Automatic recurring payments to follow RBI instructions from 1 April

Automatic recurring payments to follow RBI instructions from 1 April

Come April, there will be no automatic recurring payments for various services including recharge and utility bills as the RBI has mandated Additional Factor Authentication (AFA) after 31 March.

However, banks and payment gateways are demanding additional time to follow RBI directives on automatic recurring payments.

On 4 December, RBI directed all banks, including RRBs, NBFCs and payment gateways, to undertake recurring transactions (domestic or cross- Border). Compliance with AFA will not continue beyond March 31, 2021.

As a part of the risk mitigation measure, the RBI announced the move to enhance the safety and security of card transactions.

Non-readability of some players may affect recurring payments such as utility bills, phone recharges, DTH and OTT, among others, after 31 March.

Recently, RBI extended the limit of contactless card transactions and e-mandates for transactions through cards and (UPI) from January 1, 2021 to January 1, 2021, to further facilitate digital payments in a safe and secure manner. Can be increased. .

Under the new norms, banks will have to inform the customers in advance about the advance payment and the transaction will be done after receipt from the customer. Therefore the transaction will not be automated but will be done after authentication from the customer.

For recurring payments above ₹ 5,000, banks will have to send the lump sum password to the customer as per the new guidelines.

“All ecosystem players, these are banks and payment gateways, are guilty of not taking the RBI directive seriously and not being able to come to a platform from 2019, which we should have done at least a few months ago,” So that Vishwas Patel, chairman of the Payment Council of India (PCI), said that there could be a smooth transition to a new way of doing recurring transactions.

Therefore, the Reserve Bank of India (RBI) requested to consider extension of at least one month, so that the players fulfill the RBI instructions, Patel, who is the executive director of Infibeam Avenues, said.

According to PCI estimates, everyone has understood its seriousness as it is a business of Rs 2,000 crore per month. We hope the cycle is not broken and end consumers and traders are not inconvenienced, ”he said.

A senior official of an e-commerce company said that the industry is not ready to implement the e-mandate framework issued by RBI.

From 1 April, customer e-mandate transactions will be rejected by banks if further extension is not given by the RBI, the official said, adding it would create major disruption to recurring transactions and destroy customer confidence in digital payments. will do it.

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