For auto-payments from debit and credit cards or via wallets, an additional authentication will be required by the customer from April
The new rule will be applicable for transactions performed using all types of cards – debit, credit, UPI and PPIs, including wallets
Starting from next month, the auto-payment rules for mobile, utility and other bills are likely to be changed. The Reserve Bank of India (RBI) earlier stated that recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will need additional factor authentication (AFA) from 1 April. Under the new norms, banks will be required to inform customers in advance about recurring payment due and transaction would be carried following nod from the customer. This rule is likely to impact your monthly subscription charges for different streaming platforms including Netflix, Amazon Prime, Disney+ Hotstar.
All you need to know about RBI's new rule on debit card and credit card auto-payments from April
1) For auto-payments from debit and credit cards or via wallets, an additional authentication will be required by the customer from April. "A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer," RBI said.
2) The limit for auto-debit from cards and wallets is set at ₹5,000. For transactions above the cut-off, an additional one-time password (OTP) will be needed.
3) The new rule will be applicable for transactions performed using all types of cards – debit, credit, UPI and PPIs, including wallets, the central bank earlier mentioned.
4) The regulator earlier asked the banks to introduce additional factor authentication by 31 March, 2021. In a circular issued on 4 December, 2020, RBI said, "Processing of recurring transactions (domestic or cross-border) using cards/PPIs/UPI under arrangements/practices not compliant with the aforesaid instructions shall not be continued beyond 31 March, 2021."
5) The issuer has to send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge or debit to the card. The user will have an option to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification, the regulator said.
6) To proceed the transaction, customer's consent is must. The cardholder will also have an option to "opt-out of that particular transaction".
7) The issuer shall provide the cardholder an online facility to withdraw any e-mandate at any point, RBI said. "No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions," the bank noted.
8) Banks have started informing its customers about this new rule. “In accordance with regulatory requirements, processing of e-mandates for recurring transactions, which have been registered on your credit or debit card without Additional Factor of Authentication (AFA), will be discontinued w.e.f. April 1, 2021. You may make payments directly through your card at the merchant website or application," read a communication sent by Axis Bank.