New RBI direct debit rules from Friday: What you need to know
As the Reserve Bank of India (RBI) extended deadline is coming to an end, there will be no automatic recurring payment for various services such as top-up and utility bills as the Additional Authentication Factor (AFA) will become mandatory from Friday.
On December 4, the RBI had instructed all banks, including RRBs, NBFCs and payment gateways, that the processing of recurring transactions (domestic or cross-border) with cards or prepaid payment instruments (PPIs) or Unified Payments Interface (UPI) under agreements / Practices not compliant with AFA will not continue beyond March 31, 2021.
As part of risk reduction measures, RBI has announced this step in order to increase the security of card transactions.
However, the unwillingness of some players forced the RBI to extend the deadline for recurring payments such as electricity bills, topping up the phone, DTH and OTT, among others, to September 30th.
Under the new standards, banks would have to inform their customers in advance of any recurring payments due and the transaction would be carried out after the customer nodded. The transaction would not take place automatically, but after authentication by the customer.
For recurring payments over 5,000 rupees, banks must send a one-time password to customers under the new guidelines.
Most banks, including the State Bank of India (SBI), have informed their customers about the new rules.
HDFC Bank informed customers in a mass message that the bank would reject non-compliant recurring transactions on the merchant web or in the app on your credit / debit card from October 1, 2021 in accordance with the RBI guidelines for e-mandates on cards will.
“Alternative solution – Repeat the regular payment on Merchant Web / App, which was authenticated via OTP, or pay via AutoPay in BillPay in our NetBanking for your electricity / water / gas / landline / postpaid cellular / Broadband / Insurance clearing houses, “it said.
In August 2019, the Reserve Bank of India (RBI) issued a framework for processing e-mandates for recurring online transactions.
Originally applicable to cards and wallets, the framework was expanded in January 2020 to also cover Unified Payments Interface (UPI) transactions.
The RBI had stated that AFA’s requirement has made digital payments in India safe and secure and the main objective of the framework is to protect customers from fraudulent transactions and improve customer convenience.
In the interests of customer convenience and security when using recurring online payments, the framework prescribes the use of AFA during registration and the first transaction (with relaxation for subsequent transactions up to a limit of Rs 2,000, since then increased to Rs 5,000) , as well as notification before the transaction, possibility to revoke the mandate, etc.
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