In an attempt to boost digital transactions and facilitate payments through credit and debit cards, the Reserve Bank of India (RBI) has allowed card issuers to offer the e-mandate facility to their customers. This means that the apex banks will allow the customers to make recurring payments of less than Rs 2,000 without the two-factor authentication process by giving an e-mandate.
This move will make digital payments to merchant more convenient especially at kirana and grocery stores where ticket sizes are small.
"The Reserve Bank of India (RBI) has, over the past decade, put in place various safety and security measures for card payments, including the requirement of Additional Factor of Authentication (AFA), especially for ‘card-not-present’ transactions. Recurring transactions based on standing instructions given to the merchants by the cardholders were brought within the ambit of AFA," the central bank said in a circular dated August 21, 2019.
RBI in its circular clarified that it had been receiving requests from industry stakeholders. "The RBI has been receiving requests from industry stakeholders to allow processing of e-mandate on cards for recurring transactions with AFA during e-mandate registration and first transaction, and simple/automatic subsequent successive transactions."
Keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience, it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple/automatic subsequent successive transactions, subject to conditions, it said.
Here's what you must know-
1. This circular is applicable for transactions performed using all types of cards such as debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
2. The maximum permissible limit for a transaction under this arrangement shall be Rs 2,000.
3. All other instructions related to card transactions shall be applicable on these e-mandate based recurring card transactions.
4. No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions.
5. This directive, issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007), will come into effect from September 1, 2019.
6. This facility may be reviewed, in due course, for the extension to other digital modes of payments.
7. The e-mandate arrangement on cards shall be only for recurring transactions and not for a 'once-only' payment.
8. During the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction; in the case of the latter, the cardholder shall clearly specify the maximum value of recurring transactions, subject to the overall cap fixed by the RBI (currently Rs 2,000 per transaction).
9. The cap for e-mandate based recurring transactions without AFA will be Rs 2,000 per transaction. Transactions above this limit will be subject to AFA as hitherto.
10. The issuer shall provide the cardholder an online facility to withdraw any e-mandate at any point of time following which no further recurring transactions shall be allowed for the withdrawn e-mandate.
This move will make digital payments to merchant more convenient especially at kirana and grocery stores where ticket sizes are small.
"The Reserve Bank of India (RBI) has, over the past decade, put in place various safety and security measures for card payments, including the requirement of Additional Factor of Authentication (AFA), especially for ‘card-not-present’ transactions. Recurring transactions based on standing instructions given to the merchants by the cardholders were brought within the ambit of AFA," the central bank said in a circular dated August 21, 2019.
RBI in its circular clarified that it had been receiving requests from industry stakeholders. "The RBI has been receiving requests from industry stakeholders to allow processing of e-mandate on cards for recurring transactions with AFA during e-mandate registration and first transaction, and simple/automatic subsequent successive transactions."
Keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience, it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple/automatic subsequent successive transactions, subject to conditions, it said.
Here's what you must know-
1. This circular is applicable for transactions performed using all types of cards such as debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
2. The maximum permissible limit for a transaction under this arrangement shall be Rs 2,000.
3. All other instructions related to card transactions shall be applicable on these e-mandate based recurring card transactions.
4. No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions.
5. This directive, issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007), will come into effect from September 1, 2019.
6. This facility may be reviewed, in due course, for the extension to other digital modes of payments.
7. The e-mandate arrangement on cards shall be only for recurring transactions and not for a 'once-only' payment.
8. During the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction; in the case of the latter, the cardholder shall clearly specify the maximum value of recurring transactions, subject to the overall cap fixed by the RBI (currently Rs 2,000 per transaction).
9. The cap for e-mandate based recurring transactions without AFA will be Rs 2,000 per transaction. Transactions above this limit will be subject to AFA as hitherto.
10. The issuer shall provide the cardholder an online facility to withdraw any e-mandate at any point of time following which no further recurring transactions shall be allowed for the withdrawn e-mandate.
