Changes in auto-debit rules that account’s into effect from October

Only individuals who use credit and debit cards for recurring transactions will be affected by the new auto-debit restrictions

The RBI has twice postponed the implementation of amendments to the auto-debit rule, but banks and service providers will have to re-calibrate their systems as of October 1. Noncompliance would be taken seriously, according to the RBI.

All recurring transactions will require additional authentication under the new regulations. Customers will be required to authenticate a one-time password (OTP) each time a payment is due for amounts more than Rs 5,000.

This will apply to all domestic and international credit and debit cards.

According to Livemint, banks have begun warning customers about the changes, and some have even enabled additional factor verification for a few merchants. According to the Livemint report, a list of these merchants would be published on the individual bank’s website.

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Transactions for merchants who are already connected to the technical infrastructure will be permitted. Users will, however, be required to specify or complete a registration process in which they will be required to enter the validity time and maximum amount of the standing instruction.

At the moment of the transaction, any payment request above the maximum amount will require OTP- based authentication. For transactions under Rs. 5,000, the AFA has been approved.

The authorizing bank will send a user a debit notification with the amount and name of the merchant 24 hours before each payment for subsequent transactions within this threshold. In addition, the message will include a link that will take them to a page where they can examine, change, or cancel the payment or obligation. The transaction will be completed if they do not respond to the notification.

If the bank has not informed users about the anticipated changes, they will have to make direct payments to service providers via merchant applications, websites, or their bank’s net-banking facility to avoid payment default.

Many people use their credit and debit cards to set up automatic payments for products and services ranging from electricity and gas to music and movie subscriptions, and banks are concerned that new laws may confuse millions of people.

For effective payment execution, banks and payment institutions were asked to remodel existing recurring payment flows and preserve standardization.

All correspondence-related communications will be sent to the users’ registered phone numbers and email addresses. As a result, account holders must confirm that their cards are connected to the relevant information.

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