To strengthen the safety and security of card transactions, the Reserve Bank of India (RBI) has implemented new rules that came into action from October 1. The rule states that all kinds of recurring and repetitive payments, made through credit and debit cards and which amount to the value of Rs 5,000 or above will receive a notification, 24 hours in advance, thus informing the customer of the respective payment.
As per the norms by RBI, the advanced notification sent by the banks for making recurring payments to customers will aid the latter to permit the transaction to proceed further.
Denial from the customer will not allow the transaction to get executed. For any such transaction amounting to Rs 5,000 or above, the bank will send a one-time password to the registered mobile number of the customer.
The central bank’s new guideline states that those transactions which will get an e-mandate of the customer will get successfully executed.
Here are the details that would further help you to understand the new rule:
Essentiality for such a step:
The new rule has been set up as a protection of the customers from online fraud, especially on third-party platforms. By implementing e-mandate, the RBI wants the customer to get greater control while undertaking recurring payments using credit or debit cards. The system will enable the customer to decide and fix the amount for recurring transactions in advance. The customers can also cancel any such services provided by the bank with the help of apps.
Transactions that may get affected:
Transactions, where auto-debit or auto-credit facilities are mostly used such as payments for insurance premiums, subscription for OTT platforms like Netflix, Hotstar, and Amazon Prime, ordering of food using e-commerce websites, utility service providers, and other transactions, will get affected. Besides, some banks are yet to put the operation of e-mandate in process. This new rule can cause some kind of confusion among people who are daily payers of recurring. Meanwhile, recurring payments below Rs 2,000 will not get affected.
Impact on customers:
All kinds of recurring payments will proceed only after the approval of the customers. They will receive a notification, 24 hours in advance and transactions will only be executed through OTP mode. In other words, the customers will be able to precede their recurring payments through cards that will be routed through the user’s bank. Additional Factor Authentication (AFA) will be practiced will enable to customers to get notified before auto-deduction.
