RBI's Auto Debit Rules Explained: How Your Online Payments Will Change From Oct 1

Automated payments (or recurring auto debit payment instructions) in India will change starting October 1 as new Reserve Bank of India (RBI) guidelines take effect. In particular, users of debit cards will be affected by the new rules and all previous instructions for payments on one's cards will be void.

Currently, one can put their payments on autopay mode (auto debit instruction) across different online platforms, such as Amazon and Netflix using their debit card. Every month, the amount is debited without any action required from the cardholder.

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What has changed for auto debit payments?

Now, every time a payment exceeding ?5,000 is made, users will be required to authenticate their identity using a one-time password (OTP) on their mobile phones.

All domestic and international credit and debit cards will essentially have another layer of protection for users, shielding one's money from fraudsters. These provisions will also affect payment of EMIs.

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For this, a RBI-backed standardised platform has been created and banks have announced to their customers that some of their payments may fail until payment service providers comply with the requirements of this RBI platform.

All those merchants that have complied with an RBI-mandated platform before the deadline will be able to continue allowing automated payments for their users. Also, all merchants who have been given the green-light to continue automated payments for customers will be displayed on one's bank websites.

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How does RBI auto debit rule impact you?

From the user's end, a registration process will be due if they opt for automated payments (or auto debit transactions). For the relevant "standing instruction", the user would need to specify the validity period of these recurring payments and the maximum deductible amount. Beyond ?5,000, an OTP would be mandatory to successfully make a payment.

That's not all. The RBI platform will also give more power to the users. For instance, one's bank would be required to remind the customer of a pending payment 24 hours in advance.

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The message would also contain a link where the user can modify the payment or cancel it altogether. This move may also help people manage their finances better, as current autopay payments happen without making much noise and most users who want to cancel then have to wait for another month.

Worried about defaulting on your EMI payments? The bank may sometimes not be able to send communication about payments. In this case, the user would have to pay through the merchant's website or net-banking to avoid defaulting on payments.

Make sure your correct phone number and email addresses are linked to your bank account to avoid missing out on any critical communication from your bank regarding autopayments.

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