Automatic and recurring payments on your mobile and utility bills, as well as subscription fees to any of your favorite platforms (OTT) using your credit card, debit card, UPI, or other prepaid payment instruments, are likely to be disrupted at launch Thursday April 1, when the Reserve Bank of India (RBI) applies its recently announced recurring transaction rule.
What does the RBI rule say? What will it mean for you? Here are 10 important facts you need to know about the new rule and how it will affect you.
- The Central Bank notified all planned commercial banks, card payment networks, prepaid issuers and the National Payment Corporation of India (NPCI) of the forthcoming regime, which it first announced in a circular in August 2019.
- The decision will apply not only to banks and financial institutions offering credit cards, debit cards and other prepaid payment instruments, but also to mobile payment portfolios and UPI-based payment platforms.
- The RBI said in his initial circular that it plans to introduce an additional authentication factor (AFA) for recurring transactions made through credit and debit cards and prepaid payment instruments such as mobile wallets. Explain for which transactions AFA will be required.
- Although the original circular was sent to banks, card payment networks and prepaid payment instruments issued, RBI extended its new rule to platforms allowing payments based on the Unified Payment Interface (UPI) in January last year.
- The rule was originally planned for recurring transactions that are up to Rs. 2,000. RBI, however announced in December, based on requests received from stakeholders, it decided to increase the limit for recurring transactions that do not require AFA to Rs. 5000. The bank also introduced the deadline of March 31.
- The RBI circular issued on 4 December clearly states: “The processing of recurring transactions (internal or cross-border) using cards / PPIs / UPIs in agreements / practices that do not comply with the above instructions must not continue after 31 March. 2021. “
- Once implemented, the new rule will require banks and payment platforms offering recurring transactions to send a pre-transaction notification to customers at least 24 hours before the first transaction is debited. The notification mode (SMS, email, etc.) will be chosen by the user during the registration of the electronic mandate.
- This notice will essentially require the consent of the customers – after which the issuer will be able to continue the payment.
- In addition to end-users, the new rule is likely to affect businesses that often use automatic payments for their recurring fees.
- Banks and payment platforms have yet to clarify whether they are ready to operate under the latest regime. Meanwhile, automatic payments through banks and wallets are expected to face some problems – at least initially.
Gadgets 360 has reached banks, including HDFC Bank and ICICI Bank as well as platforms such as Google Pay,, Paytm, and MobiKwik to understand their opinion. This story will be updated when and when companies respond.
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