What’s the best way to pay for your SIPs – UPI Autopay or eNACH? Your choice matters as the two methods have different functionality and register your SIPs in different ways.
A UPI AutoPay mandate can be initiated on any UPI AutoPay-enabled platform by entering the PIN of your UPI account. An eNACH mandate on the other hand needs to be approved through net banking or a debit card.
“Given the widespread use of UPI, most investors use it to set up SIPs in mutual funds. It hardly takes a few seconds to set up an SIP using UPI AutoPay,” said a spokesperson for PhonePe.
What are the differences?
Limits: Banks allow SIP mandates of up to ₹1 lakh per transaction using UPI AutoPay. For an eNACH mandate the limit can be as high as ₹1 crore, depending on the platform. Some platforms cap it at ₹10 lakh and others at ₹50 lakh.
Note that the limit for UPI AutoPay was only recently increased to ₹1 lakh and not all banks have implemented it yet, according to PhonePe.
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Bounce charges: Banks typically charges a small penalty if an SIP payment fails due to insufficient funds. However, UPI AutoPay has no bounce charges as it does not initiate the transaction in the first place if the balance in low.
Platforms: Only a handful of platforms such as PhonePe and Groww currently support SIPs using UPI AutoPay. On the other hand, all platforms allow you to create an eNACH mandate. Some UPI players don’t offer AutoPay as they don’t see it as cost-effective.
Mayank Lavania, a senior product manager at Fisdom, said, “For payments that come to us, the mandate has to be in the name of the exchange or payment gateway. If we use the services of a payment gateway, we have to pay them a fee, which is expensive. We have to give them around ₹5 for every registration, and another ₹3 for every debit. Then there is an annual maintenance charge, too. With e-mandates, charges are born by the exchange, which in turn takes it from the AMCs.”
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Both Groww and PhonePe are registered as UPI payment service providers (PSPs), which makes it more feasible for them to offer UPI AutoPay.
Mint’s take
If you use apps such as Groww or PhonePe, you can set up your SIPs using UPI AutoPay. It’s seamless, has a lower rejection rate, and doesn’t change you for failed payments. But if your SIP amount is higher than ₹1 lakh, you’ll have to stick with eNACH mandates.
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