The Reserve Bank of India had recently announced that automatic payment of things like bills and subscriptions will not be allowed starting April 1, directing 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. However, on the day of the deadline, the RBI has extended the deadline to a further six months, now falling on September 30, 2021. “The delay in implementation by some stakeholders has given rise to situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, the Reserve Bank has decided to extend the timeline for further the stakeholders to migrate to the framework by six months, i.e, till September 30, 2021," the RBI said in a notification.
On December 4, RBI 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. Non-readiness of some of the players could impact recurring payment such as of utility bills, recharge of phone, DTH and OTT, among others, post March 31. Recently, RBI enhanced the limit for contactless card transactions and e-mandates for recurring transactions through cards (and UPI) from Rs 2,000 to Rs 5,000 from January 1, 2021 with a view to further the adoption of digital payments in a safe and secure manner. Under the new norms, banks will be required to inform customers in advance about recurring payment due and 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 are required to send one-time password to customer as per the new guidelines. All the ecosystem players, be it banks and payment gateways, are guilty of not taking RBI directive seriously from 2019 and not being able to come on a single platform, which we should have done at least a couple of months back, so that there could have been a smooth transition to the new way of doing recurring transactions,” Payments Council Of India (PCI) Chairman Vishwas Patel said. So, the Reserve Bank of India (RBI) requested to consider giving at least one month extension so that players meet RBI directives, Patel, who is executive director of Infibeam Avenues, said.
“Everybody has understood the seriousness of it because it is Rs 2,000 crore a month business, as per PCI estimates. We hope that the cycle is not broken and the end consumers and merchants are not inconvenienced,” he added. A senior executive at an e-commerce company said the industry is not prepared to implement the e-mandate framework issued by RBI.
RBI, in today’s notification said that the framework has not been fully implemented even after the existing deadline (today), hence the six months extension. The institution said that the “non-compliance has been noted with serious concern" and will be dealt with separately.
(With inputs from PTI)
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