The New RBI rule may hinder the automatic payments of your OTT subscriptions and utility bills from today

From today, the telephone and utility bills, as well as subscription payments of Over-the-top (OTT) platforms, are likely to be disrupted. With the beginning of a new month on April 1, the Reserve Bank of India will implement a new guideline for recurring transactions.
The Reserve Bank of India has told all scheduled commercial banks, card payment networks, prepaid instrument issuers, and the National Payment Corporation of India (NPCI) about the upcoming regime, which it first declared via a circular in August 2019. This would also apply to mobile payment wallets and platforms that support UPI-based transactions.
In the past decade, The Reserve Bank of India (RBI) has introduced numerous protection and card payment initiatives, especially with regard to ‘card-not-present transactions including requirements for additional factor authentication (AFA). Recurring transactions were brought by the cardholders, the RBI circle, based on standing instructions given to the traders.
The RBI has received requests from stakeholders from the industry to enable e-mandate processing on AFA cards for repeat transactions during the registration of e-mandate and first transactions and subsequent transactions.
In view of the changing need for payments and the need to balance the security and safety of card business with client convenience, it has been decided to allow e-card processing for recurring (market) payment transactions with the AFA during registration, modification and cancellation of an e-mail, as well as in the course of first transactions.
This circular refers to transactions carried out with all forms of portals – Prepaid Payment Instruments (PPIs), debit cards, credit cards and payment wallets.
Under this arrangement, the actual allowable limit shall be rupees 2,000/-. For these periodic card transactions dependent on e-mandate, all other directions relating to card transactions shall apply. The cardholder would not be charged or reimbursed for using the e-mandate service on cards for recurring purchases. This directive will take effect on September 1, 2019, and is issued under Section 10 (2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). This facility could be checked in the future to see whether it may be applied to other digital payment systems.
Applicability of the cards:
On cards, the e-mandate arrangement can only be used for periodic transactions, not for one-time payments.
Registration of the Card information for repeated e-mandate based transactions:
An e-mandate facility cardholder wishes to take up a one-time registration process with the issuer’s validation of AFA. Just in addition to the usual procedure required by an issuer, an e-mandate on a card for recurrent purchases must be registered after active AFA validation.
The registration must only be done when the issuer receives all relevant details, including the e-mandate validity duration and other conditions relating to the audit trail. It is also important to ensure that the e-validity mandate’s period can be changed at a later stage if desired.
During the registration process, the cardholder has the option, for either the fixed value or for a variable value of the recurring transaction, of providing the e-mandate. In that, the e-mandate holder must, subject to the general heading set by the RBI (currently $2,000 per transaction), clearly specify the maximum value of repeatable transactions.
The issuer shall validate AFA when amending an existing e-mandate.
The first transaction, as well as all future recurring transactions, will be processed
AFA confirmation is needed while performing the first transaction in an e-mandate based periodic transaction sequence. AFA confirmation can be merged if the first transaction is done simultaneously with the registration of an e-mandate. All AFA validations must follow the RBI’s current instructions.  Only those cards that have been successfully registered and on which the first transaction has been successfully authenticated and approved can be used for subsequent recurring transactions. These corresponding transfers may be performed without the need for AFA.
Notification prior to the transaction:
The issuer must give a pre-transaction notice to the cardholder at least 24 hours prior to the actual charge/debit to the card as a risk mitigation and customer facilitation step. When registering an e-mandate on a card, the cardholder should be given the option of choosing a mode (SMS, email, etc.) for accessing the issuer’s pre-transaction notice in a simple, unambiguous, and understandable manner. The cardholder must be granted the option of modifying this mode of providing pre-transaction notice.
The pre-transaction notice must at least remind the cardholder about the identity of the merchant, the value of the transaction, date/due time of debit, transact number, debit motive or e-mandate.
The cardholder would be able to opt-out of the individual transaction or e-mandate after the pre-transaction notice has been received. The issuer shall confirm the AFA for any such opt-out. The issuer shall ensure, upon receipt of the notice of such an opt-out, that the specific transaction does not take place/there are no repeat transactions (as the case may be). The cardholder shall be sent a confirmatory intimation for this reason.
Notification after the transaction:
The issuer shall give the cardholder a notification/alert after purchase in compliance with the current instructions. At a minimum, it should notify the cardholder of the trader’s name, the transaction size, the date and time of the transaction, the transaction number and e-mandate, purpose of debit, i.e. the cardholder’s registered e-mandate.
Limits on transactions and a velocity check:
Without AFA, the cap or limit for e-mandate based recurring transactions would be 2,000/- rupees per transaction. Transactions above this threshold would be immune to AFA, as they have been in the past.
Both types of merchants that accept repeated purchases based on such e-mandates are subject to the 2,000/- per transaction cap. Issuers must implement appropriate velocity tests and other risk control procedures.
Revocation of the e-mandate:
The issuer must supply the cardholder with an online facility to revoke any e-mandate at any time, during which no further periodic purchases for the withdrawn e-mandate will be permitted.
Information regarding the ability to revoke an e-mandate at any time must be explicitly conveyed to the cardholder at the time of registration and when required afterwards. Any e-mandate withdrawn by the cardholder will be subject to AFA validation by the issuer.
In the case of revoked e-mandates, acquirers must ensure that all records, including payment instrument information, are removed by the merchants they onboarded.
Dispute arbitration and redress of complaints
The issuer must implement an effective redress scheme to make it easier for cardholders to file complaints. Card networks must now provide a conflict resolution process for settling these conflicts with a clear Turn Around Time (TAT).
In the case of e-mandate based recurring purchases, the card networks must make appropriate provisions to define chargebacks or grievance requests separately. The RBI’s guidelines on minimizing customers’ responsibility in unauthorised transactions would also apply to such transactions.

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