New RBI norms: No automatic recurring payment from today

New Delhi, September 30

With the RBI’s extended deadline coming to an end, there will be no automatic recurring payment for various services, including recharge and utility bill as the additional factor of authentication (AFA) will become mandatory from Friday.

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.

Risk mitigating measure

• Under the new norms, banks will be required to inform customers in advance about recurring payment due and transaction would be carried following nod from the customer. So the transaction would not be automatic but would be done after authentication from the customer
• For recurring payments above Rs5,000, banks are required to send a one-time password to customers as per the new guidelines
• The Reserve Bank of India said this step will bolster safety and security of card transactions

As part of risk mitigation measures, RBI announced this step to bolster safety and security of card transactions.

However, non-readiness of some of the players forced the RBI to extend the deadline on recurring payment such as utility bills, recharge of phone, DTH and OTT, among others, till September 30.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and transaction would be carried following 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 customers as per the new guidelines.

Most of the banks including SBI have informed their customers about the new rules.

HDFC Bank in a bulk message to customers said as per RBI guidelines on e-Mandate on cards, the bank will decline non-compliant recurring transaction at merchant web or app on your credit/debit card from October 1, 2021.

“Alternate solution — retry regular payment on merchant web/app authenticated via OTP or pay via AutoPay in BillPay on our NetBanking for your electricity/water/ gas/landline/postpaid mobile/ broadband/insurance billers,” it said. In August 2019, the RBI had issued a framework for 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. — PTI

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