Autopay rules for debit and credit cards: What you need to know

Have you enabled the autopay feature on your debit and credit cards? Are you planning to enable it soon? Then, it helps to know how it works. An autopay feature or e-mandate (referred to as SI or Standing Instruction in the bank’s parlance) on your debit or credit card is a useful tool, especially if you have a lot of recurring payments every month that you tend to forget.

But the autopay feature works on clearly defined rules set by the RBI (Reserve Bank of India) that have been updated/modified from time to time. For instance, the autopay feature will not work if your credit card bill is over ₹1 lakh.

Here is a guide on autopay rules and how they help you manage your regular payments seamlessly when used properly.

How can you start autopay, and what are its features?

The process is quite simple. You can either register a SI on the merchant’s website or app, or you can do so on the debit/credit card of your bank. You can set autopay for telecom service providers, OTT (Over The Top) platforms, insurance companies, and other utility service providers such as electricity, gas, and water services.

The autopay feature has both a fixed and a variable mandate. Under the fixed mandate, the bill value charged by the merchant will always be fixed (for instance, if you have opted for a ₹399 plan with an OTT merchant, the amount will be charged to your debit/credit card on the due date every month). Under the variable mandate, the bill value will vary, but the transaction will be a recurring one (e.g., electricity bills).

After you register, the ‘Autopay’ gets activated within 7 days.

If your payment due date is within the next 7 days, pay your dues using your routine payment modes.

By activating autopay, you are authorising the bank to deduct money from your account. In case of debit cards, you have to ensure that a sufficient amount is available in the account to clear the dues. Autopay return charges vary with each lender, but are typically 2% of the total payment amount or a minimum of ₹500.

The Reserve Bank of India (RBI) has announced a set of guidelines for autopay with effect from October 1, 2021. They are summarised here:

E-mandate Registration: You have to first register the ‘E-mandate’.

For transactions of value up to ₹15000, the bank will process them without the need for OTP (One Time Password) or validation. If the transaction value is above ₹15000, OTP validation is required via pre-debit (before the payment) notification.

For categories like insurance and mutual funds, the transaction value for which OTP validation is required will be ₹1 lakh. The SI for paying your credit card bill will work only if the amount is up to ₹1 lakh. If it is beyond ₹1 lakh, you can pay the bill only after OTP validation.

Additional Factor Authentication (AFA) is required in the following cases:

First transaction debit of the recurring transaction—if the amount is greater than ₹15000 or if the recurring transaction amount is less than ₹15000 but greater than the ‘E-mandate limit amount’ that was set at the merchant by the customer. Note: AFA can be clubbed if registration and the first transaction are done together.

Any recurring transaction where the amount is more than ₹15000 will require AFA each time the amount is debited. If the customer doesn’t approve the transaction, the card-issuing bank will not process it.

Pre-transaction notification must be sent to the customer for every e-mandate at least 24 hours before the actual debit. This notification must give the customer an ‘opt out’ option through a link provided in the ‘pre-debit’ notification.

The e-mandate can be done only for merchants who are compliant with the RBI guidelines. You can register for e-mandate for recurring transactions on these merchant websites/apps using your debit/credit card or on the bank’s official website. After successful registration, you will receive an SMS/e-mail communication with the e-mandate details. You can make payments in the regular mode for merchants who are not on this list.

What information should the customer give during ‘E-mandate’ registration?

They vary from merchant to merchant. But here is the information that you should provide.

1. Bill parameters (e.g., Relationship number, Consumer number, Meter number, Plan name, Policy number, as the case may be)
2. E-mandate start date
3. E-mandate end date
4. E-mandate limit amount (if it is not a fixed product plan)

What happens if the card with the e-mandate is lost or stolen?

If the card is lost or stolen or is permanently/temporarily blocked, recurring transactions will be declined. In such cases, you have to go to the merchant or the bank’s website and delete the existing e-mandate. The cardholder will have to then re-register e-mandate at the merchant platform or the card issuing bank’s platform using a valid active debit/credit card.

Alternatively, cardholders can make their bill payment directly to the merchant. Please note that the card issuing bank will not be liable for any recurring transaction failure due to card block.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.