Starting April 1, a new RBI rule is coming up which could lead to card payment disruption for many users. These disruptions will include problems in making bill payments from your account – mobile, utility, and other bills as well as subscription charges for OTT platforms.
The RBI had earlier notified that from April 1, the auto-payment rules are likely to be changed. The RBI had said that recuring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will need additional factor authentication (AFA) from April 1.
This means a bank will have to notify a user about a recurring transaction (auto payments) a day ahead of initiating the same. And such transactions will only be carry forwarded after the nod of the customer.
For auto-payments from debit and credit cards or via wallets, an additional authentication will be required by the customer from April. “A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer,” RBI said.
This limit however applies to transactions of Rs 5000 and above. Meaning, any auto payment above Rs 5000 will have to be reconfirmed by the user.
The RBI had earlier asked the bank to introduce such a rule by 31 March 2021. “Processing of recurring transactions (domestic or cross-border) using cards/PPIs/UPI under arrangements/practices not compliant with the aforesaid instructions shall not be continued beyond 31 March 2021.”
From now, before an auto transaction of over Rs 5000, one will receive a message asking them to reconfirm the same. The cardholder will also have an option to “opt-out of that particular transaction”.
It would be the duty of the cardholder to provide an online facility to withdraw any e-mandate at any point, RBI said. “No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions,” the bank noted.