From April 1, Expect Disruptions to These Types of Card Payments: 10 Facts

 

Payments made automatically from your account for mobile, utility, and other bills also as subscription charges for over-the-top (OTT) platforms are likely to be disrupted from April 1 due to a replacement Federal Reserve Bank of India (RBI) rule.

  The rule, which needs additional authentication for recurring transactions using credit cards, debit cards, UPI, or other prepaid payment instruments (PPIs), could affect many customers.

What does the RBI rule say? what is going to it mean for you? Here are 10 important facts you would like to understand about the new rule and the way it'll affect you.

From April 1, 2021, recurring transactions would require a further authentication by the customer (at minimum, at the time of fixing a replacement recurring payment) to proceed.
Initially, the rule was planned on recurring transactions worth up to Rs. 2,000. The RBI, however, announced in December 2020 that on the idea of requests from stakeholders, the limit was raised up to Rs. 5,000. Transactions above that cut-off would require a further one-time password (OTP).

RBI in August 2019 notified all scheduled commercial banks, card payment networks, prepaid instrument issuers, and therefore the National Payments Corporation of India (NPCI) about the large change for recurring transactions.

The ruling is about to be applied on not just banks and financial institutions offering credit cards, debit cards, and other prepaid payment instruments, but also on mobile payment wallets and platforms enabling UPI-based payments.

The bank also introduced a March 31, 2021 deadline to comply, with the RBI circular issued on December 4 reading, "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 March 31, 2021."

Banks and payment platforms offering recurring transactions will need to send a notification to customers a minimum of 24 hours before the primary transaction is debited. 

The mode of notification (SMS, email, etc.) are going to be chosen by the buyer at the time of registering the e-mandate for recurring payments.
That notification will essentially need the customer's consent — upon which the issuer are going to be ready to proceed with the payment.

 Subsequent recurring transactions may happen without that extra step.
Banks are expected to say no these automatic payments and users will need to make manual transactions to finish bill payments. 

Banks have also started notifying customers that they're going to not be ready to process recurring payments, meaning until things are sorted out by institutions and authentication is granted, users may need to manually make transactions.

In addition to finish consumers, the new rule is probably going to impact enterprises that always use auto-payments for his or her recurring charges. Third-party payment processors have also declined to share customer information with banks thanks to contractual agreements, which could increase the matter .

Thefinancial institution has refused to increase the deadline but the matter is predicted to be resolved within the coming weeks. Banks and payments platforms are yet to supply clarity on whether they're able to operate under the newest regime. 

Meanwhile, it's expected that automatic payments through banks and wallets may face some hiccups — a minimum of initially.
An executive of an e-commerce company said, “E-commerce companies are committed to stick to all or any applicable regulations. However, industry isn't prepared to implement the e-mandate framework issued by RBI. Most banks and networks need a couple of more months to upgrade their systems to comply. 

Starting April 1, customer e-mandate transactions are going to be declined by banks, if further extension isn't granted by RBI. this may cause major disruption to recurring transactions and can erode customer trust in digital payments.”

However, BIONICK TECH wasn't ready to independently verify whether the available details were associated with the alleged MobiKwik data breach