For recurring payments based on permanent debit instructions, banks are now required to reach out to customers before making such deductions. About three weeks into the new arrangement announced by the Reserve Bank of India (reserve Bank of India), confusion remains over how merchants, especially receiving partners overseas, can re-enable automatic payments for their customers. This has led to a scramble among large merchants to provide alternative payment solutions to customers, while others have temporarily reduced the range of services offered.
For example, Amazon has stopped free trials for its Prime subscription service in India, citing “friction in the auto payment process,” showed a disclosure on its website.
Netflix is prompting customers to reset their payment modes and one of the options provided is “autopay” on the Unified Payments Interface, a service the OTT company enabled only last month.
Meanwhile, Apple is advising its customers to top up their closed loop wallet Apple ID to ensure smooth payments.
unhappy customer
“If you add funds to your Apple ID balance, your subscription payments will continue until the balance is depleted,” an Apple communication seen by ET said.
Google is asking customers of its cloud services to add a new primary payment method that is “RBI compliant.” Others such as YouTube and Facebook have given similar instructions. The resulting confusion has not gone down well with customers or entrepreneurs running their subscription services. While some blamed their respective banks, many others also criticized the regulator.
Those affected include software providers as a service (SaaS) facilities, media platforms and even telecom companies that generate revenue through subscriptions on a one-time mandate basis. Kushal Bhagia, chief executive of VC firm FirstCheck, tweeted, “The most hated organization in the founder circle right now is RBI. “Every founder whose biz used to run on subscriptions is screaming with anger and helplessness at the sight of their retention group swayed by this random new regulation on credit card subscriptions (sic).”
The central bank could not be immediately contacted for its comments.
Apart from retail customers, many corporates and MSMEs also pay monthly bills through this automatic deduction route. The industry estimates that such payments amount to $2 billion in annual gross transaction value.
Experts told that RBI’s new rules Due to disruption in auto payments, the regulator gave banks more than two years to ensure compliance. Vishwas Patel, executive director, CCAvenue, said, “The new RBI rules are good for customers in the mid to long term, as they ensure visibility and control over their billing.”
“It is very disappointing that banks have not heeded to repeated reminders to ensure requisite compliance.”
Sources said the country’s largest public sector lender, SBI and card network American Express are yet to go live. American Express and SBI did not respond to ET’s queries.