Have you heard about and used the Electronic Clearing System (ECS)? The Electronic Clearing System is a service that your banks provide you when you want to transfer funds from one account to another online.
ECS is mostly utilized by people when they have a periodic payment or transaction to make electronically. The best case would be the payment of the loan EMI.
Even though you may use this service commonly, you need to keep a few things in your mind to make the most of the ECS service. Read on!
- ECS types
You should know that there are two types of ECSs – one is ECS credit, and another one is ECS debit. ECS credit is in action when a service provider needs to credit an amount to your savings account. The example will be your Salary or dividends. ECS debit facility is when you have to make periodic payments such as EMIs, SIP payments for mutual funds and more. The availability of ECS sets your free from writing cheques every month and reduces the chances of missed due dates for multiple bills. To enable the ECS mandate, your service provider may ask for a cancelled cheque. It is because it contains all the vital information related to your bank account.
- How much
You have the facility to fix the amount of ECS, and you are also free to set a maximum limit and auto-debit amount depending as per your bill. Example – If you have set an ECS mandate for credit card bill with the maximum limit of Rs.15,000, and if your credit card’s total due is Rs.12,000, then the ECS for Rs.12,000 will be enabled. What’s more, you can also set the minimum amount that can be deducted from your bank account via ECS towards different bills.
- Begin and stop
To begin the ECS service for your mobile phone payment, you will need ECS to mandate debit with your mobile phone service provider and get it endorsed by the bank. There is a possibility that your bank may charge you a small processing fee to set up the ECS mandate. When you wish to stop the ECS, you will need to inform the bank in advance so that they have enough to initiate the closing formalities.
- Be Cautious
You should be cautious towards ECS as an ECS mandate debit is like a cheque issued by you. It would mean that you should have enough funds in your bank account to facilitate the transaction. If there is an ECS bounce, then you should be ready to bear the fine as in the case of a bounced cheque. The fine may go up to Rs.1,000. Your bank will re-run the ECS again if it fails to clear in the first place owing to a lack of funds. If you don’t get the required money in your account by then, your ECS will bounce.
- Keep an eye on your bank account statement
The ECS debit mandate is surely a great service as it takes away the pain of issuing so many cheques for diverse payments each month. It regulates your payment of EMIs, bills and SIPs and more on autopilot. But you should always check your bank account statements frequently to spot any discrepancy about the amount debited and the bill.
Electronic Clearing System is a handy system to help you avoid writing so many cheques for multiple payments. It can help you save time and avoid remembering due dates for each. If you are ready to set up an ECS mandate, you will need to provide a canceled cheque so that your bank details can be verified for debit as well as credit.