Credit and debit card payment: New rule on auto-debit

Changes in auto-debit rules

Credit and debit card payment:  Starting from next month, the auto-payment rules are likely to be changed. The Reserve Bank of India (RBI) earlier stated that recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will need additional factor authentication (AFA). A large number of credit and debit card users set auto-payment instructions for a number of services ranging from electricity and gas to music and movie subscriptions, and the new rules threatened to spell chaos for millions of users.

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Banks have started informing their customers about this new rule. “As per RBI’s recurring payment guidelines, w.e.f. 20-09-21, Standing Instructions on your Axis Bank Card(s) for recurring transactions will not be honoured. You can pay the merchant directly using your card for uninterrupted service,” read a communication sent by Axis Bank.

“As per RBI guidelines on ‘Processing of e-mandate on cards for recurring transactions’, effective 1st October 2021, existing/new Standing Instructions which were/are registered without additional factor of authentication will not be processed. We shall be implementing the solution at the earliest,” Axis Bank says on its portal.

1) All Standing Instructions set up on your credit card and debit card (both domestic and international) will not be processed, without the additional factor of authentication.

2) Mandate registration, modification, deletion will require additional factor authentication (AFA)

3) Customers will get a pre-debit (SMS/e-mail) notification 24 hours prior to the debit

4) Customers can opt-out of the transaction or the mandate via the link provided in the pre-debit notification

5) Customers will have the facility to view/modify/cancel any standing instructions set on their card

6) Customers can set a maximum amount for each SI. If the transaction amount is greater than the maximum amount assigned by the customer, the pre-debit notification will have a link for the customer to authenticate the transactions with AFA. Without this authentication, the transaction will not be processed.

7) Any recurring transaction of an amount greater than ₹5, 000 will require AFA each time the amount is debited.

8) If Standing Instructions for Bill payments is registered on your Bank account, there will be no change. If these are on your Bank’s debit or credit card, these will get declined from 1st October 2021. E.g. SI given on Netflix, Amazon, Insurance payments will get deactivated. However, SI registered using bank accounts for Mutual Funds, SIPs, EMIs will continue.

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