RBI’s new rule on debit card and credit card auto-payments from 1 October. RBI new rule will impact your Amazon Prime, Netflix and iTunes subscription. Amazon Prime, Netflix, iTunes subscription will be cancelled. The new rules are,
1) All Standing Instructions set up on your credit card and debit card will not be processed, without the additional factor of authentication.
2) Customers will get a pre-debit (SMS/e-mail) notification 24 hours prior to the debit
3) Customers would get a link(via SMS or Email) for each auto debit. Customer should approve the pre-debit notification for auto-debit transactions.
4). Any recurring transaction of an amount greater than ₹5, 000 will require additional OTP authentication each time the amount is debited.
5). This is only for debit card and credit card transactions, not for transaction on bank account. If you registered using bank accounts for Mutual Funds, SIPs, EMIs will continue without any impact.
This new rule to avoid fraudulent transaction using auto-debit facility and make the customer aware of auto-debit transaction on their cards. This new rule provides better control and awareness on credit card transactions.
So, if you have subscribed to services like Amazon Prime, Netflix, Spotify, iTunes, Google and Gaana using recurring payments on your credit or debit card, it will not be allowed from 1st October 2021 onwards.
Under the new rules, banks have to notify the customers 24 hours in advance in case of an upcoming auto-debit transaction. Simply put, customers have to provide additional factor authentication (AFA) by approving the auto-debit requesting in advance. Banks will send a notification to a customer via SMS and email before the transaction.
The notification will contain details about the name of the merchant, transaction amount, date of debit, reference number of transaction and the reason for the debit. You have to reply to the pre-debit notification to approve the transaction. Otherwise your auto-debit transaction will be declined. So monitor your SMS or email notification for your auto-debit transaction.
Customer will get an option to choose a mode among available options (say email, SMS) for receiving the pre-transaction notification. Check with your bank and select your preferred option.
In addition, auto-payment transactions above Rs 5,000 will require customers to authenticate such payments manually with a one-time password (OTP),apart from pre-debit notifications. Customer should ensure that the correct mobile number is linked to the debit/credit cards.
The auto-debit rules are likely to impact customers who make card auto-transactions for bill payments, OTT subscriptions, and other online services. Customers should note that only standing instructions on cards will be impacted and not standing instructions given to banks. If the standing instructions for bill payments is registered on a user’s bank account, there will be no change. Therefore, EMIs and SIPs payments scheduled in bank account will not get impacted.
Your loan EMIs and SIPs payments scheduled in bank account will not get impacted.
On short note,
- You have to validate all your auto-debit transactions on your card.
- Select your preferred option(SMS/Email) for pre debit notification.
- Approve your auto-debit each time to continue the services and subscriptions.