Banks and payments ecosystem are gearing up towards the transition to adhere to the Reserve Bank of India’s (RBI) guidelines on e-mandates for all recurring payments on credit cards and debit cards. The guidelines will not impact the recurring transaction under e-NACH and UPI AutoPay.
Banks will have to notify customers 24 hours beforehand for an auto-debit transaction, and the customer will have to authenticate the transaction, under the new rules.
The RBI had kept Rs 2,000 as the maximum permissible limit, which, later in December 2020, was hiked to Rs 5,000 with effect from January 1, 2021.
Are banks prepared?
Kotak Mahindra Bank, in a media statement said: “Kotak Mahindra Bank (Kotak) is fully geared up to ensure compliance with the regulations that come into effect on October 1, 2021.”
Kotak said that to ensure a smooth transition, the merchant/merchant aggregators’ ecosystem needs to be in a state of readiness and the bank is closely working with merchant/merchant aggregators to ensure minimal disruption for customers.
An ICICI Bank spokesperson said: “We will implement the RBI guidelines on auto-debit payments from debit/credit cards with effect from October 1.”
Similarly, Axis Bank said it is prepared to go live with the new solution effective October 1.
Sanjeev Moghe, EVP & Head, Cards and Payments, said: “For the solution to work seamlessly, it requires the merchant, acquirer, network and issuer to integrate with a common solution.”
“While Axis Bank will be live, readiness of other partners in the ecosystem, including merchants, is at different stages. To ensure that the customer is not affected, we are advising the customers to track their recurring payments,” Moghe said.
An e-mail sent to HDFC Bank didn’t elicit any response. This report will be updated upon receiving a response.
However, HDFC Bank said on its website: “A common industry-wide platform has been developed, and HDFC Bank has completed its internal development and integration. We are now working jointly with merchants to make it live for customers at the earliest.”
Some banks are ramping up on building in-house capabilities and some are partnering with Razorpay’s Mandate HQ and Billdesk’s SI Hub, a senior payments industry official said. Most banks are already live with BillDesk’s SI hub, he said requesting anonymity.
Banks prescribing alternatives
In their communication to customers, banks are asking customers to be prepared with short-term solutions.
HDFC Bank, in an SMS communication to its customers, said: “Retry regular payment on Merchant Web/App authenticated via OTP or Pay via AutoPay in BillPay on our NetBanking for your Electricity /Water/Gas/ Landline/Postpaid mobile/Broadband/Insurance billers.”
Similarly, Axis Bank’s Moghe said: “Customers are being advised to keep track of their payments and pay the merchant directly using the card.”
Customers can also re-register their standing instructions using Axis Bank cards at the merchants who are compliant and integrated to the new solution, Moghe said.
Our teams and members are working on integrations and see how it goes live. There’s a possibility that the Payments Council of India (PCI) may seek a small extension upon hearing from members on September 30, said Vishwas Patel, Chairman, PCI.
PCI is an industry body representing companies in the payments and settlement system.
Later, it is the RBI’s prerogative to decide on the extension of the deadline, Patel added. The RBI had extended the deadline from March 31, 2021, to September 30, 2021.
The RBI, on March 31, had said in a notification that the progress of on-boarding existing as well as new mandates of customers as per the framework is not satisfactory. Keeping in view the requests of some stakeholders and to prevent any inconvenience to customers, it has been decided, as a one-time measure, to extend the timeline for ensuring full compliance to the framework till September 30, 2021, RBI had said.
The central bank had disallowed ecosystem players from taking up new mandates for recurring online transactions, unless such mandates were compliant with the framework.Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action, the RBI had said.