Have auto-debit payment set up for bills, subscriptions? It could stop from April 1

The IAMAI has warned that millions of e-mandates stop from 1 April 2021, as most major banks are yet to follow the new RBI guidelines.

Millions of bank customers who have set up recurring auto-debit payments such as mobile and utility bills, OTT (over-the-top) platforms and digital news subscriptions have been facing trouble since April 1 as these payments cannot take place. . It is because of this that the Reserve Bank of India (RBI) has set a deadline of new regulations on March 31 to enable Additional Factor Authentication (AFA) for recurring payments through debit and credit cards.

The Internet and Mobile Association of India (IAMAI) has warned that millions of customer e-mandates may fail from April 1, 2021, as most major banks have followed RBI’s requirements for registration, tracking, modification and activation. Has not taken the requisite steps for. Return of e-mandate.

Payment volumes of more than Rs 2,000 crore, including MSMEs and corporates including cards, utility bills, OTT and media subscriptions, are estimated to be affected in April.

The RBI has issued two circulars to banks, non-bank prepaid payment instrument issuers, and an authorised card payment network for processing e-mandates, expiring on March 31, 2021.

The new rule requires banks to send a notification to customers five days before the payment is deducted and allows the transaction to go through only after the customer’s approval. For recurring payments of more than Rs 5,000, banks are also required to send lump-sum passwords to customers.

“Industry consultancy suggests that most major scheduled commercial banks do not have advanced capacity to comply. Due to this, other participants in ecosystems such as acquisitions and card networks are not able to comply with the obligations under these circulars.

As a result, automatic monthly recurring payments via debit or credit card for many services are likely to fail from April 1, until banks and merchants find an option. Until then, customers will have to pay bills or subscriptions by visiting individual merchants’ payment pages. However, recurring payments using UPI’s AutoPay feature will not be affected.

With banks such as HDFC Bank, ICICI Bank, State Bank of India informing network partners of their inability to process standing instructions on recurring payments, vendors have now started informing customers, suggesting alternative methods of payment Are giving

Asking Niti Aayog to take up the issue of extension of time with RBI, IAMAI said that it is important to appreciate that all banks will first need to enable such an e-mandate-compliant framework, after which other participants such as merchants And PAs (payment aggregators) will need to build their technical integration.

Earlier this month, the RBI asked banks, payment gateways and other payment service providers permanently block card details, making recurring payments even more difficult. The central bank took this step citing data leaks in payment processor Jespe and newly banking startup Cheque book.