New RBI Guidelines On Debit, Credit Card Auto-Payment – Free PDF Download

What’s happening?

• Credit card users may have given standing instructions for recurring payments to various service providers such as Airtel, Netflix, Hotstar, or Amazon Prime,
• But they may still have to make payment directly to their service provider beginning April 1.
• This is because banks and merchants are still working to adhere to RBI guidelines on e-mandate on cards for recurring transactions.
• Bankers say that while they are ready to offer the service and have complied with RBI guidelines,
• Merchants are not ready yet and, until they adhere to the norms, it may lead to some inconvenience on payment.

What this means?

• Over the last few days, banks have started sending messages or emails to their credit card users,
• Intimating them that since they are working on meeting the requirements laid down by RBI on e-mandate on cards for recurring transactions,
• Any standing instruction for recurring transactions will not be approved by the bank beginning April 1, 2021.
• Over the last few days, banks have started sending messages or emails to their credit card users,
• Intimating them that since they are working on meeting the requirements laid down by RBI on e-mandate on cards for recurring transactions,
• Any standing instruction for recurring transactions will not be approved by the bank beginning April 1, 2021.

What are these requirements?

• The RBI has now asked banks to send a pre-debit notification to their credit card users 24 hours before an actual debit to the credit card.
• This can be either through SMS or email, as chosen by the customer.
• The pre-transaction notification should, at the minimum, inform the cardholder about the name of the merchant, transaction amount, date/time of debit
• Also, on receipt of the pre-transaction notification, the cardholder should have the facility to opt-out of that particular transaction or the e-mandate.
• There has to be a validity period for e-mandate , which will have to be provided at the time of registration of the e-mandate.
• The RBI has also called for certain audit-trail-related requirements that the merchant service provider and banks will have to meet.
• During the registration process, the cardholder should be given an option to provide e-mandate for either a pre-specified fixed value (max. 5000) of recurring transaction, Or for a variable value of the recurring transaction.
• In case of the latter, the cardholder will provide a maximum value of the recurring transaction and this has been capped at Rs 2,000 per transaction by the RBI.
• A cardholder who wants to opt for e-mandate facility on the card should undertake a one-time registration process,
• With Additional Factor of Authentication (AFA) validation by the issuer.
• The issuer will have to provide the cardholder an online facility to withdraw any e-mandate at any point of time, following which no further recurring transactions should be allowed for the withdrawn e-mandate.

Conclusion

• So, till such time that card issuers and merchants adhere to these norms, e-mandates cannot be given by the customers for payment to service providers.
• Also remember, it applies only to cards & not on internet banking.

Q) In India the basic objectives of Monetary Policy is?

1. Price stability and adequate credit flow
2. Price control and command on economy
3. Price reduction and credit reduction
4. All of the above

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