The Reserve Bank of India on Wednesday extended the deadline on additional authentication on card payments for recurring transactions, including recharge and utility bill, till September 30. The move comes as banks and payment gateways were seeking additional time to comply with the RBI directive on automatic recurring payment.
The central bank had earlier made Additional Factor of Authentication (AFA) mandatory after March 31. On December 4, it had directed all banks, including RRBs, NBFCs, and payment gateways that the processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021. As part of risk mitigation measure, RBI announced this step to bolster safety and security of card transactions.
Under the new norms, banks would have had to inform customers in advance about recurring payment due and the transaction would be carried following nod from the customer. So the transaction would not be automatic but would be done after authentication from the customer. For recurring payments above Rs 5,000, banks would have to send one-time password to customer as per the new guidelines.
A senior executive at an e-commerce company had earlier said the industry is not prepared to implement the e-mandate framework issued by RBI. Starting April 1, customer e-mandate transactions would have been declined by banks, if further extension was not granted by RBI, an official said, adding, this would have caused major disruption to recurring transactions and would erode customer trust in digital payments.