India has been, slowly but effectively, adapting to all things digital – from shopping to banking. However, the value of online processes was realized only recently. When the COVID-19 pandemic struck India, it brought to light the volume of physical processes that our nation still had in place.
Many of the physical procedures take place in sectors like banking, lending, and investment. Paper trails and long processing time were one of the most concerning aspects of these sectors. That was until RBI and NPCI took major steps to reform these processes in order to keep up with the times.
Physical Mandate to eMandate: A journey
One of the often-used modes of payment in the financial sector is recurring payments. From interest payments to SIP deductions, periodic payments characterize a large part of this sector. However, up until a few years ago, the processes governing these payments were entirely physical.
To authorize recurring payments, one needs to submit a mandate. Submitting a mandate form means that a bank or a third party can automatically debit a certain amount from your account, at regular intervals. Earlier, this process of obtaining, filling, and submitting the form used to be entirely physical. This is why it is known as Physical Mandates.Physical mandates can take up to 21 days to process completely. This increases the processing time and affects all subsequent steps. Click To Tweet
Then came the apparent paperless approach in the form of Paper NACH. Under this, there was no direct manual intervention since all forms would be sent over the email. However, contrary to popular belief, it wasn’t paperless. The customer had to take printouts of said forms, sign it manually, and then upload it again. This paper-bound step led to multiple errors.
In 2018, RBI and NPCI made a landmark decision by completely digitizing the Paper NACH process. This was called eMandates. With eMandates, the infrastructure for recurring payments was digitized, making the whole process free of human intervention. With features like digital signatures and no paper requirement, there was a major upgrade in the system.
Razorpay eMandate: Digitizing recurring payments
Earlier this year, Razorpay introduced eMandates as a part of our Subscription offering. Razorpay Subscriptions were introduced to simplify and automate recurring payments. The aim of Razorpay eMandates was to reduce human intervention at every payment cycle and digitize periodic debits.
With more than 30 banks already added, eMandate is the much-required upgrade to Subscriptions. Companies availing Razorpay eMandate get an additional advantage on multiple fronts. Along with saving time and efforts, eMandate has helped our merchants increase customer retention and reduce administrative costs.
The biggest strength of Razorpay eMandates lies within its API. We are one of the first enablers of the NPCI-launched eMandate feature. Thanks to the smooth user experience and better TATs, our partner brands rely on us to give them an efficient experience with eMandates.
Razorpay eMandate became a much-needed respite for many companies including ETMONEY. Read below to see how they embraced and improved their performance with eMandates.
How ETMONEY joined the eMandate wagon
ETMONEY is a pioneer in the space of financial services. The company aims to simplify the financial journey for its customers. With ETMONEY, a user can access all major kinds of financial products including investments, borrowing, and insurance.
The problem: Longer time, worried customers
As a platform whose major offering is mutual funds, ETMONEY was well versed with physical mandate. Unfortunately, they were also well versed in the problems that came with it. This specifically affected the customers who opted for the SIP method of investment.
SIP is a method of investing in mutual funds that involves equal monthly contributions being made to the portfolio. This was one of the biggest use cases for recurring payments at ETMONEY. To authenticate the monthly deduction for SIP investments, they had to use physical mandate and Paper NACH, which came with operational issues.
Challenges with Physical Mandate:
- With the physical mandate, bigger banks were taking 3-8 days for the entire process
- The smaller banks sometimes used to take 15 days to process the mandates
- Physical mandate involved numerous uploads creating operational inefficiencies
Challenges with eNACH (i.e Electronic or Paper NACH)
- Sometimes, users were unable to take a printout and then scan and send
- Some messages like “until canceled” were not understandable to the user
- Users used to sign anywhere on the form which is not acceptable
- Users often did cuttings and made errors while signing manually
The solution: Razorpay eMandate
ETMONEY’s relationship with Razorpay products started with eMandate, followed by Route and then onto Razorpay Payment Gateway. The company went live with eMandate, introduced under Razorpay Subscriptions, in May 2019. Having used e-NACH before, they wanted to explore eMandate, the newly introduced digital mandate solution by NPCI, as well. This is when they approached our team to take this forward.
