Debit card, credit card auto-payment rules change from April

[ilykmtns]

Update: Reserve Bank of India (RBI) has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021. source

1. For auto-payments from debit and credit cards or via wallets, an additional authentication by the customer will be required from 1 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.
2. The limit for auto-debit from cards and wallets is set at ₹5,000. For transactions above the cut-off, an additional one-time password (OTP) will be needed.
3. The new rule will be applicable for transactions performed using all types of cards – debit, credit, UPI and PPIs, including wallets, the central bank earlier mentioned.
4. The regulator earlier asked the banks to introduce additional factor authentication by 31 March, 2021. In a circular issued on 4 December, 2020, RBI said, "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."
5. The issuer has to send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge or debit to the card. The user will have an option to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification, the regulator said.
6. To proceed the transaction, customer's consent is must. The cardholder will also have an option to "opt-out of that particular transaction".
7. The issuer shall provide the cardholder 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.
8. Banks have started informing its customers about this new rule. “In accordance with regulatory requirements, processing of e-mandates for recurring transactions, which have been registered on your credit or debit card without Additional Factor of Authentication (AFA), will be discontinued w.e.f. April 1, 2021. You may make payments directly through your card at the merchant website or application," read a communication sent by Axis Bank.

source

 

[resjudicata]

@ilykmtns This is very useful. I sometimes forget to cancel some yearly subscriptions and they auto charge me. At least for higher value subscriptions, now I get to decide whether to allow it even if the subscripiton service does not alert me earlier about upcoming subscription.

 

[protectmysteps]

@resjudicata All they could do was have banks comply with fraud resolution in an effective and efficient way. Just like other countries who take their people's money and convenience seriously.

By declining auto payments they are creating more trouble than preventing. From now on my Google ads account will require manual payments every month. And if I forgot to pay for as much as few days, my ads stops running and for a business which solely rely on online advertising I will loose business.

 

[kman009]

@protectmysteps Exactly what I was thinking! So many of our work expenses are on autopay - email, hosting, back up. It’s going to be a massive headache to authorise each and every payment every month.

 

[beaniebabie2]

@protectmysteps People can find a way to complain about anything

 

[joeybaggz]

@beaniebabie2 How is asking for better fraud resolution a complain ? If this was done to stop fraud it won't be effective, since if your credit card info is leaked someone can still cause fraud. All this will do is put in more hoops.

Auto Payment is a very useful feature for online businesses and it has clearly been said that we are moving towards more subscription based services. This order sets back india's payment services compared to somewhere else in the world.

 

[deer]

@beaniebabie2 @beaniebabie2 just because you don't understand other people's use cases doesn't mean they are complaining. in fact, your opinion here is totally a waste, honestly

 

[johncflores1]

@resjudicata This happened with me. There was app called "better me" i took trial and forgot to cancel. They took 6500 and when requested Google said ask developer abd developers avoided me and ignored me on twitter facebook and emails.

 

[will1999]

@johncflores1 Just because you make poor financial decisions doesn't mean we should all do away with seamlessness of online transactions. Pro tip: on your Google Play app you can look at your subscriptions which lists your current and upcoming subscription charges.

 

[deer]

@johncflores1 if you look in this thread, the general pattern seems to be "I made a mistake, I forgot, this is very useful because I am not a fully functioning adult capable of making smart financial choices"

Then again in a country full of people like this I guess the govt has no choice?

 

[johncflores1]

@deer That's true. We might do stupid thing. After all we are humans. This isn't just the case with India, this globally prevails. But big corporations having control over goverment doesn't let such regulations being passed where recurring payments are authenticated.

There are smart perfect humans, there are stupid who forget about such auto pay and there are people who doesn't know this concept of auto pay. Later two constitution highest percentage. I moved to catagory 1, my mistake cost me ₹. 6500 and I'm learnt from that but there can be possibly lost of people who might fall in this trap of recurring payments.

I have atleast 16 auto payment, I'm sad by this step for me but I don't wish others make expensive mistakes.

 

[heliumskylark]

@deer There are many companies which take NACH e-mandates through netbanking for recurring automatic payments every month but make it impossible to cancel it. If you call their customer care, they tell you to contact the bank and once you contact the bank, they claim helplessness and tell you to contact the company's customer care. So as a customer, you end up going round and round in circles and nothing is achieved.

I have been a victim of this shady practice recently and have registered a formal complaint with the banking ombudsman. Since my case is still open, I won't name the parties responsible yet.

Does this new order help in any way in that regard? I don't want RBI to stop automatic payments as they are very useful. Any instance of customer forgetting to cancel subscription should be owned up by the customer. Government shouldn't try to be a nanny. But banks should provide an online user interface to cancel all NACH mandates registered against an SB account for easy cancellation or else it becomes an endless source of agony for customers who have to deal with faceless corporations and their stupid as brick customer care.

 

[shutupandrock94]

@ilykmtns

The limit for auto-debit from cards and wallets is set at ₹5,000. For transactions above the cut-off, an additional one-time password (OTP) will be needed.

How to pay more than ₹5000 in international websites that doesn't require otp if the rule is active on Credit and debit cards??

 

[resjudicata]

@ilykmtns So if I autopay my electricity, phone, internet bills via Credit Card- I'd require to authenticate the transaction via OTP every month? If yes, then it's a disaster for auto payments.

 

[resjudicata]

The limit is 5k and above. So if your utility or other bills are less than 5k per bill, it should work without needing additional OTP.

 

[resjudicata]

this would be useful incase someone forgot they had autopay or didnt know about autopay stated it by mistake

 

[resjudicata]

no one starts autopay by mistake. The one time process is a bit lengthy. Also, my bank sends out an email + SMS 7 days before any autopay amount gets deducted from my CC.

 

[whitemagnolia]

@resjudicata Yeah same here. Just when I finally found a good bank which lets me use Google Cloud Provider services I get this news. Sigh, too much regulations in this country.

 

[resjudicata]

@whitemagnolia Google cloud service -like integration with GSuite? What's that bank?

 

[whitemagnolia]

@resjudicata Not G Suite. GCP is Google’s offerings like Microsoft’s Azure & Amazon’s AWS.

Unlike the rest of the world Indian regulations forbade automatic monthly payments w/o OTPs which is a requirement to sign up for GCP services. And a lot of Indian bank’s debit cards were incompatible until I found Kotak’s virtual debit cards.

I’m worried that I would be back to ground zero once again now because of these rules. There’s so much regulation in literally every other thing in the country.