, Edited by Explained Desk | New Delhi |
March 30, 2021 7:29:11 pm
Even though credit card customers may have given standing instruction for recurring payments to various service providers such as Airtel, Netflix, Hotstar, Amazon Prime among others, beginning April 1, 2021, they may have to make payment to their service provider directly as 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, the merchants are not ready yet and hence it may lead to some inconvenience on payment till such time that the service providers adhere to the norms.
What has happened?
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 on the card will not be approved by the bank beginning April 1, 2021.
What does this mean?
This means that if you had provided an e-mandate for your Airtel mobile bill payment or Netflix monthly subscription fee etc and it was getting automatically debited to your credit card every month, the payment will not go through beginning April 1. Customers will have to make payments directly to the service providers for the bills as and when they become due in order to continue to receive the service.
One will have to make the payments directly until such time that banks and service providers meet all the requirements laid down by the RBI for e-mandate on cards for recurring payments.
What are the key guidelines that RBI wants card issuers and merchants to adhere to?
Among the key guidelines, the RBI has now asked banks to send a pre-debit notification to the credit card users 24 hours before actual debit to the credit card. This can be either through SMS or email as chosen by the customer. The pre-transaction notification shall, at the minimum, inform the cardholder about the name of the merchant, transaction amount, date/time of debit etc.
Also, on receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of that particular transaction or the e-mandate.
There has to be a validity period for e-mandate that 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 shall be given an option to provide e-mandate for either a pre-specified fixed value 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 it has been capped at Rs 2,000 per transaction by the RBI.
A cardholder who wants to opt for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer.
Among others, 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 shall be allowed for the withdrawn e-mandate. So, till such time that card issuers and merchants adhere to these norms, e-mandates can’t be given by the customers for payment to service providers.
Does it impact standing instructions from bank account given through net banking?
The RBI guidelines are only for e-mandate on cards for recurring transactions and it does not impact the standing instruction given on net banking for utility bill payments etc. So, all standing instructions given through net banking will continue as they have been.
Does the RBI guideline provide a safeguard?
The fresh guidelines do provide safeguard to the customer on various aspects. Offering more transparency, customers will now receive an intimation from the issuer on a recurring transaction debit 24 hours ahead of the debit. It also empowers the customer with the facility to cancel the e-mandate before the debit to the card. It also offers customers with an option from the issuer to withdraw any e-mandate at any point of time. Also, the customers will now provide a validity period for the e-mandate and it can’t be for perpetuity.
Bankers too feel that while it may cause some inconvenience in the near term, these are steps that will be beneficial for customers.