Reserve Bank of India has introduced a new rule that all kinds of recurring or repetitive payments which are made through either credit or debit cards will be notified to the customer – 24 hours in advance. This notification will contain the information of the scheduled payment. The new rule will come into effect for the scheduled payments which are minimum of INR 5,000.
The advanced notification to customers ,for the execution of the recurring payments, has been set up for seeking the customer’s approval to take forward any such transaction, according to the new norms published by the Reserve Bank of India (RBI).
Such transactions will not be executed if the customer’s approval is not received. Under this new system, for any transaction of more than INR 5,000, banks will send Onetime passwords (OTP) to the customers.
Those recurring transactions on a customer’s credit or debit card, which don’t comply to this new rule, will now be declined by banks.
Customers will need to re-register themselves with each of their payment instruments for both – debit or credit cards
Why the new rule has been introduced?
The new rules have been designed to protect customers from the online frauds, especially on third party platforms, where it has been seen quite often that possibilities of payment related frauds are more.
In other words, customers will need to re-register themselves with each of their payment instruments, whether it is a debit or a credit card. Once this is done, the first recurring transaction will have to be conducted through an Additional Factor Authentication (AFA) system, i.e. through approval in advance of such auto-debit requests, which are of value above INR 5,000.