RBI has released new rules for card payments to come into effect from April 1st, 2021

Reserve Bank of India has issued a new set of rules for payments made automatically from a user’s account for mobile, utility, e-commerce, OTT platforms and other bills. These automatic payments are likely to be disrupted from April 1st, 2021 as the new mandates will come into effect from the first of April. The RBI has issued that there will be a requirement of an additional authentication for recurring transactions using credit cards, debit cards, UPI or other prepaid payment instruments (PPIs).

8 Card payments new policy mandated by RBI you must know about

1. It has been mandated by RBI that from April 1st, 2021, the automatic bill payments and transactions are chosen by a user will be affected. An additional authentication by the customer, at the time of setting up a new recurring payment, to proceed.
2. The rule will apply on transactions worth up to Rs 5,000. Earlier, it was decided that the rule will be implied on transactions worth up to Rs 2,000. RBI revealed in December 2020 that on the basis of requests from stakeholders, the limit was raised to Rs 5,000.
3. Transactions above the cut-off of Rs 5,000 will require an additional one-time password.
4. Back in August 2019, RBI had notified that all scheduled commercial banks, the National Payments Corporation of India (NPCI), prepaid instrument issuers and card payment networks about the major change for recurring transactions.
5. The new rules will be applicable to mobile payment wallets and platforms enabling UPI-based payments. Apart from these, banks and other financial institutions offering credit and debit cards along with other prepaid payment instruments will also follow the new rules.
6. The RBI introduced March 31st, 2021 deadline to comply with RBI circular that was issued back in December 2020. It read, “Processing of recurring transactions (domestic or cross-border) using cards / PPIs / UPI under arrangements / practices not compliant with the aforesaid instructions shall not be continued beyond March 31, 2021".
7. Banks and other payment platforms offering recurring transactions will have to send a notification to customers at least 24 hours prior to the first transaction is debited. The mode of notification will be selected by the consumer at the time of registering the e-mandate for the recurring payments.

8. The new rules are likely to affect enterprises that often use auto-payment for their recurring charges.

Image credits: RBI Twitter