Banks and payment aggregators are scrambling to meet the October 1 deadline for standing instructions for recurring online transactions. Many banks are sending communications to customers saying that they will have to make payments directly to merchants.
“In compliance with the regulatory requirements, we are currently building a solution to seamlessly manage all your domestic standing instructions for recurring payments. This solution will be available soon for you. Starting October 1, any existing standing instruction for domestic and international recurring transactions on your card account will not be processed. We request you to make these payments directly to the service providers to avoid any interruptions,” American Express said in a recent message to customers.
American Express did not respond to an e-mail query from BusinessLine on the issue.
While a number of other banks are also working to comply with the norms, some are sending similar messages to customers.
Working to meet deadline
“This time around, the RBI norms will have to be met. But what may happen is that the existing standing instruction will become invalid and, as and when any issuer is ready, the customer can sign up for any new registration. There will be a period when the customer will have to pay the merchant directly. All of us are ensuring suitable customer communication and working to meet the deadline,” explained a banker.
As the new standing instruction will not get registered immediately, there may be one or two bill cycles that the merchant and consumer will have to take care of, he said.
The RBI had, in March, extended the deadline for banks to comply with norms for processing recurring online transactions by six months to September 30.
To make online transactions secure, the RBI has introduced an additional factor authentication for cards, wallets, prepaid instruments and UPI during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹5,000), as well as pre-transaction notification and facility to withdraw the mandate. However, many banks had failed to comply with the earlier deadline of March-end following which the RBI had decided to extend the deadline to prevent any inconvenience to the customers.
Bharat Panchal, Chief Risk Officer – India, Middle East and Africa, FIS, said banks are prepared to meet the deadline for standing instruction for recurring payments. But there are many in the ecosystem and some of them may not be prepared.
Other payment options
“Technically, there is not a significant challenge in implementing it. The infrastructure is available but just need to be extended. In case, customers are unable to do standing instruction for recurring payments on their credit cards, they still have a number of options such as UPI Autopay, BharatBill Pay, net banking and e-wallets,” he said.