RBI Unveils New E-Mandate Rules To Streamline Recurring Digital Payments

Consolidated Framework with Wider Applicability Issued under the provisions of the Payment and Settlement Systems Act, 2007, the framework applies to all payment system providers and participants handling recurring transactions through cards, prepaid payment instruments (PPI), and UPI, including both domestic and cross-border payments. The updated directions bring together earlier circulars into a single framework, aiming to streamline processes and improve clarity for stakeholders. Stronger Customer Control and Transparency The RBI has emphasised a customer-centric approach by mandating a one-time registration process for e-mandates, supported by an additional factor of authentication (AFA). Customers will be able to modify, pause, or cancel mandates at any time, with authentication required for such changes. The framework allows both fixed and variable recurring payments, with users given the option to set maximum transaction limits. Customers can also choose their preferred mode—such as SMS or email—for receiving alerts. Mandatory Alerts and Opt-Out Facility Issuers are required to send a pre-transaction notification at least 24 hours before any debit. This notification must include key details such as the merchant’s name, transaction amount, timing, and reason for debit. Customers will have the option to opt out of a specific transaction or an entire mandate, subject to authentication. Post-transaction notifications detailing the debit and grievance redressal mechanisms are also mandatory. However, pre-debit alerts are not required for automatic balance replenishment of FASTag and National Common Mobility Card (NCMC). Higher Limits for Recurring Transactions To reduce friction in routine payments, the RBI has allowed recurring transactions up to Rs 15,000 to be processed without additional authentication. For specific categories such as insurance premiums, mutual fund subscriptions, and credit card bill payments, the limit has been increased to Rs 1 lakh per transaction. Transactions exceeding these thresholds will continue to require additional authentication. Dispute Resolution and Other Provision The framework requires issuers to establish robust grievance redressal mechanisms and extends existing customer protection norms for unauthorised transactions to e-mandates. Additionally, no charges can be levied on customers for using the e-mandate facility. Acquiring entities must also ensure that merchants comply with the new guidelines. Towards a Consent-Driven Autopay Ecosystem The RBI said the framework aims to make recurring digital payments simpler, safer, and more user-centric. By combining reduced transaction friction with enhanced safeguards and customer control, the guidelines mark a shift towards a more transparent and consent-driven digital payments ecosystem. (KNN Bureau)