New Delhi: The Reserve Bank of India (RBI) has put an end to automatic recurring payments after March 31. The RBI aims to enhance the safety and security of card transactions with this move.
Banks will have to alert the customers in advance about recurring payment due. The transaction would be carried out only after getting the customer's nod. This means no money will be debited automatically from your account.
As an added measure, for recurring payments above Rs 5,000, banks are also required to send a one-time password to the customer.
This is likely to affect recurring monthly payments to services like streaming platforms, mobile recharge and utility bills.
However, standing instructions on banks accounts for recurring payments to EMIs and mutual funds will continue as usual.
On December 4, RBI had directed all banks and payment gateways that the process of recurring transactions via Unified Payments Interface (UPI) not compliant with this new guideline would not be continued beyond March 31.
However, banks and payment gateways are seeking additional time to comply with the RBI directive on automatic recurring payments.
This could impact recurring payments including utility bills, phone, DTH and OTT recharge, among others, post March 31.
All the ecosystem players, be it banks and payment gateways, are guilty of not taking RBI directive seriously from 2019 and not being able to come on a single platform, which should have been done at least a couple of months back, so that there could have been a smooth transition to the new way of doing recurring transactions," Payments Council Of India (PCI) Chairman Vishwas Patel said.
The Reserve Bank of India has been requested to consider giving at least one-month extension so that players meet its directives, Patel, who is executive director of Infibeam Avenues, said.
"Everybody has understood the seriousness of this because it is a Rs 2,000 crore a month business, as per PCI estimates. We hope that the cycle is not broken and the end consumers and merchants are not inconvenienced," he added.
A senior executive at an e-commerce company said the industry is not prepared to implement the e-mandate framework issued by RBI.
Starting April 1, customers' e-mandate transactions will be declined by banks, if further extension is not granted by RBI. This will disrupt recurring transactions and may erode customer trust in digital payments.
