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.

 

Do you use your debit/credit card or mobile wallet for recurring auto-debit payments? If yes, then you should know that from October 1 onwards, as mandated by the Reserve Bank of India (RBI), banks and other financial institutions will have to ask customers to provide additional factor authentication if the auto-debit mandate for the payment is above Rs 5,000.

 

Banks have started informing their customers about this new rule. “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 honored. You can pay the merchant directly using your card for uninterrupted service,” read a communication sent by Axis Bank.

 

In December, the RBI granted more time to migrate to the new framework by March 31, following a request from the Indian Banks’ Association (IBA), which was later pushed to 1 October 2021. “Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action now,” the RBI had said.

WHAT IS THE PROCESS?

Banks will send a notification to a customer via SMS and email before the transaction. The notification will contain details about the name of the merchant, transaction amount, date of debit, reference number of transaction, and the reason for the debit.

The cardholder will have the option to either disapprove or approve the transaction. The rule was introduced by the RBI to make the auto-debit process secure and provide more flexibility to customers.

 

RBI’s new rule on debit card and credit card auto-payments from 1 October: All about it

1) All Standing Instructions set up on your credit card and debit card (both domestic and international) will not be processed, without the additional factor of authentication.

2) Mandate registration, modification, deletion will require additional factor authentication (AFA)

3) Customers will get a pre-debit (SMS/e-mail) notification 24 hours prior to the debit

Banks that fail to follow the norms in the future could face stringent action, as per the RBI’s circular dated March 31, 2021.