Banks To Cancel Auto Pay Transactions From April 1

Auto-initiated payments for mobile phone, broadband, DTH, electricity, water and other utilities bill will be cancelled starting April 1. All recurring transactions using cards and other prepaid payments will now require an additional factor of authentication. This is as per an RBI circular first issued in December 2020.

The Reserve Bank Of India had said that recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will need additional factor authentication (AFA). The new rule will start from 1 April. A notification will be sent to customers five days before an automatic payment is scheduled. The transaction will go ahead only if the user approves it. If the auto payment is declined by the bank then the user will have to make a manual transaction for bill payments.

This rule is likely to impact your monthly subscription charges for different streaming platforms including Netflix, Amazon Prime, Disney+ Hotstar.

All you need to know about RBI’s new rule on debit card and credit card auto-payments from April

1) For auto-payments from debit and credit cards or via wallets, an additional authentication will be required by the customer from April.

2) The limit for auto-debit from cards and wallets is set at ₹5,000. For transactions above the cut-off, an additional one-time password (OTP) will be needed.

3) The new rule will be applicable for transactions performed using all types of cards – debit, credit, UPI and PPIs, including wallets, the central bank earlier mentioned.

4) The regulator earlier asked the banks to introduce additional factor authentication by 31 March 2021.

5) The issuer has to send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge or debit to the card.

6) The user will have an option to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification.

7) To proceed with the transaction, the customer’s consent is a must. The cardholder will also have an option to “opt-out of that particular transaction”.

8) The issuer shall provide the cardholder with an online facility to withdraw any e-mandate at any point.

9) No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions.

10) Banks have already started informing their customers about this new rule.

For the unversed, In auto pay transactions, money is automatically transferred on a scheduled date towards payment of recurring bills such as credit cards and utility bills.

Good News for customers, RBI extends timeline for processing of recurring online transactions. To prevent any inconvenience to the customers, RBI has decided to extend the timeline for the stakeholders to migrate to the framework till September 30, 2021. 

Also Read: Indian Banks to remain shut for 7 days from March 27 to April 4