ECS is the term used in the context of banking, full form of ECS is Electronic Clearing Service. Electronic clearing service is a mechanism by which an individual can make payment to the creditor on a periodical basis without worrying about whether the payment has been made or not, the only thing he or she has do is to maintain balance in his or her account so that ECS does not get dishonored. Given below are some of the advantages of ECS –
- Under this system there is no need for issuing cheques by the person making payment because debit in his or her bank account will be made automatically provided the customer has given mandate for ECS to the bank. Hence customer is saved from the onerous task of issuing cheque every month.
- Since payment is deducted automatically from the bank account on a specific date chances of defaults on the part of party making payment is nil unless the party does not has sufficient balance in the bank account.
- On the part of person receiving payment ECS is a boon because he or she does not has to remind the person from whom the payment is due as payment will be received automatically due to electronic clearing service.
- It helps the customer in managing the debt in a systematic way because the customer can give multiple mandates for ECS for different debts and also one can change the amount of ECS and hence it gives the customer flexibility of managing the debts.
As one can see from the above that ECS is boon for people who have multiple debts and they find it difficult to manage and remember dates of loan or debt installment.