Worried about the impact of the latest auto-debit guidelines on your business? Read on to know more about the latest norms and how to comply with them.
If your business is impacted by the latest auto-debit guidelines and you are looking to get more clarity on it, then you have come to the right place!
The Reserve Bank of India (RBI) recently announced new guidelines for subscription payments. Now you must be thinking, what do these guidelines mean for your business? Don’t worry! We have prepared a simplified guide for you below:
What are the Latest Auto-Debit Guidelines?
With effect from October 1, 2021, businesses need to comply with new norms to continue auto-debiting the subscription amount on credit & debit cards. As per the latest guidelines, Additional Factor Authentication (AFA) or an OTP approval from customers is necessary to resume the auto-debit functionality. All businesses will have to intimate customers up to 24 hrs before any auto-debit transaction up to ₹ 5,000. Also, businesses need to provide customers with an ‘Opt-out’ link with the auto-debit notification.
While it is a disruption in the short term, the new norms will ensure a convenient, secure and, safer recurring payments ecosystem for all. They give the customer more control over transactions and allow them to manage their subscriptions easily from the bank portal itself.
How will the New Guidelines Impact Your Business?
All subscription-based businesses, from the biggest OTTs to upcoming subscription box companies, are under the purview of these new regulations. However, entities conducting transactions such as Mutual Funds (SIP), EMIs, or loans based on UPI and Netbanking remain unaffected by the new norms.
Commenting on the future of India’s subscription economy, Nimit Bhatia, Associate Director – Products at PayU said “In the longer term, it’ll result in more customers being comfortable using card payments. These regulations will give end customers the comfort that translates into more business growth over time. Short term pain but overall subscriptions or cards business will grow in the upcoming quarters.”
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While new norms may have influenced businesses in the short term, they are a very big step forward in improving the payments ecosystem of India. They give more control to consumers and will improve the way digital transactions are done.