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Before the introduction of the eNach mandate and other mandates, the conditions of financial institutions were heavily dependent on manual labor and paperwork. This involved intense utilization of manpower, even for low-value tasks.

The manual paperwork process required to complete high-volume payments that resulted in delays, errors, frauds, and operational inefficiencies that could have been rectified by the adoption of better technologies. 

Moreover, it is also a challenge to maintain comprehensive documentation of the financial history of a large pool of customers.

For this reason, the world of financial transactions and mandate management has witnessed a significant transformation. The incorporation of eNach and eMandate solved all the mentioned problems and unburdened the banking institutions by facilitating the easy transaction of recurring payments by an automated system.

For instance, by consenting to these technologies, you can easily pay electricity bills, school fees, and insurance premiums without needing them to be manually approved or physically visiting a bank.

Despite having similar purposes, these two payment systems are different. 

The blog would therefore focus on what eNach and eMandate are as separate payment options and how they are different from each other. It would also highlight the benefits of these gateways.

What is eNach mandate?

eNach mandate, or the Electronic National Automated Clearing House, is a vital tool that facilitates interbank high-volume and low-volume transactions that are recurring in nature. 

The whole process is done through enabling digital technology, which minimizes the resource dependency on form-filling, administrative, and operational investment.

The eNach mandate acts as customer authorization for banks to debit or credit funds automatically. The customer need not to manually give permission to authenticate the recurring payment every moment of time.

It comprises all the electronic clearing systems that were earlier used by lenders to automatically debit payments from borrowers without the hassle of periodic reminders.

To avail of the eNach mandate facility for debit or credit, customers have to digitally sign the NACH form. This is done to generate the UMRN or Unique Mandate Registration Number. It allows you to manage your mandate information and track it afterward.

However, eMandates are a different case.

What is eMandate?

eMandate is another popular digital payment service that supports financial infrastructure for businesses in India. Just like eNach mandate , it also automates recurring payments without manual interference.

By allowing you to provide standing instructions to your bank, it automatically debits a specific amount from your bank account,

It checks periodic payouts of loan EMIs, card payments, SIPs, etc. This helps avoid any penalties for late payments. 

The Reserve Bank of India has also increased the minimum limit required in the e-mandate from Rs. 5000 to Rs. 15,000. 

However, if you have insufficient funds at the time of the auto-debit, then the bank is liable to charge you a penalty based on their terms and conditions.

Apart from the ease of banking, eMandate prioritizes security and data privacy of the customer. They employ rigid and robust authentication protocols and encryption that are in compliance with the regulatory framework provided by the government.  

How are eNACH and eMandate different?

Overall, both eNach and eMandate have similar features, but they are marginally different: 

eNach is governed by the National Payment Corporation of India, or NPCI, and covers more than forty banks, whereas eMandate is individually controlled and covers four to five banks.

eMandate can be considered an electronic authorization that pertains to certain transactions, unlike eNach, which generally deals with the transfer of bulk and heavy-volume payments.

How is eNach and eMandate beneficial?

Despite a few narrow differences, the main purpose of these systems is to automate payment transactions. Apart from this one feature, it facilitates an array of benefits that put businesses in an advantageous position. 

Cost efficient: 

In a conventional scenario, organizations are required to send regular notifications and intimations to customers for follow-up on payments. 

This time-consuming activity only results in unnecessary operational efforts, and administrative costs and might strain customer relationships with the businesses.

However, eNach and eMandate have reduced the large amount of investment involved in the manual structure of maintaining payments and invoicing.

Now, companies are not required to allocate manpower or other resources to track and follow up on late payments.

As the whole process is electronic, accounting also becomes much easier, paperless, and more efficient. 

Convenient Process: 

Both customers and businesses prefer a convenient system of payment rather than a tedious, manual process. In this regard enabling eNach and eMandate is quite easy.

It involves minimal paperwork and offers maximum ease in completing recurring payments. It also eliminates constant manual authentication and enhances customer-business relationships.

Customer Retention: 

There is no denying the fact that customers prefer businesses that allow them to complete banking transactions at their convenience and comfort, especially when they are recurring payments. 

That’s why many companies associate themselves with eNach and eMandate, therefore facilitating regular payments and uninterrupted and hassle-free customer service.

Moreover, the legal consent to auto-debit the amount on the set date would help businesses retain customers better as they gain the benefit of banking convenience.

Seamless payments: 

In this digital age, banking can be quickly done via laptop or mobile screens. This feature of new-age technology gives customers the option to not visit the bank and instead complete their recurring payments from their place.

For businesses, it also becomes a viable option to strategically invest efforts and money in a financial structure that creates provision for auto-debit.

In the end, incorporation of eNach and eMandate adds to customer retention, improves the customer experience, and allows organizations to focus on key areas rather than low-value tasks.

Conclusion:

Both eNach and eMandate have revolutionized the payment landscape. Despite having slight differences, they both offer secure, seamless, and convenient payment solutions.

They were designed to enhance the technological infrastructure of the business industry by integrating advanced financial technology.

It is beneficial to both businesses and customers, promising a paperless economy for the coming future.

KYC is the foundational step for any onboarding process. Know Your Customer is a mandatory procedure to verify a customer's identity and also prevent fraud and identity theft.

