Tag: e-mandate

RBI extends timeline for processing of recurring online transactions till Sept 2021, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India had issued a framework for processing of e-mandates on recurring online transaction with additional factor of authentication.

First issued in August 2021, the framework was extended in January 2020 and 31st March, 2021 was the last deadline, however noting that the framework has not been fully implemented across the industry the RBI is looking at it as a serious concern.

The RBI said, “This non-compliance is noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.”

The requirement of additional factor of authentication made digital payments in India safe and secure. Initially the framework mandated use of AFA for transactions above Rs 2,000 which was later enhanced to Rs 5,000.

The primary objective with AFA by RBI was to protect customers from fraudulent transactions and enhance customer convenience. A request from Indian Banks’ Association led to RBI extending the deadline till March 31, 2021 to enable banks to complete the migration and RBI had advised the stakeholders in December 2020 to mitigate to the framework by March 31, 2021.

However the payments industry wasn’t ready for the transition and could have led to customer inconvenience along with a loss of Rs 2,000 crore estimated by the Payments Council of India.



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Make new arrangements for recurring credit, debit card transactions as new norms kick in from April 1

Banking & Finance

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Starting April 1, customers will have to make alternative arrangements for recurring transactions for utilities and bill payments such as registering the biller on internet or mobile banking.

This is because most banks and payment companies have been unable to meet RBI norms to process e-mandate on cards for recurring transactions.

However, UPI and Rupay AutoPay facilities are unlikely to be disrupted. Sources said that most banks are live on it but it is unclear as to how many merchants are live on it.

Most large banks and payment players have already been informing customers that they would have to make alternative arrangements for auto debit through debit and credit cards.

Apart from payments for utilities like phone and electricity bills, even recurring payments to service providers such as Amazon Prime and Netflix will have to be made directly.

According to bankers, while they have made arrangements to comply with RBI norms, many merchants are yet to adhere to them.

“We are currently building a solution in adherence to the regulatory requirements. Therefore, effective April 1, 2021 any standing instruction for recurring transactions on your Card account will not be approved by American Express,” American Express said in a communication to customers, adding that to avoid any disruption in delivery of goods and services, starting April 1, 2021 customers should make payments directly to the service providers for bills as and when they become due.

Visa declined to comment on the issue when approached by BusinessLine.

“..as per regulatory guidelines, recurring merchant transactions based on Standing Instructions on your ICICI Bank Cards will be disabled effective April 1, 2021. To continue making payments against your regular utility bills, kindly register your biller through iMobile Pay or Internet Banking. For other standing instruction transactions, you may re-register or initiate transactions at regular intervals,” ICICI Bank said in a similar message to customers.

Recently, the Internet And Mobile Association of India (IAMAI) had also warned that millions of e-mandates set up by customers could fail from April 1, 2021.

The RBI had issued two circulars (August 2019 and December 2021) to banks, ‘non-bank prepaid payment instrument issuers’, and ‘authorised card payment networks’ for processing of e-mandates. The deadline to comply with it is March 31, 2021.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and it would be carried following nod from the customer. For recurring payments above ₹5,000, banks are required to send a one-time password to the customer as per the new guidelines.

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