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Auto-Debit Rules to Change From Today: What Does It Mean For Customers?

Customers have been informed about the new rules on credit/debit cards and auto-debit transactions by their banks.

Updated
India
2 min read
<div class="paragraphs"><p>Customers may see some auto-debit transactions from credit and debit cards failing from next month onwards. Image used for representation.</p></div>
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Customers may see some auto-debit transactions from credit and debit cards failing from next month onwards. This is due to the new additional factor authentication rules mandated by Reserve Bank of India. The changes will come into effect from Friday, 1 October.

Banks, including Axis and HDFC have already started informing their customers about the change in the rules for auto-debit payments, Livemint reported on Monday, 27 September.

RBI had deferred the implementation of new rules on automatic debit by six months. It was done as per the request of banks, customers, and the digital payment companies who were not prepared for the 31 March deadline.

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As per RBI's recurring payment guidelines, with effect from 20 September, "Standing Instructions on your Axis Bank Card(s) for recurring transactions will not be honoured. You can pay the merchant directly using your card for uninterrupted service," states a communication sent by Axis bank to its customers as per the Livemint report.

The new framework was announced in August 2019. RBI had warned that "non-compliance will be dealt seriously".

Here is all you need to know about the new rules.

What are the changes made under the new rule?

  • Addition Factor Authentication (AFA) is compulsory for all transactions below Rs 5,000 on debit cards, credit cards, UPI and other Prepaid Payment Instruments (PPI)

  • All Standing Instructions set up on credit and debit cards – both domestic and international – will be processed only with AFA

  • AFA will be required for mandate registration, modification, and deletion

What changes for the customer?

  • Customers will receive a pre-debit (SMS/e-mail) notification 24 hours before the debit

  • Customers can opt-out of the transactions with the link provided in the debit notification

  • Customers will have the facility to view, modify, cancel any Standing Instructions (SI) set on their card

  • Customers can set a maximum amount for each SI

  • No change will occur if SI for bill payments is registered on our bank account

  • If they will be on your bank's debit or credit card, they will be declined from 1 October. For example, SI given on Netflix, Amazon, Insurance payments will be deactivated

  • SI registered using bank accounts for mutual funds, SIPs, EMIs will continue

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What is the process?

  • Bank will send a notification via SMS/e-mail to the customer before the transaction

  • Customers will have 24 hours to change or cancel a payment

  • The notification will have these details: Name of merchant, transaction amount, date of debit, reference number of transaction, and the reason for debit

  • Customers should make sure that correct mobile number is linked

(With inputs from LiveMint)

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