As the digital transformation in India has been consistent for a while, the government has introduced a lot of digital services to accommodate the demand. One among those services is eNACH. It is a process where the payments are to be collected electronically from the customer’s bank account. It makes use of the NACH (National Automated Clearing House) system.
There are several instruments, such as insurance premiums, loan interest, SIP and others, that demand consumers to make periodic payments. In the past, people used to stand in queues to process these recurring payments, which was a tedious approach. But, with the collective collaboration of NPCI and RBI, the paper NACH process was upgraded to eNACH.
Let’s find out how eNACH is potentially the future of digital payments.
Who Makes Use of eNACH Solution?
It is used by service providers and businesses for collecting recurring payments from consumers, such as loan EMIs, utility bills, subscription fees and insurance premiums. Automating the payment collections is a convenient approach, which will reduce the overall transaction fees and will minimise the payment default rate.
NPCI has a list of more than 40+ banks that support eNACH Registration. When you are registering from the eNACH, the users will have to integrate their savings account with a periodic debit facility. The eMandates will be integrated, where the customers will give their consent for automating the money debits from their account for several purposes.
The Benefits of Integrating eNACH for Businesses!
There are a lot of benefits associated with that eNACH for both customers as well as merchants. So, let’s get an insight into them all for a better understanding of eNACH’s capabilities:
For Merchants:
1. Increased Customer Retention
As eNACH enables the customers to implement just a one-time registration, the merchants can easily auto-debit from their savings accounts. Thus, it will reduce the overall burden of the consumer for manually processing recurring payments every month. The customers will get to use the services or products without a hassle.
2. Administrative Costs are Reduced
The cost of the administrative work will reduce, and there is no need to chase delayed payments or frequent invoicing. Accounting will become easier as all the processes are digitalised.
For Customers:
1. Payment Becomes Seamless
Once the eNACH registration is done, payments will be automatically set at particular intervals. It will save you a lot of effort and time.
2. Simple Authentication
It is quite easy for the customers to authenticate themselves for eNACH. All they will need is their banking credentials.
3. Faster Activation
The eNACH facility gets activated within one day, making it a better alternative than the ECS, which takes around 30 days to activate.
Conclusion
Thus, eNACH is considered the future because a lot of industries are adopting the ease of its use. A lot of business models have already integrated it, which includes OTT media service providers, SaaS companies, utility billers and others. The end purpose of eNACH is to suppress the burden exerted on the destination bank.
