E-NACH has been one of the latest programs of the National Payment Corporation of India (NPCI) among its portfolio. Businesses today are expanding collateral to the introduction of new fine technologies. Technological advancements have always braced the developing nature of businesses vis-a-vis has acted as a tool in Modern-day needs. This need for executing all business transactions of financial nature in a way that would ensure security and authenticity to the customers has been turned out to be of equal importance. This has ensured not only the process of transacting but has celebrated the customer-seller relationship in terms of sharing information, forecasts of preferences, patterns of investments of the customer, etc.
Technology has always proved to be an aid in supplementing and maintaining the operational functions of any business setup. While concerning the payment functionalities of any transaction the aid has always been about taking care of the authenticity of the transaction and completion of the same in real-time. This has been a task in course of recurring transactions of similar nature.
NACH system is one of the latest programs of NPCI and is meant to focus on improved electronic payment systems in India. A mandate is to be carried out by instructing the Bank or other Institution to automatically consider the recurring collection requests at different intervals of time for a similar nature transaction. Such an automated process is completed by debiting the instructed amount from the Bank account of the applicant. Once a Bank is authorized by the customer the process of deduction will be automated completely for all further payments of similar nature. This payment procedure can be followed for numerous purposes such as rental payments, EMI, loans, lending, and other financial services in any business between customer and vendor. It can also be used for making bulk transactions towards distribution of subsidies, dividends interest, salary, pensions, etc. The present era of digitization has served successfully the purpose of this system.
E-NACH involves a process of workflow intercepting at various levels. Wherein the applicant when initiates the mandate for payment after authentication from the Corporate i.e the Bank for which the e-mandate is requested, it flows to the sponsor bank and then is moved to the destination bank. This lessens the burden of processing on the destination bank while automated submission from both the ends authenticates the mandate on the E-NACH system. This emandate further has the advantage over the paper and paperless banking in terms of security as it involves multiple levels of issuance and confirmations of the mandate through alternate channels. Auto acceptance of mandates leads to curb the timely scrutiny of the transactions too. It will no longer require the supervision of personnel to maintain the legitimacy of the transaction.
The program follows a procedure of application not different from the conventional e-banking procedures. No additional measures of identification are required every time at a new transaction. The customer has his benefits as aforementioned whereas, at the same time, it eases the procedure for vendors too. The collection of payment from the customer is simplified. It does not always require the intervention of both the parties after an initial request for the mandate as it tends to send a timely update to both the parties.
E-NACH has also simplified the automated cycle of payment more by reducing the levels involved in the whole procedure of online payments. It has turned out to be a shorter and simplified route by involving direct approval from the destination bank of the mandate. Such a response of approval (or rejection of mandate request if in case) is sent back to the sponsor bank through NPCI within 48 hours of the request. It sets out transparency between the customers and vendors regarding the transfer of funds as well as the legitimacy of the transaction.
The direct-debit or push payment has already made it simpler for the customers to use the services. Now with E-NACH, the requirement for second-factor authentication at every stage of payment has been relaxed. Here the customer has to authorize the mandate only at its initial stage to get the amount debited from his account. No future authorizations for related mandate will be required. This way the vendor will be at ease to keep a track of the customer and to take action if any discrepancies found.
Unlike other electronic payment methods currently used in India where the customer is mandatorily required to have debit cards or credit cards, in case of digital wallets, UPI, etc to carry out the payment transaction, E-NACH system, on the other hand, requires the customer to have a valid Bank account in any Nationalised Bank which is associated with NPCI throughout the country, which nearly everyone in India has. Here at first, each destination bank has to develop connectivity with NPCI to allow the customers to authorize the required e-mandate via Net- Banking login or debit card PIN methods. This will provide the customers with a hassle-free payment method that can be used at any time and be accessed from anywhere. E-NACH is emerging out to be a success on many platforms being the newly introduced program by NPCI. Today various Financial Institutions in India are developing themselves as a functionary that can provide the services of E-NACH in order to attract the growth and to attract more customers. This also helps the Economy to grow technologically concerning other economies.