Banks have started informing customers about changes in auto-debit transactions as mandated the 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 on 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 is 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.
What do these changes mean for banks? For banks and payment institutions, the new rules pose a major challenge. It will require them to overhaul existing recurring payment flows and maintain standardisation for smooth execution of payments.
👉 Click here to read the latest Gujarat news on TheLiveAhmedabad.com