Reserve Bank Of India (RBI) has issued a circular to all the stakeholders of Banks and payment wallets regarding the extension of the timeline for processing auto-debit payment by six months. By 30th September, banks and other financial institutions have to ensure adherence to the new norm.
“Keeping in view the requests of some stakeholders and to prevent any inconvenience to customers, it has been decided, as a one-time measure, to extend the timeline for ensuring full compliance to the framework till September 30, 2021,” said the RBI circular.
For making the payment ecosystem “safe” and “secure”, RBI had introduced Additional Factor Authentication (AFA).
Earlier RBI mentioned that AFA is mandatory for the customers availing recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) from 1 April.
Auto-debit facilities generally help paying utility bills, EMIs, subscription charges for OTT streaming platforms like Amazon Prime, Disney+Hotstar, Netflix. With the introduction of the new framework, these services were likely to be hit.
As per the guidelines of RBI, the limit of transaction for auto-debit is ₹5000. Any transaction surpassing this limit will need an additional one-time password. The Bank has to send the notification at least 24 hours before such auto-debit payment is made. For the first time transactions, the Bank will only process the payment if the customer approves.
RBI added, “No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions.”
Stakeholders were given sufficient time to complete the process of migration to the framework by March 31, 2021. Despite this, there seemed a non-readiness amongst the players. Warning of the stringent actions, RBI said,” During the extended timeline, no new mandate for recurring online transactions shall be registered by stakeholders, unless such mandates are compliant with the framework. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.”
In August 2019, RBI had notified all scheduled commercial banks, co-operative banks, payment banks, wallets, Non-bank Prepaid Payment Instrument Issuers, National Payments Corporation of India (NPCI) about the new framework for recurring transactions.