Tuesday, 19 October 2021

New Auto debit Rule from 1st October

New Auto debit transaction Rule from 1st October

From 1st October, the auto-payment rule is likely to change. The (RBI) Reserve Bank of India earlier stated that recurring transactions using Unified Payments Interface (UPI), credit cards, debit cards, or other prepaid payment instruments (PPIs) would need additional factor authentication (AFA). Many credit and debit card users set auto-payment instructions for several services ranging from gas and electricity to movie and music subscriptions, and new rules alarm to confuse the millions of users.

Banks have already started notifying their customers about new transaction rules.

"As per RBI's recurring payment rule, w.e.f. 20-09-21, Standing Instruction on your Bank Card(s) for recurring transaction will not be honoured. You can pay the user directly using your card for uninterrupted service,"

In December, the RBI allowed more time to migrate to the new framework by 31st March, following a request from (IBA) the Indian Banks' Association, later pushing to 1st October this year.

RBI said.

"Any further delay in to make sure to complete keep the framework beyond the extended timeline will attract strict supervisory action now,"

"As per RBI guidelines and rule on 'Processing of e-mandate on cards for recurring transaction', will be effective from 1st October 2021, existing and new Standing Instructions which (were/are) register without additional factor of confirmation, will not be processed. We shall be execute the solution at the earliest,"

New Auto debit transaction Rule from 1st October 1unsplash image

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RBI's new rule on credit card and debit card auto-payments from 1st October: Details below

  1. All Standing commanding set up on your debit card and credit card for both domestic and international users will not be processed without the additional factor of confirmation from the user.
  2. Mandate modification, deletion, registration will require (AFA) additional factor authentication
  3.  Customers will get a pre-debit SMS and e-mail notification of the debit before 24 hours amount deduction
  4. Customers can also opt-out of the transaction or mandate via the link provided in the pre-debit notifications
  5. Customers will have the facility modify/cancel/view any standing command set on the card of the user
  6. Customers can also set a maximum amount for each Standing Instruction. Suppose the transaction amount is greater than the maximum amount assigned by the customer. In that case, the pre-debit notification will link the customer to authenticate/confirming the transactions with (AFA) additional factor authentication. Without this confirmation, the transaction will not be processed further.
  7. Any recurring transaction of more than ₹5 000 will require additional factor authentication each time the amount is debiting.

If SI for Bill payments registers on your Bank account, there will be no changes. If these are on your Bank's credit or debit card, these will get declined from 1st October 2021. E.g., SI given on Netflix, Amazon, Insurance payments will get deactivated. However, SI registered using bank accounts for Mutual Funds, SIPs, EMIs will continue.

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