E-mandate: RBI strengthens process with new guidelines, procedures
RBI has strengthened the process of e-mandate on cards for recurring transactions with AFA during e-mandate registration and first transaction, and simple/automatic subsequent successive transactions.
After receiving requests from industry stakeholders, the RBI has strengthened the process of e-mandate on cards for recurring transactions with AFA during e-mandate registration and first transaction, and simple/automatic subsequent successive transactions. RBI said this week, “Keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience, it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions.”
A circular was released by RBI, helping both customers, merchants, industries and banks while processing e-mandate facility in regards to card-related transaction.
Here’s what you must know:
The e-mandate is an arrangement on cards which shall be only for recurring transactions and not for a ‘once-only’ payment.
How to register?
As per RBI, a cardholder desirous of opting for e-mandate facility on card shall undertake a one-time registration process, with AFA validation by the issuer. An e-mandate on card for recurring transactions shall be registered only after successful AFA validation, in addition to the normal process required by the issuer.
A registration shall be completed only after all requisite information is obtained by the issuer, including the validity period of the e-mandate and other audit trail related requirements. The facility to modify the validity period of the e-mandate at a later stage, if required, shall also have to be provided for.
Notably, during the registration process, the cardholder shall be given an option to provide the e-mandate for either a pre-specified fixed value of recurring transaction or for a variable value of the recurring transaction; in the case of the latter, the cardholder shall clearly specify the maximum value of recurring transactions, subject to the overall cap fixed by the RBI. Currently Rs 2,000 per transaction is the cap specified by RBI.
First transaction and subsequent recurring transactions
While processing the first transaction in e-mandate based recurring transaction series, AFA validation shall be performed. If the first transaction is being performed along with the registration of e-mandate, then AFA validation may be combined. All such AFAvalidation shall be as per extant instructions of the RBI.
Subsequent recurring transactions shall be performed only for those cards which have been successfully registered and for which the first transaction was successfully authenticated and authorised. These subsequent transactions may be performed without AFA.
Pre-transaction notification
As a risk mitigant and customer facilitation measure, the issuer shall send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge/debit to the card. While registering e-mandate on the card, the cardholder shall be given facility to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification from the issuer in a clear, unambiguous manner and in an understandable language. The facility for changing this mode of receiving pre-transactionnotification, shall also be provided to the cardholder, stated the RBI.
Also, the pre-transaction notification shall, at the minimum, inform the cardholder about the name of the merchant, transaction amount, date / time of debit, reference number of transaction/ e-mandate, reason for debit, i.e., e-mandate registered by the cardholder.
On receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of that particular transaction or the e-mandate. Any such opt-out shall entail AFA validation by the issuer. On receipt of intimation of such an opt-out, the issuer shall ensure that the particular transaction is not effected / further recurring transactions are not effected (as the case may be). A confirmation intimation to this effect shall be sent to the cardholder.
Post-transaction notification
The issuer shall send post-transaction alert / notification to the cardholder. This notification shall, at the minimum, inform the cardholder about the name of the merchant, transaction amount, date / time of debit, reference number of transaction / e-mandate, reason for debit, i.e., e-mandate registered by the cardholder.
E-mandate withdrawal
The issuer shall provide the cardholder an online facility to withdraw any e-mandate at any point of time following which no further recurring transactions shall be allowed for the withdrawn e-mandate. It needs to be noted that, the exception to this will be a pipeline transaction for which pre-transaction notification has already been sent to the cardholder, but the debit has not been communicated to or received by the cardholder, and the e-mandate withdrawal happens during the interregnum.
Information about this facility to withdraw e-mandate at any point of time, shall be clearly communicated to the cardholder at the time of registration and later on whenever felt necessary.
The withdrawal of any e-mandate by the cardholder shall entail AFA validation by the issuer.
Hence, in respect of withdrawn e-mandate/s, the acquirers shall ensure that the merchants on-boarded by them, delete all details, including payment instrument information.
Any grievances?
To appropriately address the system, RBI has guided that, an issuer shall put in place a redress system, to facilitate the cardholder to lodge grievance/s. Card networks shall also put in place dispute resolution mechanism for resolving these disputes with clear Turn Around Time (TAT).
The card networks shall make suitable arrangements to separately identify chargebacks / dispute requests in respect of e-mandate based recurring transactions.
RBI instructions on limiting liability of customers in unauthorised transactions shall be applicable for such transactions as well.
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