eNACH The Future of Digital Payemnts Explained

Worldline Editorial Team

As India continues to transform digitally, the government introduced several digital services and one such service is the National Automated Clearing House or eNACH. eNACH is a method of electronically collecting payments from a customer's bank account using the National Automated Clearing House (NACH) system.

Several investments such as SIP, loan interest, and insurance premiums require periodic payments. Earlier, people used to stand in long queues to submit forms for these recurring payments to follow the bank's process. It was a tedious process and also very time-consuming. To overcome this issue, the RBI and NPCI decided to digitalize the paper NACH process called e-NACH.

e-NACH is used by businesses and service providers to collect recurring payments from their customers, such as utility bills, loan EMIs, insurance premiums, and subscription fees. It is a convenient and efficient way to automate payment collections, reduce transaction costs, and minimize the risk of a payment default.

NPCI covers 40+ banks for e-NACH registration. When registering for e-NACH, users need to have a savings account through which payment can be debited periodically. eMandates are instructions provided by customers to auto-debit money from their accounts for several purposes including subscriptions, loans, EMIs etc.

Benefits of eNACH to businesses:

There are several benefits associated with eNACH for both merchants and customers. For customers, the benefits of eNACH include:

Customer retention: With just one-time registration for e-NACH, it allows merchants to auto-debit from a customer's account at the start of every billing cycle. This helps reduce the burden of the customer to authorize recurring payments at regular intervals. Customers can continue to enjoy products and services smoothly.

Reduction in administrative costs: With this facility, the cost of administrative work has been drastically reduced. Now, there is no need for invoicing and chasing late payments from customers. Accounting work has become effortless as everything has become digitalized.

Data security: Your customer's data will remain safe as your payment solutions provider has to comply with PCI norms. Data is end-to-end encrypted too.

Benefits of eNach to customers:

Seamless payments: Upon registration of eNACH, payments are automatically done at particular intervals. This has saved a lot of time and effort which was otherwise cumbersome during paper NACH. eNACH has a low failure rate too.

Authentication is simple: The authentication process for eNACH by the customer is very simple. It only requires net banking credentials.

Activation is faster: eNACH activates in just one day, unlike the older method of Electronic Clearing Service (ECS) which used to take 25-30 days for activation.

Multiple subscription options available: There are several subscription options available for a customer to choose from on how they want to make the payments. For example, a customer can pay a pre-decided fee for subscription service after a specified period. A customer can also pay based on the consumption of goods or services or can choose both of these options too.

eNACH is the future

Recurring payments through eNACH are going to be the way ahead for several industries owing to its ease of use. It has already started being used in various business models. This includes OTT media services. Companies like Amazon Prime, Netflix, and Spotify are dependent on subscriptions that need to be renewed each month. SaaS companies are largely dependent on regular fee payments every month which can help their business grow. Utility bills like electricity, water, telephone, gym subscriptions, gas etc also depend on these services. Delivery of groceries relies on recurring payments too.

The main objective of e-NACH is to minimize the burden of processing on the destination bank, shorter mandate acceptance cycles, secure mandate acceptance etc. e-NACH is the future of recurring payments because it is a standard procedure and will consolidate all Electronic Clearing Systems. The entire process is electronic and online. It removes barriers to the manual payment process that took 3-4 days for payments to get settled. However, through e-NACH, payments get settled in a few hours. NACH mandate provides a unique reference number that can be used in the future. It has a structured controlled system that helps in resolving disputes, settlement issues, etc.

For more information on eNACH and recurring payments, visit Worldline’s solution>