In a traditional verification system, KYC requires a tedious process of visiting the financial institution, submitting documents, and waiting for the in-person verification to be complete, which may take more than a week.

However, because of the COVID-19 pandemic, it became difficult for people to follow this method of verification. The restrictions on in-person interactions led to an alternative digital channel of verification. The convergence of technology and the existing KYC verification structure led to the introduction of video KYC.

Many organizations, especially banks and financial institutions, have shifted their onboarding process from offline to online to serve their customers without any hindrances.

On 9th January 2020, the Reserve Bank of India introduced video KYC in India and laid down the guidelines required to be followed by the banks.

Now, with a video call, the KYC details can be verified in minutes. Read on to understand how video KYC is helping the financial sector. 

What Is Video KYC?

VKYC, or Video Know Your Customer, is the process used by financial institutions to verify information during the onboarding process. Instead of going to the banks for offline verification, the process can now be simply done through a video call.

This facility is enabled by VCIP technology and is regulated and assisted by a trained professional for a customer-friendly experience.

In the last two years, there has also been a huge shift towards cashless transactions. As a result, many e-wallet and digital payment companies now provide video KYC facilities to their customers to facilitate a smooth transaction and avoid identity theft.

Even the Securities and Exchange Board of India has allowed video KYC for mutual fund investments, encouraging the adoption of this method in the financial sector. The global video KYC market is expected to reach $1.1 billion by 2027 according to Allied Market Research.

What Is The Process Of Video KYC Verification?

Video KYC is a simple and quick way to verify customer details during the digital onboarding process.

The customer schedules a video call with the financial institution, wherein the representative verifies the government document and also confirms the address through geo-tagging.

Finally, all the identity cards are matched through the AI facial recognition tool.

After a thorough verification, the details are submitted for the final audit, according to which the KYC is verified.

What Are The Benefits Of Video KYC Process for the Financial sector?

Cost-effective: Adoption of video KYC cuts the cost allocated for the physical infrastructure required for verifying identities in an offline setup.  

The company also saves money on low-value tasks, which are now replaced by automated messages and status updates.  

The investment is shifted to the adoption of a new affordable and effective  software supporting video KYC.

KPMG reported that video KYC can reduce the customer acquisition’s cost by 90% because it removes the need for physical labor and infrastructure.

Saves time: Ideally, a regular KYC takes up to 10–20 days to get verified, but video KYC ensures quick verification within 10–20 minutes. 

There is also no requirement for the institution's representative to visit the address and do a physical verification.  

A video call can be scheduled according to the needs and requirements of both the customer and the organization. 

Paperless process: Video KYC solution replaces physical document submission with an electronic mode. All the identity cards, like passports, driver’s licenses, and address proofs, can be shown and submitted online.

Even the storage of such documents is done through a cloud storage system, which is easier to access and track than regular paperwork data.

It pushes the financial institutions to work towards a sustainable and efficient work environment.

Customer Satisfaction: For any company, customer satisfaction is the primary goal. The video KYC tool is designed to have a pro-customer approach. 

According to a report by PwC, 82% of customers prefer the digital onboarding process over the traditional method, and 47% have a positive attitude towards banks offering service remotely.

The whole verification process is based on the consent and convenience of the customer. They can freely ask questions from the agent and ensure the video KYC process is performed securely while sitting in the comfort of their homes.

Easy onboarding process: With the growing competition in the business and finance industries, it is essential to retain and hold a strong customer base. 

Video KYC is an efficient alternative to accelerate the onboarding process and provide financial products and services quickly to those concerned. 

By using technology and software-dependent verification systems, the whole process becomes seamless and error-free, making it a more preferable method for this industry.

Reach potential customers: The video KYC solution solves the problem of reaching remote locations without investing in the logistics involved in sending a team for verification. 

It allows people who have a camera and an internet connection to participate in the onboarding process despite their geographical limitations.

Moreover, this feature is inclusive of the multilingual factor; agents can be chosen based on the language preferred.

Prevents Scams and Identity Theft: For the financial year 2022, banks in India reported 9,102 frauds amounting to underlying damages of Rs. 60,389 crore.

A major reason for this loophole is the lack of a concrete verification system. 

A video KYC would prevent identity thefts as the agent would be able to carry out the verification in compliance with the regulations and the data retrieved would remain encrypted, confidential, and stored safely in an electronic format.

There is no dependency on manual setup and is relatively error free than other formats, thus preventing any scams and fraud.

From the consumer’s perspective, this also adds to the accountability and credibility of the company 

Rise of small financial institutions: For legacy businesses, it is easy to integrate and develop a new channel of verification based on their customized needs.  

They are relatively less vulnerable to fluctuations in demand generated by the  customers than compared to smaller financial institutions.

The video KYC process is a boon for such growing financial actors because it allows them to scale their resources allocated for verification depending on the demand of customers. 

Through a remote and interactive authentication process, smaller financial institutions can also participate in this growing sector.

Conclusion:

The introduction of video KYC is a revolution in the financial sector. With a variety of forms of verification available for the consumers, this has turned out to be a  seamless , speedy and beneficial process for the companies to attract potential customers and maintain efficient working with the existing.

It is a useful tool to prevent costly scams and identify fake accounts. 

The video KYC is a cost effective technology that allows them to maintain a strong customer base and guarantee a satisfactory consumer experience.