New Delhi | Jagran Business Desk: From paying recurring bills to EMIs, every month bank account holders, make some transactions that are important and timebound. The auto-debit facility provided by banks to customers makes it easier for them to process these payments. Under this facility, customers don't even have to worry and the payment is made without any obstacle. However, this facility is soon going to change due to new security features mandated by the Reserve Bank of India (RBI).

Here's everything you need to know about the new changes in the auto-debit facility:

What has changed?

Customers who use the auto-debit facility on their debit and credit cards for recurring payments may see some transactions fail from October 1. Those who use the auto-debit facility may have to process some of these transactions manually from next month.

This comes as the RBI has made AFA (Additional Factor of Authentication) mandatory for all recurring transactions below ₹5,000 on debit cards, credit cards, UPI, and other Prepaid Payment Instruments (PPIs). All stakeholders are required to ensure full compliance with the framework by September 30, 2021.

What does this mean?

This means all recurring payments which were earlier debited automatically from customers' cards (credit/debit/prepaid) for mobile, utility, other recurring bills as well as subscription payments like OTT streaming services will now have to undergo additional factor authentication.

Why the changes are made?

The changes in the auto-debit facility are made because the Reserve Bank of India (RBI) has issued a framework for processing e-mandates on recurring online transactions.

Many banks including Axis and HDFC have already started informing their customers about the change in the mandate for auto-debit payments.

What is the process?

  • According to the directives, banks will send a notification to customers via SMS and email before the transaction.
  • Customers will be notified by banks 24 hours prior to the transaction to provide enough time for a consumer to alter or cancel a payment.
  • The notification will contain details about the name of the merchant, transaction amount, date of debit, reference number of transaction, and the reason for the debit.
  • The cardholder will have the option to either disapprove or approve the transaction.

Posted By: Sugandha Jha