What is the ACH mandate

Read our detailed guide to know what the ACH mandate is and how it works.
What is the ACH mandate
5 min read
22 November 2023

ACH mandate stands for automated clearing house (ACH) mandates. It plays a pivotal role in simplifying electronic payments. It’s a system for establishing recurring automatic payments from your account to billing companies.

In India, this digital fund transfer system is administered by NACH (National Automated Clearing House). Essentially, the ACH process mandates a credit or debit from the sender's account and a corresponding debit or credit on the recipient's account.

For example, if you’ve borrowed a loan, you can use the ACH mandate to make regular payments to repay your loan. With the help of this system, the EMI amount from your account gets deducted to the loan provider every month on a pre-set date.

Benefits of ACH mandate

The ACH mandate offers an array of benefits making it a go-to option for customers and businesses. Here are four benefits of the ACH mandate.

Convenience: ACH mandate makes payments convenient. Once you provide authorisation for the transaction, you don’t need to make any payments online. The payment process will be automatic, and the amount will be deducted from your bank account on the pre-set date. You can choose to authorise recurring payments such as monthly utility bills, loan payments, or one-time payments.

Secured: It’s a secured mode of payment. You can be assured that your personal and financial details are protected during the transaction process.

Avoid penalties: With the help of the ACH mandate, you can avoid late payment fees and penalties. Since it’s an automated method of payment, it gets processed on the due date without any delays. It reduces the risk of missed payments, and the penalties that may come with it.

Eco-friendly method: Since it’s a digital mode of payment and therefore, it helps reduce paper consumption and waste.

In conclusion, the ACH mandate is a secure and convenient way of transferring money making it a go-to option for individuals and businesses.

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