Auto Debit Rule Change: A consolidated framework for digital payment e-mandates has been issued by the Reserve Bank of India (RBI). This move is aimed to simplify and streamline auto-debit systems. Going onwards, recurring payments of up to Rs. 15000 would not require a one-time password (OTP), meaning you can now easily pay for insurance, over-the-top (OTT) subscriptions and Systematic Investment Plans (SIPs).
Why The Auto Debit Rule Change?
The auto debit rule change would strengthen customer protection across prepaid payment instruments (PPIs), Unified Payment Interface (UPI) and cards including both cross-border and domestic transactions.
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Under the revised guidelines, recurring payments to the tune of Rs. 15000 would not require an OTP going forward. This means that payments such as credit card bills less than Rs. 15000 can now be processed without additional factor authentication (AFA).
However, the Central Bank has made both post-debit and pre-debit alerts mandatory. Moreover, pre-debit notifications must be sent at least 24 hours before a recurring transaction is about to happen. It must clearly mention the merchant name, date and amount while also giving customers the choice to opt out. On the contrary, post-transaction alerts must contain important details along with information on all available grievance redressal mechanisms.
How Will This Benefit Consumer?
A lot of recurring payments fail because the consumer may have changed his or her mobile number, the OTPs may reach late, the phone may have no signal or the recurring payment message may be missed by the consumers entirely.
The consolidated framework for digital payment e-mandates would give consumers an extra layer of protection while making online transactions. On the other hand, it would help banks gain an invaluable opportunity to collect data as evidence in the context of online payments.
The consolidated framework for digital payment e-mandates comes into effect immediately. A one-time registration process needs to be completed by consumers who want to select an e-mandate; it should be authenticated via AFA.
