New recurring payment norms: 4 weeks later, people still face disruptions

More than three weeks have passed since the Reserve Bank of India’s (RBI's) new guidelines on e-mandates for recurring payments came into effect but consumers are still taking to social media platforms to complain about the disruptions they are facing.

This comes as most stakeholders in the ecosystem have not put in place systems in accordance with the new rules, resulting in many transactions not going through.

Industry sources said most banks are still not ready, especially the smaller ones.

Some of the bigger ones have complied with the new regulations at the very last moment, thus not allowing the payment aggregators to test the process completely before going live.

Recurring transactions for international merchants are not going through at all.

And, around 60-70 per cent of the standing instructions for recurring transactions are not going through, a source aware of the development, said.

The blame has to be put on banks because despite getting ample time to comply with the new guidelines, they did not put all the systems in place, a source said.

If they had done all the back-end work in time, the customers would not have faced such disruptions.

The Payments Council of India went to the RBI to extend the timeline by another month but the RBI did not agree, he added.

Vishwas Patel, chairman, Payments Council of India, said, “Yes, the consumers are facing disruptions when it comes to making recurring payments through their cards.

"American Express and smaller banks are not yet compliant with the RBI rules.

"In the mid to long term, these new rules will provide more convenience to customers.”

The framework for processing e-mandates for recurring online transactions was supposed to kick in from April 1 but many stakeholders approached the regulator saying they need more time to implement it.

Consequently, the RBI, to prevent any inconvenience to customers, decided to extend the timeline to September 30, 2021.

But it also said any further delay in ensuring complete adherence to the framework will attract stringent supervisory action.

“For the start-up community, most of the software and other services were set up through cards, and it has been time-consuming to ensure they don’t fail since they are mission-critical,” said Vipul Sharma, member, Fintech Associ­a­tion for Consumer Empowerment (FACE).

“We should see this disruption going on for a few months since most payments are on a monthly basis.

"Customers, who have completed payments in October, will again face issues with some platforms in November as well,” he added.

While banks, card networks, merchants, and payment companies are scrambling to comply with the new guidelines, US-based tech giant Apple is promoting its wallet payments for subscription-based payments in India.

In its notification to customers, it said, “If you use a credit or debit card for subscriptions, transactions may get declined by banks and card issuers.

"If you add funds to your Apple ID balance, your subscription payments will continue until that balance is depleted,” the US tech giant said.

Among banks, HDFC Bank, the largest credit card issuer in the country, has complied with the new RBI regulations on standing instructions for recurring payments.

As many as 20 merchants, including over-the-top (OTT) platforms, insurance companies, tech giants and telecom majors are live with HDFC Bank for merchant standing instructions.

Few other large lenders, including Kotak Mahindra Bank, have complied with the new guidelines while many are yet to go live.

Responding to a Business Standard query, Sanjeev Moghe, executive vice-president & head, cards & payments, Axis Bank, said, “Axis Bank is fully compliant with the new rules of RBI on recurring payments.”

“While Axis Bank is ready & live, the readiness of other partners in the ecosystem, including merchants, is at different stages,” he added.

Among card issuing companies, VISA cards are enabled for registering merchant standing instructions, according to RBI guidelines.

MasterCard and DinersClub are also now compliant.

India’s indigenous card network Rupay is also expected to follow suit soon.

American Express is yet to comply with the regulations.

“There are multiple solutions available in the market for banks to implement so that customers do not face any issues with regard to recurring payments.

"Most banks, except for a few large ones, are not prepared as far as the new guidelines are concerned.

"However, if they take it on high priority, solutions such as Razorpay would take a few days to implement,” said Harshil Mathur, chief executive officer (CEO) & co-founder, Razorpay.

Payment gateway firms such as Razorpay, Billdesk, PayU have come up with solutions that will help banks, customers, and merchants navigate through this issue by registering their mandates on their customised platforms.

Photograph: Ajay Verma/Reuters