In a circular on Wednesday (August 21), the Reserve Bank of India (RBI) permitted processing of e-mandate on credit and debit cards for recurring transactions (merchant payments) with a cap of INR 2,000 from September.
In simple terms, customers can now make recurring payments of less than INR 2000 without the two factor authentication process. This had been a continuous request from the industry stakeholders calling for processing of e-mandate on cards for recurring transactions with Additional Factor of Authentication (AFA) during e-mandate registration and first transaction.
The e-mandate is applicable for transactions performed using all types of cards debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
‘Thankful To RBI For Giving Clarity’
The RBI has now said that “it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions.”
Vishwas Patel, chairman PCI, in a media statement said, “We are thankful to RBI for giving clarity on recurring payments. However the cap of INR 2,000 is low for many subscription/ bill payments/ education fees etc.” He also emphasised that electricity bills from commercial shops/ offices/ 3bhk plus residences in metro cities are in excess of INR 2000 per month and will not have the facility of automatic recurring payments due to this cap.
He further added, “We would have appreciated if RBI had included UPI as a payment option in the above circular for recurring payments. UPI 2.0 is a non-starter because RBI has blocked its biggest feature recurring billing.”
RBI said this has been done keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience. Further, no charges should be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions.
TR Ramachandran, group country manager, Visa, India and South Asia said in a media statement, “Recurring payments, especially for utility and entertainment services are a rapidly growing trend across most Indian households. The volume and the frequency of these payments make these some of the best use cases to transition into digital payments. Towards this end, the RBI’s decision to permit e-mandate on cards will be a strong enabler to grow digital payments across the country.”
In April 2019, the National Payments Corporation of India (NPCI) received approval from the Reserve Bank of India for implementing e-mandates for both internet banking and debit cards. This will allow users to issue standing instructions to automatically pay their recurring payments using NPCI’s instruments.
In its circular, NPCI had informed all the member banks to take immediate measure and implement both the variants within June 30. The limit for each mandate is set at INR 1 Lakh, and depending on the usage, the organisation will review the limit in due course.