Home Business framework New RBI Auto Debit Rules Take Effect From Friday: What You Need To Know

New RBI Auto Debit Rules Take Effect From Friday: What You Need To Know


With the end of the Reserve Bank of India (RBI) extended deadline, there will be no automatic recurring payment for various services including recharge and utility bill because the additional authentication factor (AFA ) will become mandatory from Friday.

On December 4, the RBI ordered all banks, including RRBs, NBFCs and payment gateways, to process recurring transactions (domestic or cross-border) using prepaid cards or payment instruments (PPI) or Unified Payment Interface (UPI) under non-AFA-compliant arrangements / practices would not continue beyond March 31, 2021.

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

However, the lack of preparation by some of the players forced the RBI to extend the deadline for recurring payments such as utility bills, phone recharge, DTH and OTT, among others, until September 30.

Under the new standards, banks will be required to notify customers in advance of recurring payments due and the transaction will be completed after customer approval. Thus the transaction would not be automatic but would take place after customer authentication.

For recurring payments over 5,000 rupees, banks are required to send a one-time password to customers in accordance with the new guidelines.

Most banks, including the State Bank of India (SBI), have informed their customers of the new rules.

HDFC bank in a mass message to customers said that in accordance with the RBI’s e-money order guidelines on cards, the bank will reject non-compliant recurring transactions on the merchant’s website or app on your credit card. credit / debit from October 1, 2021.

“Alternative 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 / mobile postpaid / broadband / insurance bills”, a-t -he declares.

In August 2019, the Reserve Bank of India (RBI) published a framework for handling electronic money orders on recurring online transactions.

Initially applicable to cards and wallets, the framework was extended in January 2020 to also cover UPI (Unified Payments Interface) transactions.

RBI had said that the AFA’s requirement made digital payments in India safe and secure, and that the main purpose of the framework was to protect customers from fraudulent transactions and improve customer convenience.

In the interest of customer convenience and security in using recurring online payments, the framework made the use of AFA mandatory during check-in and the first transaction (with flexibility for subsequent transactions up to a limit of Rs 2,000, since increased to Rs 5,000), as well as pre-transaction notification, possibility to withdraw the mandate, etc.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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