The auto debit payment facilities of bills and subscriptions will stay in place for six more months. The Reserve Bank of India (RBI) has extended the timeline for processing recurring online transactions by six months. Now banks and financial institutions have time till 30 September to implement the new framework. “To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021,” RBI said.
It further noted that the non-compliance of the framework beyond the extended timeline would be a serious concern and be dealt with separately.
“The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021,” it said.
“Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.”
Under the new rule, which was earlier to be enforced from 1 April, recurring transactions will require additional authentication by the customer to proceed. Initially, the rule was planned on recurring transactions worth up to Rs 2,000. The RBI, however, announced in December that based on requests from stakeholders, the limit was raised to Rs 5,000.
In August 2019, the Reserve Bank of India (RBI) had issued a framework for the processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.
The requirement of the Additional Factor of Authentication (AFA) has made digital payments in India safe and secure. In the interest of customer convenience and safety in the use of recurring online payments, the framework mandated use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹2,000, since enhanced to ₹5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc. The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.
On December 4, RBI had directed all banks including RRBs, NBFCs, and payment gateways that the processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.
Debit card, credit card auto-debit payment facilities
Under the new norms, banks will be required to inform customers in advance about recurring payment due and the transaction would be carried following the nod from the customer. So the transaction would not be automatic but would be done after authentication from the customer. For recurring payments above Rs 5,000, banks are required to send a one-time password to the customer as per the new guidelines.