A handy guide by expert explains where and when additional authentication will be needed as norms of recurring auto-debit payments change
The new rules took effect on Friday and have been brought in to make payments more secure
It is a full stop to recurring auto-payments of bills, as the Reserve Bank of India (RBI) has stated that recurring transactions need an Additional Factor of Authentication (AFA) (done through One Time Passwords) along with the normal one-time registration process for auto-debits. The new rule became applicable on Friday.
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Vineet Saxena, partner, Banking, Financial Services and Insurance (BFSI) at Chokshi & Chokshi, LLP, decodes the play, and pay, by the new rules RBI guidelines policy.
Is there a limit of auto-recurring transactions, above a certain amount that will need additional authentication, now?
Any recurring transaction of an amount greater than Rs 5,000 will require Additional Factor Authentication (AFA) each time the amount is to be paid.
Do these new guidelines apply to payments on debit or credit cards?
This circular is applicable for transactions performed using all types of cards, debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
Vineet Saxena, partner, Banking, Financial Services and Insurance (BFSI) at Chokshi & Chokshi, LLP
I wish to continue paying digitally, so, how does the scenario change now?
. All Standing Instructions set up on your credit card and debit card (both domestic and international) will not be processed, without the AFA.
. Mandate registration, modification, deletion will require AFA.
. Customers will get a pre-debit (SMS/e-mail) notification 24 hours prior to the debit
. On receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of that particular transaction or the e-mandate. Any such opt-out shall entail AFA validation by the issuer. On receipt of intimation of such an opt-out, the issuer shall ensure that the particular transaction is not effected/further recurring transactions are not effected (as the case may be). A confirmation intimation to this effect shall be sent to the cardholder.
IIf I have given a standing instruction to a bank to pay Rs 30,000 every month for a transaction, what happens to the arrangement now?
Any recurring transaction of an amount more than Rs 5,000 will require AFA each time the amount is debited. While processing the first transaction in e-mandate-based recurring transaction series, AFA validation shall be performed. If the first transaction is being performed along with the registration of e-mandate, then AFA validation may be combined.
Then, recurring transactions shall be performed but only for those cards which have been successfully registered and for which the first transaction was authenticated and authorised. Following transactions may then take place without AFA.
Why do you think this rule has come in?
As an additional safety and security measure of card transactions with customer convenience.
Is this for the overall good or detrimental to the system?
It is good for the system as it will check on any misuse of cards without inconveniencing the customers too much.
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