RBI extends timeline for auto-debit; auto-initiated payments may get impacted

Reserve Bank of India extends timeline for auto-debit till September 30, 2021.

On Wednesday, March 31, Reserve Bank of India released a notification regarding framework for processing of e-mandates for recurring online transactions.

The processing of recurring transactions, whether domestic or cross-border, using cards or pre-paid instruments or UPI may get impacted beyond March 31, 2021. So, if you have given any standing instructions on your debit cards or credit cards for recurring transactions, they may get impacted from April 1. Most banks are intimating their customers by sending them a communication on the new rules.

“Processing of e-mandate on cards for recurring transactions” whereby processing of e-mandate on cards / Prepaid Payment Instruments (PPIs) was permitted for recurring transactions (merchant payments), with Additional Factor of Authentication (AFA) during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions, subject to certain conditions.

A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer. An e-mandate on card for recurring transactions shall be registered only after successful AFA validation, in addition to the normal process required by the issuer.

It is, however, noted that the progress of onboarding existing as well as new mandates
of customers as per the framework is not satisfactory. Keeping in view the requests of some
stakeholders and to prevent any inconvenience to customers, it has been decided, as a onetime measure, to extend the timeline for ensuring full compliance to the framework till
September 30, 2021. During the extended timeline, no new mandate for recurring online
transactions shall be registered by stakeholders, unless such mandates are compliant with the
framework.

In August 2019, 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 to counter fraudulent transactions and enhance customer convenience.

Source: RBI

 

“Based on a request from the Indian Banks’ Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, Reserve Bank had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021. Thus, adequate time was given to the stakeholders to comply with the framework,” RBI noted.

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