MandateHQ will also enable businesses and fintechs, especially subscription-based businesses, to get access to a wider customer base, who use debit cards, as recurring payments were mostly supported via credit cards previously
Bengaluru: Razorpay has partnered with Mastercard to launch its new recurring payment interface, MandateHQ, to help banks implement the Reserve Bank of India’s (RBI) new rules on automatic debit and recurring payments.
The new platform will help banks adhere to RBI’s new framework for implementing recurring payments while also providing a standardised platform for the industry.
Razorpay’s Mandate HQ is an application programming interface (API)-based plug-n-play solution that reduces the go-live time for any card issuing bank that wishes to enable recurring payments for its customers.
MandateHQ will also enable businesses and fintechs, especially subscription-based businesses, to get access to a wider customer base, who use debit cards, as recurring payments were mostly supported via credit cards previously.
In 2019, the RBI had issued a new framework for processing of e-mandates on recurring online transactions. It had made an additional factor of authentication (AFA) mandatory for all recurring transactions below ₹5000 on debit cards, credit cards, even Unified Payments Interface (UPI) and other prepaid payment instruments (PPIs).
This RBI directive is applicable to all recurring payments which were earlier debited automatically from customers’ cards (credit/debit/prepaid) for mobile, utility, other recurring bills as well as subscription payments for different OTT streaming platforms.
The rule was expected to create an additional infrastructure burden on merchant partners, banks and payment processors. Looking at the unpreparedness of the ecosystem, the RBI extended the deadline for implementation of new guidelines from March 31, 2021 to September 30, 2021.
Through the MadateHQ platform, Razorpay now looks to solve infrastructure bottlenecks and has already started pilots with three Indian banks, the company said.
It has already started discussions and looks to go live with 20 more banks before the RBI deadline for implementation by September-end.
“With the launch of MadateHQ, now we will have a full stack of payment instruments in the country ranging from UPI to credit and debit cards and will help us offer value to entities whose business models rely on recurring payment transactions. We are expecting a 5x-6x increase in recurring payment or subscription-based payments in the country. And any card issuer whether fintech or bank can leverage this platform," said Harshil Mathur, co-founder and chief executive officer, Razorpay.
MandateHQ will help banks with end-to-end mandate lifecycle management including creating, viewing, updating, cancelling, and pausing mandates and processing debits for valid mandates. In addition, the MandateHQ platform will also help banks to enable a 24-hour pre debit notification via electronic mail, SMS and WhatsApp.
The solution offered by banks will also help end customers manage their card mandates.
“MandateHQ will enable all the partner banks to seamlessly adapt the new framework for recurring payments via debit and credit cards, UPI and other prepaid payment instruments (PPIs), in compliance with RBI’s new mandate and ensure that bank customers can continue to enjoy hassle-free payments," said Rajeev Kumar, senior vice president, market development, South Asia, Mastercard.
India’s expenditure on digital media and entertainment subscriptions has doubled in the last three years.
With the launch of UPI-Autopay in July last year, merchant demand for subscriptions has grown by five times in the last six months, the company said.
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