- Automatic payments for phone bills, OTT fees and other utility services are likely to fail in April.
- Customers may have to look for alternative payment methods as payments are not likely to get through.
- The recurring payments through debit and credit cards will be affected while payments using UPIís AutoPay feature will not be affected.
Customers who have saved automatic payment options for phone bills, OTT fees, or other digital subscriptions are likely to face problems starting April. They may have to look for alternative payment methods as payments are not likely to get through. The Internet And Mobile Association of India (IAMAI) has given out a prior warning to millions of users noting that e-mandates set by customers could fail starting April 1, 2021. The recurring payments through debit and credit cards will be affected while payments using UPI's AutoPay feature will not.
The failure in automatic payments will subsequently affect companies like Amazon, Netflix, Vodafone Idea and Tata Power. ET cited sources that said there are complexities in the implementation of the new rules as a common integration between the issuing bank, the acquiring bank and online merchants are required for authentication messages.According to the report, HDFC bank, ICICI Bank, SBI as well as card scheme operators like American Express and Mastercard are notifying network partners about their inability to process standard instructions recurring mandate-based payments. Vendors have also suggested alternate payment methods to users.
Meanwhile, Indian Bank Association (IBA) has requested RBI to extend the deadline for compliance to March 26. The request was denied by the central bank. Over 2000 crores worth of customer transactions is likely to be disrupted in the first week of April unless RBI extends the deadline before March 31.
"Industry consultations suggest that most major scheduled commercial banks do not have upgraded capacities to comply. Due to this, the other participants in the ecosystem like acquirers and card networks have not been able to follow the obligations under these circulars," the IAMAI said.
The RBI has issued two circulars to banks -- 'non-bank prepaid payment instrument issuers', and 'authorised card payment networks for processing of e-mandates. The deadline to comply with these mandates is March 31, 2021. As noted by the IAMAI, most major banks have not upgraded with Reserve Bank of India's requirements for enabling registering, tracking, modification and withdrawal of e-mandates.
According to reports, the new rule requires banks to send a notification to customers five days before the payment is deducted and allow the transaction to go through only after the customer approves it. For payments above Rs 5,000, banks are also required to send a one-time password (OTP)'s to customers. Earlier this month, the RBI directed payment gateways, card-issuing banks and other payment service providers to stop storing card details permanently citing data leaks. The payment gateways would be allowed to store data in an encrypted format.