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NACH: India’s big leap towards less cash society.

Are you a credit card holder who missed your due date in your busy schedule? Have a car loan EMI or a library membership to pay every month?  An insurance premium, credit card payments and utility bills etc. are some repetitive bills we often miss our due dates and end up shelling extra amounts as penalties. ACH payments system will help you never miss your due dates again. Unlike card based transactions and online banking where you have to keep track of due dates, ACH payments system allows the user to pay bills automatic from your bank account.

So what is ACH payments system?

Automated Clearing House (ACH) is a network that processes low value, high volume transactions based on electronic instructions. Better known as ECS (Electronic Clearing System) in India is used by companies for collection of payments towards telephone / electricity / water bills, loan EMIs, mutual fund investments, insurance premium etc. and  institutions for making bulk remittances towards distribution of dividend, interest, salary, pension, etc..

How ACH does benefits consumers, banks and organizations:

For Consumers:

  • Timely payment of bills /installments /premium without remembering the due dates.
  • Faster processing time and less manual intervention.

For Banks:

  • Less dependence on cheques and paper based transactions.
  • Faster processing time and less manual intervention.
  • Better service to customers and affiliate organizations.

For organizations:

  • Better customer service.
  • Timely dispersal of salaries, dividends and clearance of bills.
  • Facilitates automatic credit of variable benefits like allowances, scholarships etc.
  • Less dependence on cheques and paper transactions.

How does it work?

User has to register for bill payments with your service provider, banks and financial institutions by providing details such as name, account number, name of the bank /branch, MICR code, etc. Once the mandate is accepted respective bills are directly debited from user’s bank account without hassle of manual payments. Similarly large institutions can disperse salaries, dividends etc.

ACH and proposed NACH:

Currently ACH is made available in around 89 centers in the country. It is operated by the Reserve Bank of India (RBI) at 15 centers and by commercial banks at the remaining centers. The limitations of ACH are that these centers operate in regional spaces thus limiting the transaction possibility to few regions. In order to overcome these limitations and empower ACH payments NPCI has mandated NACH (National Automated Clearing House), a centralized system that consolidates multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices on par with international systems. This mandate after successful implementation will cater to more than 82000 bank branches that provide core banking services across the country will decrease transaction time close to the real time.

Why do we need NACH?

NPCI builds, implement and manage an Automated Clearing House (ACH) system with built-in security features and multiple level data validation facility accessible to all participants across the country. The intention is to create fully automated processes with the use of open standards and best industry practices. This will prescribe a single set of rules (Operating and Business), practices and standards which are common across the country for all Participants, Service Providers, and Users etc. The platform will be robust, secure and scalable with both transaction and file based transaction processing capabilities.

Impact of NACH:

  • NACH platform can alter the face of payments scenario in India leveraging on its largest distribution footprint and modern technology.
  • The system allows global banks, to help companies looking to do business in India to manage their cash effectively and in line with a broader global cash management strategy.
  • NACH will allow member banks to design their own products and help address specific needs of the corporate world, Government and retail customers.
  • By supporting UID and mobile based ACH transactions NACH facilitates financial inclusive policies and initiatives by governments, banks and other financial institutions.
  • Define and Manage Governance Process by way of a set of Operating Guidelines, practices and standards for all Participants, Service Providers and Users etc.

VSoft’s Mandate enabled ACH Payments Solutions

VSoft Technologies, a leading IT solutions provider for banking and financial institutions now offers mandate enabled ACH payments solutions, a comprehensive web-based system for undertaking end-to-end operations for mandate enabled repetitive direct credit or direct debit transactions.

The design of VSoft’s Mandate Management System is based on Object Oriented Programming (OOPS) and Service Oriented Architecture (SOA) principles enables it to be highly robust and flexible. The robustness of the system makes it capable of storing and processing high volumes of data while its flexibility gives it the ability to integrate and interface with third party systems and payment networks in a seamless fashion.

VSoft’s Mandate enable ACH Payments Solutions is fully compliant with NACH network and its robust architecture facilitates almost real time payments process and helps b2c companies in offering complete customer satisfaction.

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