RBI Mandates Notification on Credit Cards

RBI Mandates Notification on Credit Cards

Various digital service providers like OTT platforms have predicted a 10-15% fall in their user base after a change in auto-debit rules comes into effect from October 1.

Banks have started informing customers about changes in auto-debit transactions as mandated by the Reserve Bank of India (RBI). The changes will come into effect from October 1, Livemint reported on Monday.

It quoted a communication from Axis Bank, which said, “As per RBI's recurring payment guidelines, w.e.f. 20-09-21, Standing Instructions on your Axis Bank Card(s) for recurring transactions will not be honoured. You can pay the merchant directly using your card for uninterrupted service."

In April, the RBI deferred new rules on automatic debit by six months. It was done at the request of banks, customers and the digital payment companies, which said they were unprepared for the March 31 deadline.

The new framework was announced in August 2019, and the RBI had warned that “non-compliance will be dealt with seriously”.

There is fear among digital services operations like the over-the-top (OTT) platforms, which fear that they will lose customers who may henceforth find it more tedious to make payments.

What are the changes coming into effect from October 1?

Under the new rules, all recurring transactions will need additional authentication. For payments exceeding 5,000, a one-time password (OTP) will have to be validated by a customer each time a payment is due. This will apply to all credit and debit cards, both domestic and international.


How will this impact consumers/users?

Since all the standing instructions will not be processed, mandate registration, modification and deletion will require additional factor authentication.

A large number of credit and debit card users set auto-payment instructions for goods and services ranging from electricity and gas to music and movie subscriptions, and the new rules could lead to chaos for millions of users.

If the standing instructions for bill payments are registered on a user's bank account, there will be no change. The new rules will only impact the standing instructions on debit and credit cards.

Do these guidelines provide safeguards?

The fresh guidelines do provide safeguards to the customer on various aspects. They offer transparency, since customers will now receive an intimation from the issuer on the recurring transaction debit 24 hours ahead of the debit. It also empowers the customer with the facility to cancel the e-mandate before the debit to the card. It also offers customers with an option from the issuer to withdraw any e-mandate at any point of time. Also, the customers will now provide a validity period for the e-mandate — it can’t be for perpetuity.
    • Related Articles

    • RBI's Codes for Foreign Remittance

      Purpose Codes for Foreign Remittance in Form 15CA CB | RBI Purpose Codes Purpose Codes are like Roll Numbers which has been tagged to each type of transactions of foreign remittance allotted by Reserve Bank of India to bifurcate & segregate among ...
    • Section 195 TDS on Foreign Payments

      1) Who is responsible to deduct tax under section 195 of the Income Tax Act, 1961? Any person responsible for paying to a non-resident, not being a company, or to a foreign company, shall deduct income-tax thereon at the rates in force. 2) Nature of ...
    • Formalities Before Applying for a PAN Card

      PAN Cards For a Partnership Firm The Partnership Act, 1932 regulates the partnership firms in India. In a partnership firm, two or more persons come together as partners for carrying on a business or profession. They agree to share the losses and ...
    • How to Apply for PAN Card Online

      Permanent Account Number or PAN Card is a nationalized identity card. Without a PAN, you will not be able to carry out any financial transaction. It is the Indian Income Tax Department that allocates this 10-digit alphanumeric and unique account ...
    • Pan Card Download By Name And Date Of Birth

      Get PAN Card Details PAN stands for Permanent Account Number. It is a 10-digit character alphanumeric number allotted to PAN cardholders served in the form of Government-issued identification. It helps in the identification of income taxpayers or PAN ...