Money & Banking

New auto-debit rules: Banks, merchants working on a common platform

Surabhi Mumbai | Updated on September 27, 2021

Lenders sound off customers about changes; UPI-based mandates gain pace

Banks are working on a common industry-wide platform to comply with the Reserve Bank of India’s norms on auto-debit which will come into effect from October 1.

While banks including Kotak Mahindra, ICICI, HDFC and Axis are individually putting in place mechanisms to meet the deadline, they are working with merchants to make the new platform live for customers at the earliest.

In a communication to customers, HDFC Bank said until the platform goes live, customers can pay directly at the merchant website or app, use net banking to register with BillPay, or set auto-pay (Standing Instructions) on debit and credit cards via BillPay.

BillDesk and Razorpay are the two companies working with banks to meet the auto-debit norms.

A Kotak Mahindra group spokesperson said, “To ensure a smooth transition, the merchant and merchant aggregators’ ecosystem also needs to be in a state of readiness. The bank is closely working with merchant/merchant aggregators to ensure minimal disruption for customers.” Similarly, in a communication to customers, ICICI Bank has also updated them on standing instructions on credit and debit card, adding that there will be Mandatory Additional Factor Authentication for a bill amount higher than ₹5,000 or if the bill amount is greater than the deductible limit set.

Authentication factor

The Reserve Bank of India had, in March, extended the deadline for banks to comply with norms for processing recurring online transactions by six months to September 30.

With an objective to making online transactions secure, the RBI has introduced an additional factor authentication for cards, wallets, prepaid instruments and UPI during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹5,000), as well as pre-transaction notification and facility to withdraw the mandate.

However, many banks had failed to comply by the earlier deadline of March-end following which the RBI had decided to extend the deadline to prevent any inconvenience to the customers.

UPI-enabled mandates

Meanwhile, the UPI AutoPay option has been gaining popularity among customers who are grappling with the change as well.

Kotak Mahindra Bank said it is also already live on UPI-based mandates and the initial user adoption is encouraging.

“We expect a surge in card and UPI-based mandates as more merchants start offering and more consumers start setting up e-mandates,” it said.

Earlier this month, PhonePe said it has registered over 10 lakh UPI-enabled AutoPay mandates since the feature was launched in June this year.

“UPI AutoPay has been enabled on PhonePe for varied use cases such as mutual funds SIPs, Wallet Auto top-ups and for OTT subscription renewals,” it had said.

Published on September 26, 2021

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