New auto debit rules for Credit Cards: What you should be aware of

The new auto debit rules issued by the Reserve Bank of India (RBI), directed at card-issuing banks and companies, regulate the recurring payment transactions made through Credit Cards, debit cards, and other prepaid instruments. Let us look at the developments in this regard and how this changes your Credit Card auto debit instructions and rules.

The new auto debit rules

The RBI has instructed that for recurring payments to be debited automatically, approval of the customer will be required. This is also known as the Additional Factor of Authentication (AFA). Banks ensure AFA by sending a pre-debit alert to the customer 24 hours before the due date. The cardholder approves the same through an OTP. Presently, transactions exceeding Rs 15,000 require cardholder approval. 

Transactions below the threshold

For transactions less than Rs 15,000, the cardholder will receive the alert. However, the need for AFA approval is not mandatory. The notification alert will include information such as the mandate ID, transaction value, purpose of debit, and date and time of debit.

Options available to the cardholder

The cardholder can opt out of the transaction through the AFA or view/modify/cancel the auto debit mandate. This applies to all notification alerts, whether for transactions below Rs 15,000 or above. They can also choose and change the communication mode for the alert (text message, email, etc.).

If the cardholder doesn’t approve the transaction, the corresponding bank will subsequently decline it. The customer can make the payment directly to the merchant through the app or website, however, the customer must bear the non-payment or late payment fees, if any, charged by the merchant. The issuing bank is not liable for any claims in this regard.

Setting up the e-mandate

As a cardholder, you must set up an auto debit e-mandate authorising the service provider or merchant to raise a fixed amount at a set frequency. You must specify the validity period and the maximum auto debit amount for future transactions as per the standing instruction. Two-factor authentication is conducted to complete the registration and trigger the recurring transaction.

International recurring transactions

The new auto debit rules apply to recurring overseas transactions as well. If the Credit Card or prepaid payment instrument is not in sync with the new guidelines, such auto debit instructions will get discontinued with the advent of the new auto debit rules. To resume them, the cardholder must follow the above-mentioned registration process and initiate the e-mandate with the issuing bank.

Get your auto debits right with IDFC FIRST Bank

IDFC FIRST Bank ensures that your auto debit instructions flow through a streamlined process. Go to your internet banking profile, navigate Credit Cards, and enable ‘Autopay future bills’. You can also activate auto debit rules through your phone banking app.

Apply for your IDFC FIRST Bank Credit Card and stay a step ahead of your bills!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.