Electronic Clearing Service
One may define Electronic Clearing Service as a special electronic mode of money transfer between bank accounts. It’s often utilized by a variety of institutions to make such kinds of payments like pensions, wages, dividends, and other transfers. Using this solution, a user can also pay utility bills, monthly loan payments, and SIP investments. ECS is suitable for debit and credit transactions.
Initial steps to using ECS
To benefit from this scheme, a user has to complete a few simple steps. Firstly, one needs to notify the bank they use. Secondly, a user delivers a mandate which authorizes the organization that will make future transactions. As a rule, the mandate comes with detailed information about the client’s bank account and department.
The bank only monitors the transactions and sends alerts whenever the money is added or withdrawn from the account. The latter may be a text or an app notification.
An organization that makes payments, however, has to take care of all the details. They include the sum debited or credited to the bank account, the date of transaction, and other crucial payment particulars.
ECS users can make a few adjustments as well. They may determine how much can be withdrawn from an account, highlight the purpose of transactions, and determine the validity period for each mandate.
The RBI has stated that the sponsor bank has to cover the transaction fees. Destination departments have already been instructed to grant ECS credit to the beneficiaries free of charge. So, as a recipient, you won’t have to pay any extra fees.
How to stop using ECS?
To properly cancel the given solution, the beneficiary has to notify both the service provider and the bank. Each institution has a special form one has to fill in to discontinue the services. As soon as the bank and the service provider receive the written forms, you won’t receive ECS services anymore.