Withdrawal of Recurring Payments through Cards
The Reserve Bank of India had issued a circular requiring banks and participant service providers to adhere to specific guidelines for processing recurring debits from credit cards, debit cards and pre-paid instruments. The RBI had given a deadline of 30th September 2021 for participants to adhere to these guidelines. The important aspects of the guidelines are as follows.
- Among the key guidelines, the RBI has now asked banks to send a pre-debit notification to their credit card users 24 hours before an actual debit to the credit card. This can be either through SMS or email, as chosen by the customer. The pre-transaction notification should, 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 should have the facility to opt-out of that particular transaction or the e-mandate.
- There has to be a validity period for e-mandate , which 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 should 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 this has been capped at Rs 2,000 per transaction by the RBI.
- A cardholder who wants to opt for e-mandate facility on the card should undertake a one-time registration process, with AFA validation by the issuer.
- Among other guidelines, 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any e-mandate at any point of time, following which no further recurring transactions should be allowed for the withdrawn e-mandate.
- So, till such time that card issuers and merchants adhere to these norms, e-mandates cannot be given by the customers for payment to service providers.
As quite a few service providers have not met the deadline, the banks have started withdrawing the recurring payment mandates asking the consumers to utilize alternate means to enable payments on time.
Utility and service providers now need to employ alternate mechanisms to collect payments from consumers.
ACH Mandates is the tried and tested mechanism tailor made for recurring payments of small and large value payments at any frequency. ACH payments have been streamlined and matured over a decade in India. Setting up ACH mandates can be simple, totally digital and instant.
Utility providers can partner with Fintech providers such as Paycorp.io to setup ACH mandates instantly and collect payments seamlessly without any disruption to the collection process. Paycorp.io ensures same day realization of payment as against the 2 day for realizing card-based payments.
Paycorp.io offers easy and low code interface with any system. Paycorp.io offers convenient payment mandate setup through whatsapp, email, and SMS. Utility providers may continue engaging with their bankers with no change to the technology platform or business flow while switching.
Website: www.paycorp.io
Ph: +91 96201 22367 | Email: info@paycorp.io
About Paycorp
We offer a unique blend of cloud-based payments processing for small businesses, API based payments processing for digital lenders and large corporates, and new business opportunities for banks by extending corporate integration platforms for payments.
Make your digital payment platform fast, safe, and fool-proof with Paycorp.io. We offer a diverse combination of cloud-based payment processing for various businesses. Whether you are an SME, a larger company, or a digital lender, we have a cloud-based, end-to-end payment solution for everyone. Frame your instructions, disburse and collect payments, realize revenue, and reconcile payments simply and efficiently with our robust payment solutions.
The Reserve Bank of India had issued a circular requiring banks and participant service providers to adhere to specific guidelines for processing recurring debits from credit cards, debit cards and pre-paid instruments. The RBI had given a deadline of 30th September 2021 for participants to adhere to these guidelines. The important aspects of the guidelines are as follows.
- Among the key guidelines, the RBI has now asked banks to send a pre-debit notification to their credit card users 24 hours before an actual debit to the credit card. This can be either through SMS or email, as chosen by the customer. The pre-transaction notification should, 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 should have the facility to opt-out of that particular transaction or the e-mandate.
- There has to be a validity period for e-mandate , which 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 should 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 this has been capped at Rs 2,000 per transaction by the RBI.
- A cardholder who wants to opt for e-mandate facility on the card should undertake a one-time registration process, with AFA validation by the issuer.
- Among other guidelines, 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 should be allowed for the withdrawn e-mandate.
- So, till such time that card issuers and merchants adhere to these norms, e-mandates cannot be given by the customers for payment to service providers.
As quite a few service providers have not met the deadline, the banks have started withdrawing the recurring payment mandates asking the consumers to utilize alternate means to enable payments on time.
Utility and service providers now need to employ alternate mechanisms to collect payments from consumers. ACH Mandates is the tried and tested mechanism tailor made for recurring payments of small and large value payments at any frequency. ACH payments have been streamlined and matured over a decade in India. Setting up ACH mandates can be simple, totally digital and instant. Utility providers can partner with Fintech providers such as Paycorp.io to setup ACH mandates instantly and collect payments seamlessly without any disruption to the collection process. Paycorp.io ensures same day realization of payment as against the 2 day for realizing card-based payments. Paycorp.io offers easy and low code interface with any system. Paycorp.io offers convenient payment mandate setup through whatsapp, email, and SMS. Utility providers may continue engaging with their bankers with no change to the technology platform or business flow while switching.
Website: www.paycorp.io
Ph: +91 96201 22367 | Email: info@paycorp.io
About Paycorp
We offer a unique blend of cloud-based payments processing for small businesses, API based payments processing for digital lenders and large corporates, and new business opportunities for banks by extending corporate integration platforms for payments.
Make your digital payment platform fast, safe, and fool-proof with Paycorp.io. We offer a diverse combination of cloud-based payment processing for various businesses. Whether you are an SME, a larger company, or a digital lender, we have a cloud-based, end-to-end payment solution for everyone. Frame your instructions, disburse and collect payments, realize revenue, and reconcile payments simply and efficiently with our robust payment solutions.
