RBI Allows Customers To Automatically Pay Bills Through Cards, Wallets

To facilitate recurring transactions and payments, the Reserve Bank of India has now allowed card issuers to provide an e-mandate facility to their customers from Sept. 1.

Following several requests from industry stakeholders, the RBI on Wednesday evening, in a notification to all banks and card payment service providers, said the e-mandate arrangement would be made available on debit and credit cards as well as on prepaid instruments, including wallets.

This facility will allow customers to process recurring, not one-time, payments through their debit and credit cards up to a limit of Rs 2,000 per transaction.

At present a customer can make utility payments, for example, through net-banking accounts by signing an electronic mandate with their bank to process the payment every month. The RBI has extended the e-mandate mechanism to debit and credit cards as part of its objective to extend digital payments services.

No charges will be levied or recovered from the cardholder for availing the e-mandate facility for recurring transactions, the RBI said in its notification.

Process For E-Mandate

• Cardholders will have to undertake a one-time registration process, with an additional factor authentication by the card issuer
• Once the authentication is validated, the e-mandate for recurring transactions can commence.
• Cardholders can give the option to provide the e-mandate for either a pre-specific fixed value of recurring transaction or for a variable value of the recurring transaction—provided it does not exceed the overall cap of Rs 2,000 per transaction
• Issuers will send a pre-transaction notification to the cardholder at least 24 hours prior to actually debiting the amount from card. The message can be sent via SMS, email or other modes depending on the cardholders’ choice at the time of registering for the service.
• Cardholders will still have the option to opt out of a particular transaction or the e-mandate when they receive the pre-transaction notification.
• The issuer will then send a post-transaction alert or notification to the cardholder with the details of the transaction, including amount, date, reference number and merchant name.
• Cardholders can withdraw the e-mandate at any point of time following which no recurring transactions will take place. When the customer withdraws from the e-mandate service, additional factor authentication validation will have to be conducted by card issuer
• Acquiring banks have to ensure that merchants delete all the details about the customer, especially the payment instrument (card) information, when the customer withdraws the e-mandate.
• Card networks need to ensure there is a dispute resolution mechanism to resolve disputes.
• Acquiring banks will be made responsible to ensure that the merchants they on-board comply with all the regulations set by the RBI in this regard.