83% Indians Support RBIs Move To Stop Auto-Debit: Survey

The Reserve Bank of India (RBI) has imposed new auto-debit standards, which are in force from October 1, 2021, to improve the security of debit or credit card transactions. According to the RBI's regulation, there will be no automatic recurring payments since the additional factor of authentication (AFA) would be now mandatory for a variety of services, notably utility bill payments, DTH and mobile recharge, and OTT subscription among others. This move taken by the apex bank has minimized the risk of online frauds among Indian customers, hence 83% of Indian consumers who paid for apps on Google Playstore, Apple App store and Windows Store support RBI to mandate OTP-based authentication for all app purchases and renewals, according to a survey taken by LocalCircles.

After consumers raised the issue of auto-debit by foreign vendors on LocalCircles in 2017 leading to unauthorised charges over a long period of time, a survey in February 2018 conducted by the platform indicated that consumers wanted OTP to be made mandatory on all foreign card transactions. The same was escalated to the Reserve Bank of India (RBI) and other arms of the Government for intervention.

To understand the magnitude of the issue of unauthenticated auto-debit charges by foreign vendors and whether this move has the support of consumers at large, LocalCircles conducted a national survey which received over 40,000 responses from consumers located in over 302 districts of India. 48% respondents were from tier 1, 27% from tier 2 and 25% respondents were from tier 3, 4 and rural districts.

The survey taken by LocalCircles are as follows:

Only 23% of Indian consumers who paid for apps on Google Playstore, Apple Appstore and Windows store say they went through the OTP-based authentication transaction for their app purchases.LocalCircles further clarified that the first question in the survey tried to understand how app stores are charging consumers on a monthly or annual basis for the apps that they are using. In response, only 23% said they pay their subscription fee based on OTP that authenticates their payment. 46% said their app store charges them on an "auto renewal" basis, either monthly or annually, as a subscription fee-or, without the use of OTP-based authentication for the transaction-for the transaction-for using its service or product. Another worrying concern is that 31% of consumers surveyed said they either "don't know" or "can't say" how app stores are charging them for any subscription they may have opted to use.

Only 19% of Indian consumers who paid for apps on Google Playstore, Apple Appstore and Windows store say they were invoiced or billed by an Indian entity. The next question in the survey sought to understand from consumers if applications they use raise the invoice. In response, 48% said "don't know". Breaking down the poll, 33% said the applications they use are billed by a foreign entity. Only 19% of Indian consumers who paid for apps for Google Playstore, Apple Appstore and Windows store said they were invoiced or billed by an Indian entity.

Only 29% smartphone users have 1 or more paid apps on their phone. 46% of Indian consumers who paid for apps on Google Playstore, Apple Appstore and Windows Store say they had a wrong charge/overcharge issue in the last 12 months. The third question in the survey asked Indian consumers if they have been wrongly charged or overcharged by app stores in the last 12 months for purchasing an app or for subscription renewal. In the question that received 7840 responses, 14% of consumers said they "don't know". The majority of 40% of consumers said "No", they haven't been charged wrongly or overcharged. However, there were 34% who said "Yes, once or twice", while 12% said they've been charged many times, said LocalCircles in its survey.