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E-mandates & their power to transform payments in India

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E-mandates & their power to transform payments in India

Arif Khan, Chief Innovation Officer, Razorpay , 0

A Finance & Digital Payments industry veteran, Arif boasts of having close to two decades of experience, garnered during his stints with HDFC Bank, PwC India and Mastercard.

Innovation in payments and banking is playing a crucial role in India's digitization journey. Fast, convenient and transparent payment solutions are transforming the way Indians transact today. After UPI and Aadhaar-based payments, the next solution poised to create massive impact for businesses and customers is e-Mandate. E-Mandates are digital payment instruments that will fasttrack recurring payments of every nature by completely removing the friction from the process. This will mean instant and secure payments, on schedule, every single time without the need for OTPs, reminders and late fees.

E-Mandates replace the physical mandate system of ECS, transforming the entire system of direct debit payments. Setting up and managing e-Mandates is fast, convenient and completely digital, reducing the payment processing time by nearly 80 percent. The impact of this efficiency is going to be huge, especially in today’s internet powered economy. Instant cash, on time, every time means a steady and assured flow of revenue for businesses to scale. Even for customers, e-Mandates provide flexibility in terms of initiating, managing and canceling mandates.

The subscription business model has taken the world’s developed economies by storm. Consumer services like
Netflix and Blue Apron to enterprise services like AWS and Salesforce are all powered by subscription payments. And, the key to successful subscriptions lies in frictionless payments. E-Mandates deliver exactly this a one time transaction authorization at the start of the billing cycle to ensure security, with all subsequent payments being fully automated. Even in India, subscription businesses are fast growing. Leading businesses like Zomato, Make MyTrip, Ola, Rentomojo etc. are betting big on subscriptions and e-Mandates are the perfect solution to deliver both customer delight and business success.

E-Mandates can be managed either through the NPCI
e-NACH route (currently available for 45 banks) or through individual e-Mandate systems instituted by banks themselves (currently available with 4-5 banks). Both channels fulfill the same end objective of automating recurring payments.

While e-Mandates work brilliantly for all subscription businesses, the possibilities for other businesses are massive as well. In fact all recurring payments like telephone bills, school fees, insurance premiums credit card bills, SIPs, and utility bills can be automated with
e-Mandates. And that’s not all. Soon UPI 2.0 will also extend support for UPI mandates opening up many more opportunities. Similar to e-Mandates, UPI mandates also enable recurring payments through a one time authorization process and can be directly set up from online portals or apps.

UPI with its inherent ease of transferring money anytime from anywhere to anyone when combined with mandates can prove to be ground breaking for businesses. For instance an Uber user can trigger a mandate to automate all future Uber payments without having to enter OTPs for each transaction or loading a wallet for convenience. This mode of making payments can be extended to several other areas like e-commerce, on-demand media, service marketplaces or just about any product or service that requires recurring payments(scheduled or otherwise).

E-Mandates will be transformative in the way that payments are handled in India.

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