Customers who use the automatic debit feature on their debit and credit cards for recurring payments may see some transactions fail as of October 1. This is due to a rule mandated by the Reserve Bank of India (RBI).
Many banks, including Axis and HDFC, have already started notifying their customers about the change of mandate for direct debit payments.
“To protect consumers, the Reserve Bank of India (RBI) has implemented new safety and security measures for card payments. Please Note: As of October 1, 2021, the Bank will NOT approve ANY standing instruction (electronic mandate for processing recurring payments) given on the merchant’s website / app, on the HDFC credit card / debit card Bank, unless it complies with the RBI process. “HDFC Bank said on its website.
“As per RBI’s recurring payment guidelines, 09-20-21, the standing instructions on your Axis bank card (s) for recurring transactions will not be honored. You can pay the merchant directly by using your card for uninterrupted service, “reads a communication from Axis Bank.
What is RBI’s new order on recurring payments?
The Reserve Bank of India (RBI) had published a framework for handling electronic money orders on recurring online transactions. It made AFA (Additional Factor of Authentication) mandatory for all recurring transactions below ??5,000 on debit cards, credit cards, UPIs and other prepaid payment instruments (PPIs), and all stakeholders are required to ensure full compliance with the framework by September 30, 2021.
This directive applies to all recurring payments that were previously automatically debited from customers’ cards (credit / debit / prepaid) for mobile bills, utilities, other recurring bills as well as subscription payments like services OTT streaming.
What’s the process?
Banks will send a notification to a customer via SMS and email prior to the transaction. Customers will be notified by banks 24 hours before a money order is debited, leaving enough time for the consumer to change or cancel a payment
The notification will contain details of the merchant name, transaction amount, date of debit, transaction reference number, and reason for debit.
The cardholder will have the option to decline or approve the transaction.
You need to make sure that your correct mobile number is linked to your debit / credit cards so that you can receive a notification for approval.
“In accordance with the Reserve Bank of India guidelines on electronic money orders for all recurring merchant payments / subscriptions via credit and debit cards, Kotak Mahindra Bank (Kotak) is fully equipped to ensure compliance with the regulations that will come into effect. effective October 1. 2021. To ensure a smooth transition, the ecosystem of merchant / merchant aggregator must also be ready. The Bank works closely with merchants / merchant aggregators to ensure minimum disruption for customers. Kotak is already operating on UPI-based mandates and the initial adoption by users is encouraging. We expect an increase in card-based and UPI-based mandates as more merchants start offering and more consumers start creating electronic mandates, ”said the spokesperson for Kotak Mahindra group.
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