What is the full form of ECS?
The full form of ECS is Electronic Clearing Service. ECS is an electronic mode scheme that transfers funds from one bank account to another, allowing for electronic credit or debit transactions linked to the account of the client. It’s usually used for periodic or regular or transactions in nature.
Types of ECS
In India, ECS had been adopted by the RBI (Reserve Bank of India) to provide a fast method for both routine and periodic payments. ECS services come in two varieties
- ECS Debit – An individual makes an EMI payment for the loans, mutual funds, policy primes, etc.
- ECS Credit – An organization or institution makes credit to the bank account of a person. For example, Wage credit, dividends, pension, incentives etc.
Benefits of ECS
- ECS increases customer relationships
- ECS reduces paper use
- ECS does not inflict delayed payments costs
- It appears to help in the quick payment of bills
- ECS enhances the payment of essential utility bills for customers, such as electric bills, phone bills, internet bills, etc.
- It also enables the payment of insurance premiums, loan instalments, credit card payments, mutual funds etc.
How do you make use of an ECS scheme?
- Individuals required to notify your bank and offer an approving mandate to the organization, which can then credit or debit the transactions via the bank.
- The Mandate includes branch information and account details.
- It is the institution ‘s responsibility to provide information about the amount to be debited or credited to this account, implying the credit date and other relative details of the transaction.
- Individuals will be informed through mobile alerts or messages that the money has been deducted from their account.
- The ECS consumer can set the maximum amount deductible from the bank, define the debit reason, and set a validity period for each provided mandate.