Recurring card payments to be affected as new credit, debit card rules kick in from October 1
With the deadline less than a week away, some merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for repetitive payments
With the deadline less than a week away, some merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for repetitive pay
As per a TOI report, about 75% of banks have set up the technology required to meet RBI's directive. Although, some banks are still in the wait-and-see mode.
Banks are intimating to customers that some transactions may fail.
“Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transactions) given at merchant website/app on HDFC Bank credit/debit card unless it is as per RBI-compliant process," the banks are already writing to the customers.
Banks are recommending the user to either pay on the biller's website using OTP or use the bill-pay option for utilities.
A dozen banks, according to Razorpay, have put in place the technology to alert the customer a day in advance in the case of repeat payments while providing them with a link to discontinue the mandate, mentions the same TOI report.
This move by RBI can take growth in recurring payment mandates off the charts even though there might be disruptions in the short term, said Shashank Kumar, Razorpay chief technology officer and co-founder.
He adds that this directive caters to two problems. Discontinuing standing instruction to a merchant was a task earlier while some asked for a letter by post asking for the discontinuation.
Moreover, credit cards were mainly used for recurring payments while debit cards weren't as much in use.
Eventually, international mandates will operate uninterrupted as neither banks nor the RBI has jurisdiction over international billers, even after October 1.
The inclusion of 900 million existing debit cards could increase Indian markets multifold, said Kumar.
RBI has increased consumer confidence by allowing them to stop payments whenever they want, he added.
Online education and entertainment could become interesting, he said, as it increases the affordability of this service by allowing them to have a monthly debit model instead of a recover annual fees.
RBI, additionally, has capped debits at Rs 5,000 per month which indicates that billers would need to increase the frequency to enable auto-debit.