First things first!
ECS stands for Electronic Clearing Service. It is an electronic mode of transferring funds from one bank account to another. It is typically used for undertaking bulk transfers by multiple institutions for making periodic payments. It could be Salaries, interest, pension and more.
The ECS mandate is a methods that can also be used to pay bills and charges like payments to service providers such as water, telephone and electricity and more. It can also be utilized to make payments such as EMIs on loans and SIP investments.
If you are looking to know more about ECS, then you can go through this post and know more!
What are the types of ECS?
There are two types of ECS – credit and debit.
What is ECS credit?
ECS Credit is known for allowing credit to many beneficiaries. It is done by raising a single debit to the account of the customers. It is generally for Salary, dividend and interest payment.
What are the advantages of ECS credit system that you can avail?
- The end beneficiary gets free from the formalities to make regular visits to the bank for depositing physical paper instruments.
- There is no delay in the realization of proceeds that earlier happened due to receipt of the physical paper instrument.
- An ECS user is able to save on administrative machinery. It is related to printing, dispatch and reconciliation.
- It provides the facility to make payments and ensure that the account of the beneficiaries gets credited on a due date.
ECS payments are possible and could be performed by an ECS user that has to make repetitive and bulk payments to many beneficiaries and recipients. The transactions get initiated after registering with an approved clearing house. An ECS user also needs to obtain an authorization such as account details of beneficiaries for indulging in the clearings of ECS.
What is ECS debit?
ECS debit facility is utilized for raising debits for many accounts of customers for availing a single credit to any institution and accounts. It is majorly done for payments like telephone bills and power bills.
What are the benefits of ECS debit to clients?
You can enjoy many advantages of the ECS debit facility in India, such as:
- It is a trouble free method that you can use to eliminate the need to go to collection centres. The need to standing in long queues for payment is also eliminated.
- You are not needed to track payment going by the last dates as ECS users can monitor it. The saving on administrative machinery is possible for cheques collections, and it is done by tracking their settlement and realization.
- The probability of better management of cash increases. It leads to cases of frauds not being reported as access to encashment and paper instruments are not possible.
- Payment realization on a single date is possible instead of so many dates and hence; fractured payment receipt.
ECS debit is a system in which the account holder can authenticate an ECS user to get an amount by raising an account debit. In this case, an ECS user has to get authorization known as ECS mandate for escalating such debts.
When it comes to payment reforms in India, the Electronic Clearance Service (ECS) has emerged as one of the best systems. No matter if you are looking to pay for multiple accounts in a single debit and get your account credited by other users, ECS can help. You can know about the ECS mandate with your banks and other financial institutions and forms that you would need to fill to start enjoying the services.