ­– pushing India one step closer to its goal of embracing the digital economy.
 

What is an eMandate?

A mandate is usually a standard instruction that you send to your bank or any other organization, for e.g. your mobile company can automatically deduct a certain amount from your bank account towards your mobile bill payment. For this to happen, the sponsor bank/ organization usually gets the customer’s consent on a signed document, then sends it to the National Payment Corporation of India (NPCI) which in turn creates a Unique Mandate Reference and sends the application to the customer’s bank. Once the customer’s bank agrees, the payment gets debited.

An eMandate cuts down this complex process cycle and makes it easy, helping in:

  1. Creation of an authenticated mandate by the customer himself through an electronic channel

  2. Shrinking the mandate acceptance cycle by taking the whole process online

Features & Benefits

  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.

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.