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Thursday, October 21, 2021

Auto-debit on credit card rule changes from tomorrow: Here’s what you need to know

The RBI had earlier extended the timeline for banks and other institutions to migrate to the framework for processing of e-mandates on recurring online transactions by six months.

By: Express Web Desk | New Delhi |
September 30, 2021 7:58:41 pm
The new rule is likely to impact those cardholders who already have put standing instructions on their cards for online payments. (Representative image, source: Pixabay)

The Reserve Bank of India (RBI) announced new guidelines on e-mandates or recurring payments through credit cards, which comes into effect from tomorrow, October 1, 2021.

The new rule is likely to impact those cardholders who already have put standing instructions on their cards for online payments. Services, where the auto-debit facility is mostly used, include OTT content platforms such as Netflix, Hotstar and Amazon Prime, utility bill payments such as those for electricity, broadband, mobile phones and so on.

While the new rule is aimed towards empowering the cardholder such that payments could only be made with the due consent of the user, existing standing instructions for these recurring payments might get affected.

The central bank had earlier extended the timeline for banks and other institutions to migrate to the framework for processing of e-mandates on recurring online transactions by six months.

Which transactions will be affected?

Only those transactions wherein a user has provided their card details for auto payment will be affected. The new RBI rules will not impact the recurring transactions under e-NACH and UPI AutoPay.

What will banks need to do?

All banks will have to notify their customers 24 hours in advance about the auto-debit transaction. Not only this, the customer will need to authenticate the transaction as per the new rules.

Will all transactions get affected?

According to the new norms, the RBI has capped auto debit facility for transactions of up to Rs 5,000. If a monthly auto-debit amount for any service/bill exceeds Rs 5,000-mark, then an additional factor of authentication (AFA) will be applied wherein a one-time password (OTP) will have to be used each time when payment is to be made.

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