MUMBAI: The Reserve Bank of India (RBI) on Tuesday tightened and consolidated rules for e-mandates—automated instructions that allow recurring payments—aimed at improving transaction processing by payment system operators (PSOs) and reducing friction for users.
Mint explains what has changed, why it matters, and what payment system operators will need to adjust.
What are e-mandates and how do they work?
An e-mandate is a one-time authorization that allows a bank to automatically process recurring payments on a customer’s behalf. These are used for subscriptions such as OTT services, mutual fund investments, utility bills, insurance premiums, and loan instalments.
Setting up an e-mandate requires a one-time registration and authentication using an additional factor of authentication (AFA), alongside the issuer’s standard process.
Each mandate must specify a validity period, which customers can modify or withdraw at any time. It can be set for a fixed amount or a variable amount, subject to RBI-specified caps. For variable mandates, issuers must allow customers to define a maximum transaction limit.
Why have the rules been revised?
The overhaul is part of RBI’s broader effort to consolidate overlapping and amended guidelines on card-based mandates and digital payments issued over time. These have now been brought together in a single final circular.
The move also follows rising complaints over auto-debits in recurring payments and difficulties in cancelling mandates. Mint reported in February that RBI had asked the National Payments Corp. of India (NPCI) to examine rising complaints of erroneous Unified Payments Interface (UPI) Autopay debits flagged to the cybercrime department.
The revised framework, effective 21 April, applies to all payment system providers and participants handling domestic and cross-border recurring transactions via cards, prepaid instruments, wallets and UPI.
What do the consolidated rules require?
The first e-mandate transaction must be authenticated through AFA. If registration and the first payment happen together, AFA can be combined. Even after registration, transactions above ₹15,000 will require AFA.
Issuers must send pre-transaction alerts at least 24 hours before any debit, including merchant details, amount, date and time, reference number, reason for debit and grievance redressal information.
Customers must be allowed to choose notification channels such as SMS or email. Any change or cancellation of an e-mandate will require AFA and must be communicated to the customer.
Issuers and acquirers will be responsible for ensuring merchant compliance with these requirements.
What are the exceptions?
To avoid disruption in essential recurring payments, RBI has exempted certain transactions from pre-debit notifications, including FASTag auto-replenishment and the National Common Mobility Card (NCMC). In such cases, wallets will continue to be topped up once balances fall below a specified minimum threshold.
Insurance premiums, mutual fund subscriptions and credit card bill payments can also be processed via e-mandates without AFA for transactions up to ₹1 lakh.
The new framework brings regulatory certainty for PSOs and an improved experience for customers, said Utkarsh Bhatnagar, partner, Cyril Amarchand Mangaldas, adding that the higher AFA-free limits for insurance, mutual funds and credit card payments reflect a "pragmatic recognition" of how Indians are using digital payments today.
“(This) defines a clear responsibility for PSOs, particularly around merchant compliance and customer grievance redressal. Acquirers now have explicit obligations, which should drive more consistent compliance across the ecosystem,” Bhatnagar said.
What changes for users?
The RBI has mandated grievance redressal systems for disputes related to e-mandates and extended its rules on liability for unauthorized transactions to recurring payments as well. Customers will not be charged for using the e-mandate facility.
Existing card-based mandates can also be mapped to reissued cards to ensure continuity.
Akshat Pande, managing partner at Alpha Partners, said the framework enhances transparency and strengthens security through mandatory pre- and post-transaction notifications and AFA. It introduces tiered limits, allows users greater flexibility with fixed or variable mandates and custom caps, prohibits customer charges, and mandates robust grievance redressal and easy revocation.
“It aims to balance convenience with stronger safeguards, requiring ecosystem players to upgrade systems while offering customers more control, safety, and clarity in recurring digital payments,” Pande said.