Be Aware! Automatic Payment Service Of Bank Accounts May Be Disrupted From Tomorrow

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Bhubaneswar: The auto payments service of bank account holders will be disrupted from April 1, 2021 as all recurring transactions using cards and other prepaid payment instruments will now need an additional factor of authentication, as per an Reserve Bank of India (RBI) rule on recurring transactions which was first issued in December 2020.

This might affect automatic payments for mobile, utility or other bills and subscription charges for OTT platforms as well, including rental services, etc.

As per the new RBI rule, from tomorrow the customers will need an additional one-time password for transactions above Rs 5,000.

Customers will receive a notification 24 hours before an automatic payment is scheduled and the transaction will take place only after it is approved by the user.

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The user will have to choose the mode (such as SMS and email) of this pre-transaction notification at the time of registration for the recurring transaction system.

If banks decline automatic payments, the users will have to make manual transactions to complete their bill payments.

Earlier, the RBI had allowed transactions up to Rs 2,000 to be exempted from e-mandate based recurring transactions without Additional Factor of Authentication. Later this limit was extended to Rs 5,000 on December 4, 2020. This means, recurring transactions above this limit will need additional authentication.

Customers might face some problems with recurring transactions and rejection of auto payment by banks which may lead to the disruption of transactions worth about ₹ 2,000 crore from April 1.

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