The teams at ETMONEY and Razorpay had multiple rounds of discussions where we discussed the eMandate processes and regulations. The whole procedure was extremely simple and hassle-free. All our teams – tech, support, and product – worked with them tirelessly so that they could integrate eMandate seamlessly into their operations.
Surbhi Lohia, a member of the Product team at ETMONEY says, “At the time of the eMandate launch, the Razorpay team was very flexible & open to customizations at their end. They worked very closely with us to launch a user-centric solution which ensured that users took to setting e-mandates as they do online payments.”
The revised process: eMandate registration
Finally, ETMONEY launched eMandates under their EasyPay offering for the customers. They had users coming to them for different products including SIP payments. But with the inclusion of eMandate under EasyPay, the transaction process was now automated and free of manual intervention. Here’s how the process looked post eMandate integration:
- A customer would come on ETMONEY and select a mutual fund of their choice
- The customer would then evaluate and select a type of investment option, out of lump sum and SIP.
- For one-time payments, Razorpay eMandate helped ETMONEY to allow users to set mandates and use them for OTP secured one-tap payments, bypassing the need for online payment authorization
- In case the SIP method of investment was chosen, ETMONEY would ask for authorization to automatically deduct a predetermined SIP amount periodically from the consumer’s bank account
- With the eMandate registration process, this authorization became digital. The mandate would get activated by simply submitting a customer’s netbanking details or debit card credentials
These steps which earlier used to take 15 days with physical mandate, were now being done in less than 2 days. Thus, the process became digital and enabled faster automation.
Witnessing positive results with Razorpay eMandate
ETMONEY decided to digitize the physical mandate process because they wanted to enhance the customer experience. They wanted to give a one-tap payment option for lump-sum payments as well as an option to automate SIPs, which would make the user journey simpler and easier.
Smoother SIP payments each month are table stakes for Mutual Fund Investments. Thanks to vibrant 4G ecosystem, smartphone penetration & Aadhaar based eSign making process of KYC easy for every Indian, the only thing that is needed to make people save monthly, systematically is an auto-payment option on SIP days. Razorpay’s e-mandate offering allowing our users to register instant mandates online using their netbanking or debit cards has been an accelerator of our growth. Their combine suite of account validation, instant e-mandate set-up, smoother debits each month, settlements to Mutual Fund companies & finally, easy reconciliation helps ETMONEY automate a lot of manual efforts & deliver an incredible end-investor experience.”
– Santosh Navlani | COO, ETMONEY
Reaping the results
Out of the multiple benefits that came their way, the team at ETMONEY was especially ecstatic with the following results.
- With the entire process getting automated with eMandate, they saw faster activations and almost no repeat requests.
- They witnessed a 95% success rates on debit payments of e-mandates
- The automation of SIP payments helped in customer retention since there was minimal manual effort needed from the customer’s side
- They witnessed a sharp decrease in queries asking the status of EasyPay registration because now the whole process was automated
According to Surbhi, some of the key metrics which measure the effects of eMandate include the total number of transactions made via eMandate and their success rate. Their team also looks at retention with regard to SIP.
Next-in-line: Aadhar-based eMandate
After the successful implementation of eMandates, we are working with the team at ETMONEY to roll out Aadhar-based eMandate. A significant portion of people in India still don’t possess credit or debit cards which are necessary for taking any subscription. To expand the user base, Aadhar-based eMandate will be a huge step. The attempt is to utilize the bank account linked Aadhar cards to facilitate recurring payments.With Aadhar-based eMandate, anyone with an Aadhar card will be able to subscribe successfully with no hassle of making periodic payments regularly. Click To Tweet
Digitize Your Processes with Razorpay eMandate
High dependency on physical processes can lead to multiple problems – foreseen and unforeseen. eMandates is a pathbreaking way of doing online transactions in India. Like ETMONEY, your business too can benefit from the speed and ease of Razorpay eMandates to improve metrics like customer retention and cash flow management.
Join Razorpay eMandates today and seamlessly transfer to a better way of handling recurring payments.