The RBI on Wednesday increased the limit for auto-debit mandates done through cards and unified payment interface (UPI) to ₹15,000 from the earlier ₹5,000
Customers will no longer be required to approve recurring transactions on their subscriptions, utility bills, EMIs etc up to ₹15,000 with a one-time password (OTP) each time at the time of payment. The Reserve Bank of India (RBI) on Wednesday increased the limit for auto-debit mandates done through cards and unified payment interface (UPI) to ₹15,000 from the earlier ₹5,000.
RBI had mandated customers to use additional factor authentication (AFA) for all recurring payments done through credit cards, debit cards and UPI, with effect from 1 October.
As per the central bank’s guidelines, AFA was to be done as a one-time setup for payments below ₹5,000, whereas each transaction, including recurring ones, above this limit had to be authenticated by the user through an OTP.
Now, customers will have to approve recurring transactions with an OTP sent from the bank only for payments above ₹15,000.
This will come as a major relief to users to seamlessly pay insurance premiums, credit card bills, EMIs on small-ticket unsecured loans, utility bills and education fees, which are typically over ₹5,000.
“Previously, any recurring transaction above ₹5,000 required banks to send an OTP to the customer for them to authenticate the transaction. While this did not affect small businesses dealing with small recurring amounts, large-scale businesses like insurance providers and SaaS companies faced a bit more friction in these payments,” said Khilan Haria, SVP and head of payments, product, Razorpay.
“To further facilitate recurring payments like subscriptions, insurance premiums, education fees of larger value under the framework, the limit is being enhanced from ₹5,000 to ₹15,000,” RBI governor Shaktikanta Das said.
“This will further leverage the benefits available under the framework and augment customer convenience.”
The central bank is yet to issue further instructions on how this will be implemented. It is unlikely that the customers will be expected to make any changes to their existing e-mandates as the onus of intimating the user with pre-debit notification and OTP lies with the bank and credit card issuing companies.
Before each due payment below this threshold, the bank sends the customers a debit notification along with a link that allows them to view, modify or cancel the payment or mandate.
If the customer takes no action, the transaction goes through. This would mean that with the increased threshold, customers will have to be careful about keeping track of bigger payments as the OTP-based authentication acted as a trigger to stop any recurring payments that they didn’t wish to continue with.
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