RBI Debit Credit Card New Rules: RBI alters Debit Credit Card rules, to be implemented from 1st October 2021

RBI Debit Credit Card New Rules:

The Reserve Bank of India has issued new guidelines for Additional Factor Authentication (AFA), according to which the auto-debit payment system will change from 1st October 2021.

Auto debit payments may get stuck from 1st October:

RBI has directed to implement Additional Factor Authentication (AFA) with the aim of making digital payments more secure in the country. Keeping in mind the interests and convenience of the customers in recurring online payments, it was directed to prepare a framework using AFA for the purpose of protecting them from frauds. But in view of the appeal of IBA, the deadline for its implementation was extended from 31st March 2021 to 30th September so that banks can make full preparations to implement this framework.

However, the Reserve Bank of India earlier had asked banks in December 2020 to prepare to implement the framework by 31st March 2021. 

It must be noted that if these RBI guidelines were implemented from 1st April then it would have been a great difficulty for the customers across the country because customers who have auto-debit payments on their debit or credit cards would’ve got stuck and OTT subscription would have failed.

RBI guidelines, banks did not follow:

The Internet and Mobile Association of India (IAMAI) had warned that lakhs of customers who have given online approvals (e-mandates) may fail after 30th September. This is because many banks have not taken steps to activate registration, tracking, modification, and withdrawal as per RBI guidelines for e-mandates.

New guidelines of RBI:

According to the new rules of RBI, banks will have to send a notification 5 days before the date of payment, the payment will be approved only when the customer gives its approval. Banks will also have to send a One Time Password (OTP) to the customer if the recurring payment exceeds Rs 5,000. RBI has taken this step keeping in view the safety of the customers.

Earlier, the Reserve Bank had asked all banks, payment gateways, and other service providers not to store card details permanently, making recurring payments more difficult. However, RBI has taken this step after the incidents of data leak in Juspay and Neo banking startup Chqbook.