Your e-mandate may soon run into trouble

Forum Gandhi Mumbai | Updated on March 27, 2021

The financial information captured through digital payment systems can be exploited for undue business benefits istock

Despite RBI circulars, most banks not ready with ‘upgraded capacities’

The Internet And Mobile Association of India (IAMAI) has warned that millions of e-mandates set up by customers could fail from April 1, 2021, as industry consultations suggest that most major banks do not have upgraded capacities to comply with Reserve Bank of India’s requirements for enabling registering, tracking, modification and withdrawal of e-mandates.

The association observed that users, merchants and non-bank entities would be the ones who will end up bearing the cost of RBI’s e-mandate circulars, which will also result in huge business losses and disruption of service for consumers.

The RBI has issued two circulars (August 2019 and December 2021) to banks, ‘non-bank prepaid payment instrument issuers’, and ‘authorised card payment networks’ for processing of e-mandates. The deadline to comply with the same is March 31, 2021.

The circulars relate to enabling recurring transactions by way of a one-time Additional Factor Authentication (AFA) at the time of creation, modification and revocation of an e-mandate, followed by automatic charges to the relevant card for subsequent transactions, subject to certain terms and conditions. “Industry consultations suggest that most major scheduled commercial banks do not have upgraded capacities to comply. Due to this, the other participants in the ecosystem like acquirers and card networks have not been able to follow the obligations under these circulars,” the association said.

In this regard, IAMAI has requested Niti Aayog to take up the issue of timeline extension with the RBI.

“It is important to also appreciate that all banks will first need to enable such e-mandate-compliant frameworks, post which the other participants like merchants and PAs (payment aggregators) will need to build their technical integrations with the SCBs and the long tail banks,” IAMAI said.

Proposes two alternatives

IAMAI has suggested providing non-bank entities like PAs and merchants with additional time of 3-6 months post the banks’ implementation deadline.

The second alternative involves ensuring that the issuer banks are compliant with the required infrastructure within the mentioned timelines – March 31, 2021 – and providing an extension of 3-6 months to the non-bank entities to comply with the circulars.

Published on March 27, 2021

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