New debit, credit card rule for OTP requirement comes into effect

The Reserve Bank of India has allowed the increase in  in limit for e-mandates/ standing instructions on credit/debit cards and prepaid payment instruments (PPIs) for recurring transactions to 15,000, from 5,000, with immediate effect. Prior to January 1, 2021, the limit was 2,000.  “On a review of implementation of the e-mandate framework and the protection available to customers, it has been decided to increase the limit from 5,000 to 15,000 per transaction and shall come into effect immediately,” the RBI said in a notification on June 16. 

“Requests have been received from stakeholders to increase the limit under the framework to facilitate payments of larger value like subscriptions, insurance premia, education fee, etc,” RBI governor Shaktikanta Das said recently.

“To further augment customer convenience and leverage the benefits available under the framework, it is proposed to enhance the limit from 5,000 to 15,000 per recurring payment,” he added.

Under the current framework, the processing of e-mandate based recurring payments on cards requires an additional factor of authentication (AFA) during registration, sending a pre-debit notification. Subsequent recurring transactions to be executed without additional factor of authentication for benefit of convenience.

According to RBI, major banks are providing the facility and the transaction volumes are seeing good traction and till date, over 6.25 crore mandates have been registered under this framework, including for over 3,400 international merchants.

The enhanced the limit of e-Mandates on Cards for Recurring Payments from Rs. 5000 to 15000 is a welcome move as it will not only benefit consumers to set mandates for multiple categories of payments but also include more players from the insurance, education, and loan sectors, said Ramesh Narasimhan, CEO, Worldline India

How to register for e-mandate based recurring transactions:

A credit/debit cardholder opting for e-mandate facility on card will have to undertake a one-time registration process, with additional factor of authentication validation by the issuer.

An e-mandate on credit or debit card for recurring transactions shall be registered only after successful Additional Factor of Authentication or AFA validation, in addition to the normal process required by the issuer, according to RBI

Registration shall be completed only after all requisite information is obtained by the issuer, including the validity period of the e-mandate and other requirements. The facility to modify the validity period of the e-mandate at a later stage, if required, shall also has to be provided for.

During the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction.

Any modification in existing e-mandate shall entail AFA validation by the issuer.

As a risk mitigant and customer facilitation measure, the issuer shall send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge / debit to the card.

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 issuer. The facility for changing this mode of receiving pre-transaction notification, shall also be provided to the cardholder.

The issuer shall provide the cardholder an online facility to withdraw any e-mandate at any point of time following which no further recurring transactions shall be allowed for the withdrawn e-mandate.

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