On December 4, the RBI had directed all banks, including RRBs, NBFCs and payment gateways, to process recurring transactions (domestic or cross-border) using cards or prepaid payment instruments (PPIs) or Unified Payments Interfaces (PPIs).is i) not to be continued beyond March 31, 2021 under AFA non-compliant arrangements/practices.
As part of risk mitigation measures, RBI announced this move to enhance the safety and security of card transactions.
However, the non-preparation of some players forced the RBI to extend the deadline for recurring payments such as utility bills, recharge of phones, DTH and OTT, among others, till September 30.
Under the new norms, banks will have to inform customers in advance about the recurring payments due and the transaction will be done after the customer’s consent. So the transaction will not be automatic but will be done after authentication from the client.
For recurring payments above Rs 5,000, banks are required to send a one-time password to customers as per the new guidelines.
Most banks, including State Bank of India (SBI), have informed their customers about the new rules.
HDFC bank In a bulk message to customers, it has been said that as per RBI guidelines on e-mandate on cards, the bank will reject non-compliant recurring transactions on your credit/debit cards on merchant web or app with effect from October 1, 2021.
“Alternate Solution – Pay through OTP on our NetBanking for your Electricity/Water/Gas/Landline/Postpaid Mobile/Broadband/Insurance billers regular payment at certified merchant web/app or through Autopay in BillPay,” it said .
In August 2019, the Reserve Bank of India (RBI) had issued a framework for processing of e-mandates on recurring online transactions.
Initially applicable for cards and wallets, the framework was expanded in January 2020 to cover Unified Payments Interface (UPI) transactions as well.
RBI had said that the requirement of AFA has made digital payments in India safe and secure and the primary objective of the framework is to protect customers from fraudulent transactions and enhance customer convenience.
In the interest of convenience and safety of customers in using recurring online payments, mandatory usage framework of AFA during registration and first transaction (with exemption to a limit of Rs.2,000 for subsequent transactions, enhanced to Rs.5,000), as well as With pre-transaction notification, mandate withdrawal facility, etc.