Your Auto-debit Facility for Bills Might Fail from April 1; Here's Why

Have you subscribed to any auto-debit facility for bills? Come April 1, your recurring monthly bill payments like mobile phones, utility bills, subscription charges for OTT streaming services, among others may soon be affected.

A new Reserve Bank of India (RBI) order will affect your subscription of Netflix, Amazon Prime Video, Bharti Airtel, Vodafone Idea, Tata Power and BSES. RBI in its diktat has made it mandatory for banks to seek customer’s approval before completing any such transaction.The Banking regulator has given time till March 31 to banks, payment card networks and online vendors to comply with the new rules for Two-factor authentication (2FA) for consumers’ recurring payments through debit and credit cards.

As per the new rule, banks and credit card service players will be required to send notification to consumers 5 days before the payment is due and grant the debit only after the consumer mandates the amount. The new rule applies to recurring amounts above Rs 5,000 and requiring banks will send one-time passwords to the customers. The recurring payments using UPI’s AutoPay feature might not get affected.

According to IAMAI, millions of customer e-mandates could break down from April 1 as major lenders didn’t take necessary steps to comply with the biggest lender’s requirement to activate registration, tracking, modification and withdrawal of e-mandates.

Earlier, the RBI said the new system would start from April 1 this year while some leading lenders and vendors had stated that they were not ready for the changeover and wanted more time. But the RBI rejected their demands.

If your bank is not ready to comply with the new rule, then your recurring payments via debit or credit cards for many services will tank for sure. The banks and vendors will have to come up with an alternate solution.

Consumers can visit the payment page of individual merchants to pay bills or continue subscriptions. The payments through NPCI platforms will not be affected. Major lenders like SBI, HDFC Bank, ICICI Bank, Axis Bank and leading card payment firms American Express and Mastercard have already started notifying their network partners about their problem to process auto-debit payments.

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