On Wednesday, the Reserve Bank of India (RBI) permitted processing of e-mandate on credit and debit cards along with e-wallets for recurring merchant payments like telephone bill payments on certain conditions.
"Keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience, it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions, subject to conditions," RBI said in a notification dated 21 August.
AFA (Additional Factor of Authentication) is a security measure put in place for card payments that requires OTP verification.
Here are the conditions to processing of recurring transactions electronically:
- Cards shall be only for recurring transactions and not for a 'once-only' payment.
- It applies to transactions performed using all types of cards - debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
- The maximum permissible limit under this arrangement shall be Rs 2,000 per transaction.
- All other instructions related to card transactions shall be applicable on these e-mandate based recurring card transactions.
- No charges will be levied or recovered from the cardholder by banks for availing the e-mandate facility on cards for recurring transactions.
- The payment system will come into effect from 1 September 2019.
- A cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer.
- While registering e-mandate on the card, the cardholder shall be given facility to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification from the bank. The facility for changing this mode of receiving pre-transaction notification, shall also be provided to the cardholder.
- The pre-transaction notification shall, at the minimum, inform the cardholder about the name of the merchant, transaction amount, date / time of debit, reference number of transaction/ e-mandate, reason for debit, i.e., e-mandate registered by the cardholder.
- On receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of that particular transaction or the e-mandate and the bank will provide a facility to withdraw online.
- RBI is reviewing the facility for extension to other digital modes of payments in due course.