You will soon be able to give e-mandates for automatic recurring payment transactions such as subscriptions to streaming services and bill payments of up to Rs 15,000, without a one-time password for every renewal. So far, the limit has been Rs 5,000.

Reserve Bank of India (RBI) governor Shaktikanta Das announced the increase in the limit on Wednesday, June 8, when he declared the results of the latest monetary policy review.

Since October 1, 2021, customers have been required to register e-mandates –give instructions to their banks – for processing recurring payments via their debit and credit cards.

“The framework for processing of e-mandate-based recurring payments was introduced by the Reserve Bank keeping in mind the benefits of convenience, safety, and security to the users, Das said in his statement.

“Under this framework, over 6.25 crore mandates have been registered in favour of a large number of domestic and  3,400 international merchants," he added.

WHAT IS THE E-MANDATE FOR RECURRING TRANSACTIONS?

The e-mandate framework was introduced to give bank customers better control over their payments.

“Customers had to register the e-mandate for any recurring transaction and had the flexibility to modify and revoke the e-mandate at any point,” said Adhil Shetty, CEO of BankBazaar.com.

The e-mandate comes with an additional factor of authentication either at the time of registration or on the first transaction, followed by automatic transactions.

“This balances the safety and security of card transactions with customer ease-of-use,” said Shetty.

Under the e-mandate framework, a debit or credit cardholder gives a standing instruction to the merchant platform like a website or mobile application to deduct a certain amount of money for recurring transactions.

This includes subscriptions on streaming platforms like Netflix, Hotstar Amazon Prime, etc. and mobile phones, piped gas, electricity bill payments and so on.

According to RBI rules, card issuers or banks have to send a notification to the cardholder at least 24 hours in advance for automatic debits.

WHAT ARE THE NEW RBI RULES ON RECURRING CARD PAYMENTS?

Originally, e-mandates were capped at Rs 2,000; this limit was increased to Rs 5,000 and now to Rs 15,000.

This will allow customers to set up automatic recurring transactions of up to Rs.15,000 and give them the flexibility to modify or cancel the payments at any time.

“Transactions above this cap shall require an additional factor of authentication at the time of processing,” said Shetty.

Insurance premiums and education fees of a larger value are now included under the framework. Earlier, this automated framework was used mainly to pay for newspaper and magazine subscriptions or utility bills.

WHAT ARE THE BENEFITS TO USERS?

The e-mandate for recurring payments offers users safety, security and convenience.
“As per the RBI, this enhancement of limit accounts for the bulk of recurring transactions, and leaves only a small margin of users with high-value recurring transactions outside its ambit,” says Shetty.

The expectation is that the e-mandate will eventually expand to cover all recurring payments.

“Major banks are providing the facility for processing of e-mandate-based recurring payment and the transaction volumes are seeing good traction," the RBI policy statement added.