New Auto-Debit Rule.
The new auto-debit rule comes into effect from October 1. And will impact majorly on recurring card-based payments of customers. According to the new rule, all recurring transactions require additional factor authentication. Some Banks already started to inform their customers about the change in auto-debit. The RBI delayed the implementation of new auto-debit rules by six months. The delay happened as per the request of banks and digital payment companies.
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Changes in the new auto-debit rule.
- Addition Factor Authentication(AFA) is mandatory for all transactions below Rs 5,000 on debit cards, credit cards, prepaid payment instruments, and UPI.
- For payments exceeding Rs 5,000, a consumer has to validate the one-time password each time the payment is due.
- All standing instructions with debit and credit cards are processed only with Addition Factor Authentication.
- Not only domestic but also international automatic debits are processed compulsorily with Addition Factor Authentication.
- AFA needs for mandate registration, deletion, and also modification.
The New Process.
To safeguard consumers and ensure safety for card payments this process is developed. Banks should send the notification through SMS/email to the customer 24 hours before the transaction. The notification will have details of the name of the merchant, date of debit, amount, the reason for debit, and reference number of transactions. Customers can have 24 hours to approve, change or cancel a payment. The important point is the customer should link the correct mobile number with the bank to receive a notification.
Customers have the facility to approve, modify, cancel any standing instructions based on cards. There is no change in automatic debits registered on your bank account like SIP, EMI will continue without any AFA. This AFA is applicable to all recurring payments debited automatically through cards for mobile, utility bills subscription payments like Amazon, Netflix, and Hotstar.
