Explained: How e-Mandate For Recurring Payments Will Impact You From October 1?

From October 1, 2021, you may have to make your auto-recurring payments or EMIs manually due to a rule imposed by the Reserve Bank of India (RBI). For the convenience of customers, most of the Indian banks have already started alerting their customers regarding the same. Users may experience failed transactions as a result of payment service providers' failure to comply with the new RBI guidelines from October 1. The RBI's framework for processing e-mandates for recurring online transactions was supposed to go into effect in March 2021, however, it was postponed until October 1, 2021, after many participants asked for leeway.

In a statement, RBI had earlier said that "It is, however, noted that the progress of onboarding existing as well as new mandates of customers as per the framework is not satisfactory. Keeping in view the requests of some stakeholders and to prevent any inconvenience to customers, it has been decided, as a one-time measure, to extend the timeline for ensuring full compliance to the framework till September 30, 2021. During the extended timeline, no new mandate for recurring online transactions shall be registered by stakeholders, unless such mandates are compliant with the framework."

For the convenience of the customers, HDFC Bank has warned against the rule through its official website that "To safeguard consumers, the Reserve Bank of India (RBI) has put in place new safety and security measures for card payments. Effective 1st Oct 2021, the Bank will NOT approve any Standing Instruction (e-Mandate for processing of recurring payments) given at Merchant Website / App, on HDFC Bank Credit card/Debit Card, unless it is as per RBI compliant process. The new conditions prescribed by RBI require a cohesive effort by all stakeholders, including Card Issuing banks, Merchant Acquiring Banks, Card Networks and Merchants. All constituents must complete the development, integration and deployment of a COMMON platform fully compliant with the RBI guidelines."

The private sector lender has also mentioned that "A common industry-wide platform has been developed, and HDFC Bank has completed its internal development and integration. We are now working jointly with merchants to make it live for customers at the earliest. "

This circular would not affect SI (Standing Instructions) who have enrolled with HDFC Bank through BillPay or SmartPay. You can pay using your HDFC Bank Credit / Debit Card on the Merchant Website / App and validate the transaction through the OTP received. You can register your Electricity, Water, Gas, LPG, Landline telephone, Postpaid mobile, DTH, Broadband, and Insurance billers for limousine payments using your HDFC Bank NetBanking account.

You can receive a 5% CashBack up to Rs 1800/- and Gift Vouchers worth up to Rs 800/- over the succeeding 12 months if you arrange auto-pay (Standing Instructions) on Debit & Credit Cards via BillPay. Netflix and Amazon Prime are the merchants that now accept Merchant Standing Instructions (e-Mandates for the processing of recurring payments) on your HDFC Bank Debit / Credit Card.

According to HDFC Bank, as per RBI Guidelines on e-Mandate on debit or credit cards for processing recurring transactions, only VISA Cards are now enabled for filing Merchant Standing Instructions. Merchant Standing Instructions for MasterCard, Diners Card, and Rupay will be available shortly.

HDFC Bank has also alerted its customers via email that "The new conditions prescribed by RBI require a cohesive effort by all stakeholders, including Card Issuing banks, Merchant Acquiring Banks, Card Networks and Merchants. All constituents must complete the development, integration and deployment of a common platform fully compliant with the RBI guidelines. A common industry-wide platform is being developed, and HDFC Bank has completed its internal development and integration. We are now working jointly with merchants to make this platform live for customers at the earliest,"

On the other hand, Axis Bank has also alerted its customers by saying in a notification that "As per RBI's recurring payment guidelines, w.e.f. 20-09-21, Standing Instructions on your Axis Bank Card(s) for recurring transactions will not be honoured. You can pay the merchant directly using your card for uninterrupted service.'

In a notification of RBI which was issued on 21st August 2019, it was stated that "relaxation in Additional Factor of Authentication (AFA) was permitted while processing e-mandates / standing instructions on cards and Prepaid Payment Instruments (PPIs) for recurring transactions with values up to Rs 2,000/-, subject to conditions listed therein. These instructions were later extended to Unified Payments Interface (UPI) as well."

Based on requests received from stakeholders and given the sufficient protection available to customers, RBI had also stated in Statement on Developmental and Regulatory Policies dated December 4, 2020 that "the aforesaid transaction limit will be increased. Accordingly, it has been decided to increase the above limit for AFA relaxation to Rs 5,000/- per transaction, with effect from January 1, 2021."

According to RBI, processing of recurring transactions (domestic or cross-border) using cards / PPIs / UPI under arrangements / practices not compliant with the aforesaid instructions shall not be continued beyond September 30, 2021.

Prior to initiating a transaction, banks will send an alert to a customer by SMS and email which will include the merchant's name, transaction amount, due date, transaction reference number and so on before 24 hours of the mandate process resulting in the deduction of the amount from the respective bank account. Within that time period, customers can manage the payment. To get a notification of e-Mandate payment, customers are advised to link their mobile number and email ID with their bank account to never miss any alert.