Insta
No Automatic Recurring Payments Without Additional Factor Of Authentication From 1 April
Making digital payments
The automatic recurring payments for multiple services will be barred from 1 April as the the Reserve Bank of India (RBI) has made Additional Factor of Authentication (AFA) compulsory from 31 March.
The RBI had in December last year directed the banks including RRBs, NBFCs, and payment gateways that the processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond 31 March 2021.
The RBI move come as part of risk mitigation measure to bolster safety and security of card transactions.
Under the new norms, banks will have to notify customers in advance with regards to any due recurring payment. The transaction will go through only after the user’s authentication and approval. Moreover, the banks will have to send a one-time password (OTP) to carry out a recurring payment in excess of Rs 5000, reports Indian Express.
So the transaction would not be automatic but would be done after authentication from the customer.
However, the banks and payment gateways are currently seeking additional time from the RBI to comply with these latest norms.
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