New facility on debit cards, credit cards to make payments easier: 10 points

Making small-ticket payments to a merchant, which are recurring in nature, through your debit, credit or prepaid cards (including wallets) is set to get easier. To boost digital transactions and facilitate payments through debit cards and credit cards, the Reserve Bank of India (RBI) has allowed card issuers to provide the facility of e-mandate to their customers. This e-mandate facility, which is currently available with bank accounts, allows the financial institution to automatically debit the amount from the bank account. The new rules come into effect from 1 September and is applicable for transactions performed using all types of cards – debit, credit and prepaid payment Instruments (PPIs), including wallets.

“The RBI has been receiving requests from industry stakeholders to allow processing of e-mandate on cards for recurring transactions with AFA (additional factor of authentication) during e-mandate registration and first transaction, and simple/automatic subsequent successive transactions,” the central said. The RBI also said that “this facility may be reviewed, in due course, for extension to other digital modes of payments.”

New debit, card payment rules in 10 points:

1) The credit or debit cardholder can give a mandate to the card issuer for automated payments to a merchant. The maximum limit for a transaction under this facility is ₹2,000.

2) The new e-mandate arrangement on credit, debit cards or wallets will be only for recurring transactions and not for a ‘once-only’ payment, the RBI said.

3) The cardholder – debit or credit – will not be charged extra for availing this e-mandate facility on cards for recurring transactions.

4) A debit or credit cardholder who wants to opt for this e-mandate facility on cards will have to undertake a one-time registration process, with AFA (additional factor of authentication) validation by the issuer.

5) For processing the first transaction in an e-mandate based recurring transaction series, AFA validation shall be performed.
6) Subsequent recurring transactions shall be performed only for those cards which have been successfully registered and for which the first transaction was successfully authenticated and authorised, the RBI said.

7) Subsequent transactions may be performed without AFA.

8) If the debit/credit holder wishes to withdraw the e-mandate at a later stage, the cardholder will have to give an online facility to the cardholder to opt out.

9) In respect of withdrawn e-mandates, the acquirers shall ensure that the merchants on-boarded by them, delete all details, including payment instrument information, the RBI said.

10) The card issuers have to put in place “an appropriate redress system to facilitate the cardholder to lodge grievances. Card networks shall also put in place dispute resolution mechanism for resolving these disputes with clear turnaround time,” the RBI said.

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