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The full form of the ACH mandate is Automated Clearing House mandate. It is an instruction authorising the bank to carry out the transactions. ACH transfers operate under NACH, and the mandate helps make the process seamless. 


You can set up an ACH mandate for recurring payments like EMIs or credit card bills. You have to complete a registration process to set up this mandate. Only the person initiating the transfer, i.e., the one who is paying can register for the mandate.

Automated Clearing House Transaction: A Brief Understanding

An Automated Clearing House (ACH) transaction takes place between two banks. One, from where the debit transaction originates, and the second, with the receiving bank where the credit entry of the same reflects. 

 

To successfully complete your transaction, some banks may levy ACH charges. This means that a fee may be involved, but not all banks levy these charges. Thus, the ACH transaction is an electronic transfer that takes place when you place a request with your bank. 

 

Only the individual or entity making the payment can initiate it, i.e., someone who wants to transfer and does not receive funds. However, not all ACH transactions are charged. For instance, ACH deposits do not attract charges, whereas direct payments may have nominal charges.

 

Features & Benefits of ACH Mandate

Here are perks you can enjoy by setting up an ACH mandate:

Increased Transaction Speed

ACH transfers take a few seconds to complete a fund transfer compared to the other traditional ways

Convenience

ACH payments are easy to initiate and process as they are processed automatically with pre-authorisation

Security

ACH is comparatively safer and less prone to security breaches

Lower Costs

ACH involves lower processing fees and service charges than various other methods of fund transfer

Accuracy

By reducing the physical handling of payments, ACH improves accuracy

Objectives of ACH

Depending on the type of ACH transfer, the objectives vary. 

1. You can use ACH direct payments in the following cases:

  • Payment of taxes

  • Payment of EMIs

  • Subscriptions

  • Gifts and donations that are recurring

  • Tuition fee

  • Mortgage loan payments

  • Membership fees

  • Recurring investments

2. You can use ACH direct deposit in the following scenarios:

  • Payroll

  • Pension

  • Annuities

  • Refund of taxes

  • Dividend payments

  • Interest payments

  • Expense reimbursements

Banks Providing ACH Facility

Several banks provide ACH facilities, some of which include:

  • Axis Bank

  • Bank of Baroda

  • Bank of India

  • RBL Bank

  • HDFC Bank

  • State Bank of India (SBI)

 

Simply visit the bank to get the form physically or go to the bank’s website to download the ACH form. Get the form and fill in the required details accurately. Once you fill in all of these details, submit the form to complete the registration process.

How to Register for the ACH Process

Currently, there are two ways to register an ACH mandate - through your bank and NSE. Here is a quick overview of the process:

1. Registration of ACH Mandate Via Banks

 

You need to follow these simple steps to register for an ACH mandate through banks:

  1. Head to the login page on the bank’s website

  2. Enter your birth date and your application number

  3. Wait to get an OTP on your registered mobile number and email address

  4. Enter the OTP, verify your IFSC code and MICR, and update them using your recent passbook

  5. Verify whether your bank is enrolled for NPCI or API e-mandate

2. Registration of ACH Mandate Through NSE

Here are the steps to register for the ACH mandate via NSE:

  1. Visit the NSE Mutual Funds website and click on ‘CRM’. 

  2. Choose ‘ACH Mandate Registration’ and enter your IIN number or customer ID

  3. Select ‘New’ as your mandate type when asked for the UMRN number

  4. Opt for ‘e-Mandate’ and make sure the ACH mandate type is set to ‘Online’

  5. Register e-mandate if your bank account is already registered at the IIN level. 

  6. Ensure that the chosen banks support e-mandates and are registered at the IIN level

  7. Click on the ‘Submit’ button to confirm your e-mandate registration

  8. Enter your Aadhaar number at the bottom of the page

  9. Enter the OTP you receive and complete the registration process

 

Note: The steps may vary in both options. Go through the instructions on the official website before you start the registration process.

Read More

All About the ACH Form

The ACH form helps easily execute transactions through ACH and ensures that the funds are directly credited to or debited from the bank account. A few important details have to be filled in the ACH form, such as:

  • MICR number

  • IFSC code

  • Bank account number

  • Phone number

  • Email ID

  • Transaction type (debit or credit)

  • Amount in figures and words

  • Bank name

 

Once you fill in all the required details and submit the form, the funds will be directly transferred into your bank account.

ACH Charges

ACH mandate charges are essentially fees that certain banks and financial institutions levy. Typically, ACH transfers do not incur charges as much like other modes of transfer. However, certain banks charge transaction fees or service fees. 

 

The ACH charges that are typically levied: 

  • Credit fee

  • Debit fee

  • Discount fee

  • Account fee

 

As these charges depend on the financial institution, it is best to verify these with the bank.

ACH vs ECS - A Comparison

ACH is different from ECS, or Electronic Clearing Service, in the following ways:

ACH

ECS

Lower possibility of rejections

Possibility of rejections is higher

Settlement happens on the same day

Settlement happens in 3-4 days

Good dispute management system

No dispute management system

Process is automated

Manual process in place

ACH Debit vs ACH Credit

Now that you know the meaning of the ACH mandate, understand the two types of ACH transfers:

1. ACH Credit

In this type of money transfer, money is transferred from the payer’s bank account to the receiver’s bank account. Under ACH credit transactions, the money is transferred into the account. 

 

For example, you set up a payment through your bank to pay a bill.

2. ACH Debit

Through this facility, money is withdrawn from the bank account. In this transfer, the payer grants the receiver authorisation to collect payment from their account, as per predetermined frequency for a predetermined duration. Under ACH debit, the money is deducted from the account. 

 

For example, you set up a recurring monthly payment for your EMI through the auto-debit option.

Frequently Asked Questions

What is an ACH mandate?

The full form of ACH is Automated Clearing House, and it is a mandate institutions raise when a recurring payment is to be set up. Essentially, you receive an ACH mandate when your payment is due.

How do I check my ACH mandate status?

You can log in to your bank’s mobile banking portal and navigate to the service request. Select the account-related ACH section to track your ACH mandate status. This process of navigation varies based on the bank.

What is an ACH payment?

ACH payment is a recurring one set up between you and a business. It facilitates straightforward direct payments electronically.

Is the ACH mandate safe?

Yes. The ACH mandate is a safe medium for making payments since digital security continues to improve by the day, and ACH also follows the trend.

Is there any penalty attached to ACH payments?

Yes, you will have to pay a penalty fee if an ACH payment gets declined. To avoid these charges in future billing cycles, you must resolve the issue. The bank may also levy other charges; however, it can vary from one banking institute to another.

What are e-ACH and e-mandate facilities?

e-ACH is typically an electronic ACH that allows the use of online portals and electronic transfers to ensure the success of a transaction. e-ACH can be used to either debit or credit recurring payments. 


On the other hand, e-mandate is a payment service brought about by NPCI (National Payments Corporation of India) to collect recurring payments.

What is the ACH mandate cancellation process?

Most of us have ACH payments scheduled and pre-authorised regularly for certain payments and subscriptions. However, if you are looking to cancel your ACH mandate, you can choose to opt out. 


Once you contact the bank, you will be asked to submit a request for the cancellation of the ACH mandate. Upon submission, your ACH mandate cancellation process will begin and get cleared within 3-5 business days, depending on the bank.

What is required for the ACH Payments?

Here’s what you need to make ACH payments successfully.

  • The recipient’s financial institution’s name

  • The recipient’s account number

  • The type of account provided by the financial institution

  • The ABA routing number of the financial institution

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