RBI extends timeline for processing recurring transactions

The Reserve Bank of India (RBI) has extended the timeline for processing recurring online transactions by six months. As such, banks and financial institutions have till September 30 to implement the new framework.

“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, that is till September 30, 2021,” the central bank said. “The recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will require an additional factor authentication (AFA) from April 1, 2021.”

The RBI, on December 4, had directed all banks including RRBs, NBFCs and payment gateways that the processing of recurring transactions (domestic or cross-border) using cards or PPIs or UPI under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021. It had announced this step to boost safety and security of card transactions.

Recently, the central bank enhanced the limit of contactless card transactions and e-mandates for recurring transactions through cards and UPI through Rs 2,000 to Rs 5,000 from January 1, 2021, with a view to further the adoption of digital payments in a safe and secure manner.

The requirement of AFA has made digital payments in India safe and secure. In the interest of customer convenience and safety in use of recurring online payments, the framework mandated use of AFA. The RBI, in its circular on Wednesday, said the primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.

“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 delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default,” it said. “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, that is till September 30, 2021. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.”

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Banks will be required to inform customers in advance about the recurring payment due and the transaction would be carried following a nod from the customer, so the transaction would not be automatic but, would be done after authentication from the customer.