Tag: Shashank Kumar

Recurring card payments to be hit from next month, BFSI News, ET BFSI

Personal Finance

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Some cardholders might see standing instructions for payment on their credit card fail from next month. These could be for subscriptions with online content platforms, edtech companies or standing instructions for online advertisement payments. Some of these merchants are yet to comply with RBI’s new requirement of additional factor authentication (OTP) for recurring payments through cards though the deadline is less than a week away.

According to sources, around 75% of the banks have put in place the technology to meet RBI’s directive. However, there are some banks and merchants who are still in wait-and-watch mode. Banks are writing to customers, warning that some transactions may fail: “Effective October 1, 2021, the bank will not approve any standing instruction (e-mandate on cards for recurring transactions) given at merchant website/app on HDFC Bank credit/debit card, unless it is as per RBI-compliant process.” The bank has recommended that customers use its bill-pay option for utilities or pay on the biller’s website using OTP.

According to Razorpay, which processes close to a third of all recurring payment transactions, a dozen banks have already put in place the new setup where even for repeat payments the bank will alert the customer a day in advance and also provide them with a link to discontinue the mandate. “In the short term, there may be some disruption but, in the long term, this move by the RBI can take growth in recurring payment mandates off the charts,” said Razorpay chief technology officer and co-founder Shashank Kumar.

Kumar says the RBI directive addresses two key issues. Earlier, discontinuing a standing instruction to a merchant could be extremely cumbersome with some asking for a letter to be sent by post asking to discontinue the subscription. Second, debit cards were a grey area and recurring payments were done largely in credit cards. Incidentally, even after October 1, international mandates will continue as neither banks nor the RBI has jurisdiction over international billers.

“There are 900 million debit cards in India and their inclusion could increase the market multifold,” said Kumar. According to Kumar, by empowering customers to stop the payments at any time, the RBI has increased the confidence level. This could also make online education or entertainment more affordable as the availability of this facility will encourage providers to have a monthly debit model rather than recover annual fees.

Besides requiring banks to alert customers, the RBI has capped automatic debits at Rs 5,000 per month. This would mean that billers, like insurance companies, with large instalments, would need to increase the frequency to enable auto-debit. In the case of utilities, many online payers use their bank’s bill payment platform for standing instructions and will have no impact.



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Razorpay partners Mastercard to make recurring payments secure

Banking & Finance

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Razorpay, a full-stack financial services company, has partnered with Mastercard to launch MandateHQ, a new recurring payment interface that will help banks comply with the new RBI guidelines on recurring payments.

Banks can adopt this MandateHQ solution in as little as seven days and enable their cardholders make recurring payments across their ecosystem in compliance with the RBI norms, Shashank Kumar, Co-Founder and CTO, Razorpay, told BusinessLine.

RBI framework

It maybe recalled that the RBI had issued a framework for processing e-mandates on recurring online transactions and had made additional factor of authentication mandatory for all recurring transactions below ₹5,000 on debit cards, credit cards, UPI and other pre-paid instruments. All stakeholders are required to ensure full compliance with the framework by September 30.

This RBI directive is applicable to all recurring payments, which were earlier debited automatically from customers cards (credit/debit/prepaid) for mobile, utility, and other recurring bills, as well as subscription payments for different OTT streaming platforms.

Kumar said that MandateHQ platform will help banks with end-to-end mandate life-cycle management, including creating, viewing, updating, cancelling and pausing mandates and processing debits for valid mandates. In addition, the mandate HQ platform will also help banks enable a 24-hour free debit notification via e-mail, SMS and WhatsApp. It will also provide end-users with a portal to manage card mandates, he added.

Indian consumers aim to spend more than APAC post Covid-19: Mastercard survey

“A lot of merchants are moving to digital economy, and our solution will help them charge their customers through debit cards and credit cards via recurring payments. It helps banks comply with RBI norms and enable their customers pay through digital payments. More importantly, it helps the consumers have a transparent view of all the mandates they have registered. With this solution, you as a consumer will always be in control of the mandates you had set up,” said Kumar.

Private banks

He also said that Razorpay is already piloting this solution with three private sector banks, and is in talks with 20 other banks to help integrate this technology into their existing payment infrastructure in the next few weeks.

Kumar also said that products such as MandateHQ will now encourage more businesses to start and adopt subscription-based business models. The new MandateHQ offering will help businesses across a variety of sectors such as insurance, utilities, content, SaaS, lending, and charitable donations, among others, to alter their payment models and introduce subscriptions, thereby delivering better value while sustaining revenue growth, he added.

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