Automatic payments which are linked to bank accounts could experience some disruptions from April 1 due to a rule on such transactions by the Reserve Bank of India (RBI). These payments include mobile bills, utility or other bills as well as subscription charges for OTT platforms. The new rule has been put in place by the apex bank to add another layer of authentication for such transactions. While notifying the rule, 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 March 31, 2021."
Keeping in mind the convenience of the customers, banks have started informing them about the 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," Axis Bank told its customers.
How will the transaction work now?
Banks and other payment platforms will have to send a pre-transaction notification the customer, at least 24 hours prior to the first automatic payment. The user will have to choose the mode of this pre-transaction notification at the time of registration for the recurring transaction system. Options like SMS and email will be available for the users. To proceed any transaction, customer’s consent will be needed. The customer will also have the option of opting out of the transaction. Subsequent payments may be completed without this step.
{{/usCountry}}Banks and other payment platforms will have to send a pre-transaction notification the customer, at least 24 hours prior to the first automatic payment. The user will have to choose the mode of this pre-transaction notification at the time of registration for the recurring transaction system. Options like SMS and email will be available for the users. To proceed any transaction, customer’s consent will be needed. The customer will also have the option of opting out of the transaction. Subsequent payments may be completed without this step.
{{/usCountry}}Is there a transaction limit in the rule?
Earlier, the RBI allowed transactions up to ₹2,000 to be exempted from the e-mandate based recurring transactions system. However, this was changed in a notification by the apex bank on December 4, 2020 when this limit was extended to ₹5,000. This means that recurring transactions above this limit will need additional authentication.