From October 1, the Reserve Bank of India (RBI) mandated changes in the auto debit rule will come into effect. The change is particularly important for customers who use debit card for their recurring transactions.
After the changes, all the standing instructions on cards will not be honoured.
What will the changes entail?
Under the new rules, all recurring transactions will need additional authentication. For payments exceeding ₹5,000, a one-time password (OTP) will have to be validated by a customer each time a payment is due.
This will apply to all credit and debit cards, both domestic and international.
What the customers should do to avoid defaulting on recurring transactions?
Banks have started informing the customers about the changes and some of them have even enabled additional factor authentication for a few merchants, Livemint reported. The list of these merchants will be published on the respective bank’s website, the Livemint report further said.
The transactions made for merchants already integrated with the technology infrastructure will be allowed. But the users will have to specify or go through the registration process where they will have to key in the validity period and maximum amount of the standing instruction.
Any payment request beyond the maximum amount will need OTP-based authentication at the time of transaction. The AFA has been allowed for transactions below ₹5,000.
For subsequent transactions within this threshold, the authorising bank will send a user a debit notification with the amount and name of the merchant 24 hours before each payment. The notification will also contain a link that will direct them to a page where the users can view, modify or cancel the payment or the mandate. If they take no action on the notification, the transaction will be carried out.
If bank has not sent any communication to the users about the proposed changes, they will have to make direct payments to service providers through merchant apps, websites or their bank’s net-banking facility to avoid defaulting on payments.
Concerns among banks
A large number of credit and debit card users set auto payment instructions for goods and services ranging from electricity and gas to music and movie subscriptions, and the banks fear that new rules could lead to chaos for millions of users.
The banks and payment institutions were asked to overhaul existing recurring payment flows and maintain standardisation for smooth execution of payments.
All the communications regarding such correspondence will come on users’ registered phone number and email ID. So, the account holders must ensure that correct details are linked to their cards.
For all the latest business News Click Here
