Automated payments (or recurring direct debit payment instructions) in India will change from October 1 as new guidelines from the Reserve Bank of India (RBI) come into effect. In particular, debit card users will be affected by the new rules and all previous instructions for payments on their cards will be revoked.
Currently, one can put his payments into automatic payment method (automatic debit instruction) on various online platforms, such as Amazon and Netflix using his debit card. Each month, the amount is debited without any action being required from the cardholder.
What has changed for direct debit payments?
Now, whenever a payment greater than 5,000 is made, users will need to authenticate their identity using a one-time password (OTP) on their mobile phone..
All domestic and international credit and debit cards will basically have another layer of protection for users, keeping their money safe from scammers. These provisions will also affect the payment of IMEs.
For this, a standardized platform supported by RBI was created and banks announced to their customers that some of their payments could fail until payment service providers comply with the requirements of this RBI platform.
All merchants who have complied with an RBI mandated platform before the deadline will be able to continue to allow automated payments for their users. Also, all mMerchants who have been given the green light to continue automated payments for customers will be displayed on the bank’s websites.
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How does the RBI Auto Debit Rule impact you?
On the user’s side, a registration procedure will be due if he opts for automated payments (or direct debit operations). For the “standing instruction” concerned, the user must specify the period of validity of these recurring payments and the maximum deductible amount. Above 5,000, an OTP would be mandatory for a successful payment.
That’s not all. The RBI platform will also give more power to users. For example, his 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 completely. This move can also help people manage their finances better, as current automatic payments go smoothly and most users who want to cancel have to wait an additional month.
Worried about defaulting on your EMI payments? Sometimes the bank may not be able to send payment communications. In this case, the user would have to pay through the merchant’s website or by net-banking to avoid a default.
Make sure your correct phone number and email addresses are linked to your bank account to avoid missing any critical communication from your bank regarding automatic payments.
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