Your Debit card, Credit card auto-payment facility may FAIL over OTP issue - Check auto-debit problem for utility bills, OTT you may face

Your auto-payment facility may fail over an OTP issue. Yes, you read that right. If RBI note is followed, this is actually set to happen, unless a new date is announced very soon. So, if you have subscribed to any auto-debit facility for utility bills from your Debit card and Credit card, you need to keep this in mind as it may become a big headache. So, this news is very important for you! According to a report, from April 1, auto-debit payments for utility bills and over-the-top (OTT) subscriptions may fail, owing to a Reserve Bank of India (RBI) guideline.

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As per the report from the Zee Media Bureau, the RBI guideline, first announced in August 2019 asked processing of e-mandate on credit and debit cards for recurring transactions (merchant payments) with a cap of Rs 2,000. However, the guideline was later revised in December 2020 that said that e-mandates for recurring transactions through cards (and UPI) have been hiked from Rs 2,000 to Rs 5,000 from January 1, 2021.  

The additional Factor of Authentication (AFA) was permitted while processing e-mandates / standing instructions on cards and Prepaid Payment Instruments (PPIs) for recurring transactions with values up to Rs 5,000, the report said.

Critically, according to the report, the RBI had said that processing of recurring transactions (domestic or cross-border) using cards / PPIs / UPI under arrangements / practices not compliant with the aforesaid instructions shall not be continued beyond March 31, 2021.

RBI's new rule on additional factor of authentication requires banks to send a one-time password (OTP) to customers to validate transactions above Rs 5,000. "As per several media reports, banks have not yet been able to successfully carry out RBI's mandate. Hence after April 1, customers who have been availing auto-debit payments for utility bills and OTT subscriptions will face major hurdles," the Zee Media Bureau said.