New auto-debit rules for all card-based recurring transactions applicable from October 01, 2021.

Customers will have to re-register all debit and credit card linked standing instructions.

Auto-debit rules for all card-based transactions to change

Starting October 01, the Reserve Bank of India (RBI) had made an Additional Factor of Authentication (AFA) mandatory for all automatic recurring payments linked to your debit card, credit card, UPI or wallet. The new mandate has been introduced to bring added layers of security and ensure that no transactions are authorised without the customer’s approval.

What will be impacted?

Automatic or pre-authorised payments such as utility bills, online subscriptions (magazines, music,  etc.), DTH and OTT subscriptions, phone recharges will require the AFA.

As per the RBI directive, the bank through which the transaction is routed will have to send you an SMS/e-mail alert 24 hours before the recurring payment is due. It gives you adequate time to acknowledge the intimation and verify the transaction.

It should be noted that any standing instructions directly linked to your bank account, such as debit for mutual funds SIPs or EMI payments for loans, will not be impacted by the new mandate and will continue to function as before.

What are the auto-debit rules you should know?

A one-time registration is mandatory for all future card related standing instructions, wherein the first debit request will require a 2-factor authentication irrespective of the transaction amount. At the time of registration, customers will also have the option to provide the validity period for the auto-debit mandate.

The e-mandate rules for recurring transactions will depend on the value of the transaction.

For transactions below Rs 5000, you will receive a notification from the bank with the mandate ID, amount and due date. No action will be required from your end to approve the transaction. However, if you wish to cancel or pause the recurring e-mandate, the bank will provide a link.

For transactions exceeding Rs 5000, the same details will be provided, and you will have to give your consent via the AFA. As mentioned earlier, your bank will send you an SMS and email 24 hours before the debit.

Related: Consumers Can Give E-MAndate For Recurring Payments Via UPI: RBI

What are the alternatives if there are glitches with the e-mandate?

Banks are expected to have some teething issues. In case of a payment failure, banks will not levy any charges; however, service providers may levy a penalty towards delayed payments.

For immediate payments, you may have to log onto the merchant site and pay manually using your debit or credit card. Alternatively, you can set up card-based auto-pay instructions via external aggregators such as BillPay and BillDesk. Many banks also allow their cards to be registered for subscription payments directly via their apps. Kotak Mahindra’s Bill Pay, Yes Bank’s PayNow, ICICI Bank’s Mandate Hub are a few of the options at your disposal.


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