Auto payment rules are likely to change from October 1. This could affect lakhs of credit, debit card users. Know in detail here.
New Delhi: Auto payment rules are likely to change from October 1. The possibility of failure of lakhs of e-mandates or auto-debits has taken note of concerns raised by several organizations as not all banks have upgraded their systems, with the Reserve Bank of India (RBI) setting the compliance deadline in April this year. was extended by 6 months. The Reserve Bank of India (RBI) had earlier said that recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPI) would require Additional Factor Authentication (AFA). The new framework was announced in August 2019, and the RBI warned that “non-compliance will be dealt with seriously”. Banks have started informing their customers about this new rule.
According to the message sent by Axis Bank, as per RBI’s recurring payment guidelines, it has come into effect from 20 September. Standing instructions will not be honored on Axis Bank Card for recurring transactions. You can pay the merchant directly using your card for uninterrupted service.
RBI had earlier extended the deadline from December 31, 2020, on the request of the Indian Banks’ Association and said that the framework has not been fully implemented despite adequate time being given to the stakeholders. RBI said that this non-compliance has been noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has led to potentially large-scale customer inconvenience and defaults. In order to avoid any inconvenience to the customers, RBI has decided to extend the time limit for the stakeholders to migrate to the framework by six months, it said.
Under the new rules, all recurring transactions will require additional authentication. For payments above Rs.5,000, one-time password (OTP) has to be verified by the customer every time the payment is due. This will be applicable on all credit and debit cards, both domestic and international.
How will these new rules affect users?
- Since not all standing instructions will be processed, additional factor authentication will be required for mandatory registration, modification and deletion.
- A large number of credit and debit card users set auto-payment instructions for goods and services ranging from electricity and gas to music and movie subscriptions, and the new rules could spell chaos for millions of users.
- If the Standing Instructions for Bill Payment is registered in the user’s bank account, then there will be no change. The new rules will affect standing instructions on debit and credit cards only.
- Additional Factor Authentication (AFA) will be required for mandate registration, modification, deletion.
- Customers will get a pre-debit (SMS/e-mail) notification 24 hours before the debit.
- Any recurring transaction for an amount exceeding Rs.5,000 will require AFA every time the amount is debited.
- Customers can set the maximum amount for each SI. If the transaction amount exceeds the maximum amount specified by the customer, the pre-debit notification will contain a link for the customer to authenticate the transaction with AFA. Without this authentication, the transaction will not be processed.
Internet and Mobile Association of India (IAMAI) which includes members like Netflix, Disney+ Hotstar and Amazon. Earlier concerns were raised about the readiness of banks to implement this framework. The association said in a note to NITI Aayog that industry consultations reveal that most of the major scheduled commercial banks do not have advanced capabilities to comply with the requirements of registration, tracking, revision and withdrawal of e-mandates. For this reason, other participants in the ecosystem such as the acquirer and the card network have not been able to comply with the obligations required by them under these circular guidelines.
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