E Mandate and E NACH || Digital Payment Setup

Summary

This video from fintech logics explores digital payment setups, focusing on e-mandates and e-NACH for smooth recurring payments. It discusses setup issues and how they're resolved by these frameworks in India. E-mandates, created by individual banks, cover over 30 banks, while e-NACH, by NPCI, integrates with more than 50. Both offer real-time registration, with e-mandates allowing higher limits. They're secure, efficient, reduce costs, and errors, and are mostly free. The video also mentions NPCI's UPI auto pay system in development.

Takeaways

• 💡 Digital payments are revolutionizing the financial sector by making transactions smoother and more efficient.
• 🔗 The presenter encourages viewers to watch earlier videos for more detailed discussions on digital payments in lending.
• 🏦 Two major frameworks for digital payments in India are e-mandates and e-NACH, both facilitating easier and more secure transactions.
• 🏢 E-mandates are infrastructure created by individual banks, while e-NACH is set up by NPCI, a key player in the Indian payment ecosystem.
• 📈 E-mandates cover over 30 banks, whereas e-NACH has integrated with more than 50 banks, offering broader coverage.
• 🔑 The registration process for both systems is straightforward, with e-mandates requiring a direct connection to the bank's APIs and e-NACH needing a connection to NPCI.
• 🔒 Authentication for e-mandates is typically done through net banking and debit cards, while e-NACH uses Aadhar-based e-signatures.
• ⏱️ Both e-mandates and e-NACH offer real-time registration, significantly reducing the time required for setting up payments.
• 💼 The limit for e-mandates can be higher, starting from 5000 and going up to one crore, while e-NACH is capped at one lakh per day for payments.
• 🛑 Both systems allow for cancellation of payments at any time with the authorization of the lender and the customer.
• 🆓 E-mandates services are generally free, while e-NACH is intentionally kept free to promote financial inclusion.
• 🌐 The advantages of these systems include seamless registration, increased efficiency, reduced costs, minimized errors, and improved turnaround time.

Q & A

What is the main topic discussed in the video?

The main topic discussed in the video is the setup of digital payment systems, specifically focusing on how digital payments are making financial transactions smoother and the role of e-mandates and NACH in facilitating these processes.

What is the purpose of digital payments in lending?

Digital payments in lending are used to replace cumbersome offline mandates and ECS systems, facilitating smoother and more efficient recurring payments for loan repayments.

What are the two major frameworks discussed for digital payments in India?

The two major frameworks discussed for digital payments in India are e-mandates and NACH (National Automated Clearing House).

Who creates the e-mandate infrastructure?

The e-mandate infrastructure is created by individual banks.

What is the role of NPCI in the digital payment system?

NPCI (National Payments Corporation of India) is responsible for creating the NACH setup, which is integrated with a large number of banks to facilitate digital payments.

How does the coverage of e-mandates compare to NACH?

E-mandates have coverage with over 30 banks, while NACH, due to NPCI's integration, covers over 50 banks and is utilized by even more.

What is the difference between the registration process of e-mandates and NACH?

For e-mandates, merchants need to build a direct connection with the bank's APIs, whereas for NACH, merchants build a relationship with NPCI, which handles connections with various banks.

How is authentication done for e-mandates and NACH?

Authentication for e-mandates is done through net banking and debit cards, while for NACH, it is typically done through Aadhar-based e-signing.

What are the typical limits for e-mandates and NACH transactions?

E-mandates can have limits starting from 5000 and going up to one crore, while NACH is normally limited to one lakh per day for payments.

How easy is it to cancel e-mandates and NACH?

Both e-mandates and NACH can be canceled at any point of time with the authorization of the lender and the customer, without significant issues.

What are the advantages of using e-mandates and NACH for recurring payments?

The advantages include a seamless registration process, increased efficiency, reduced costs due to automation, decreased errors due to no manual entry, improved turnaround time, and reduced effort for merchants and lenders due to centralized integration.

What is NPCI's role in enhancing the digital payment experience?

NPCI is working on setting up an UPI Auto Pay system to make the registration and collection process even smoother and more efficient.