Electronic Clearing Service
Electronic Clearing Service or ECS is a method of transferring funds electronically and is generally used for bulk transfers. This method is used for funds which are both repetitive and periodic in nature. (cleartax)
There are two types of ECS:
ECS Credit
ECS Credit is a facility that allows organizations to credit their employees’ salaries, pensions, or any other payments directly to their bank accounts. This facility is commonly used by organizations to disburse payments to their employees.
ECS Debit
ECS Debit is a facility that enables customers to pay bills, loans, premiums, and other payments automatically by debiting their bank accounts. This facility is commonly used by utility service providers, such as electricity, gas, and water companies, to collect payments from their customers. (Wealthpedia).
When an ECS mandate is issued by a payer, which could be a customer, the mandate i.e. their consent, along with their account details, are passed on to a clearing house. The clearing house is expected to debit the said amount on a specified date from the payer’s bank account and credit it to the beneficiary account. The transfer of funds happens electronically in bulk. (NAVI)
Cleartax. (2020, Aug 16). ECS,Electronic Clearance Service.Retrieved from: https://cleartax.in/glossary/ecs-electronic-clearance-service/
Wealthpedia Team.(2023, Sep 28). ECS Full Form & Meaning: An Overview of Electronic Clearing Service. Wealthpedia. Retrieved from: https://www.wealthpedia.in/ecs-full-form/
NAVI. (2023, March 22). What is Electronic Clearing Service (ECS) in Banking and How does it Work? Retrieved from: https://navi.com/blog/electronic-clearing-service/