In an increasingly digital world, people are conducting more and more transactions through computers or their mobile phones. Many set automatic debit mandates for recurring things like bill payments or subscriptions to various services. In the last few days, there were worries that these transactions could be rejected since many banks and service providers were not yet ready to comply with the new guidelines issued by the Reserve Bank of India that required an additional factor of authentication (AFA) for the auto debit transactions.
RBI has now extended the deadline by six months to September 30, 2021, so that all the stakeholders can migrate to the new framework. At the same time, it is displeased that the stakeholders were not ready even after sufficient time was given to them to comply with the guidelines and has warned of stern action if there are any more delays.
In August 2019, the central bank issued a framework for processing e-mandates on recurring online transactions. Initially applicable to cards and wallets, it was later extended in January 2020 to cover Unified Payments Interface (UPI) transactions, too. The RBI said that based on the request of the Indian Banks Association to extend the deadline to March 31, 2021, it had advised the stakeholders in December 2020 to migrate to the new framework.
“Thus, adequate time was given to the stakeholders to comply with the framework. It is, however, noted that the framework has not been fully implemented even after the extended timeline. This non-compliance is noted with serious concern and will be dealt with separately,” the central bank said on Wednesday.
Under the new framework, the issuer needs to send a pre-transaction notification via a text message or email to the cardholder, at least 24 hours before the charge or debit to the card. The name of the merchant, transaction amount, date of debit, reference number of transaction/e-mandate, reason for debit, etc would have to be informed to the cardholder via the pre-transaction notification. Once the cardholder receives the pre-transaction notification, he/she shall have the facility to opt out of that particular transaction or the e-mandate and this will also require an AFA validation by the issuer. The issuer will also have to send post-transaction notification to the cardholder.
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However, banks had sought further extension for complying with this framework since they were not ready and failing to comply with the framework would have resulted in the customer or enterprise’s transaction to be simply rejected.
“The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months,” RBI said.
Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action, it added.
