Home Credit card Your direct debit / credit card debit may fail from next month if not approved

Your direct debit / credit card debit may fail from next month if not approved


Do you use your debit / credit card or mobile wallet for recurring direct debit payments? If so, be aware that from October 1, as mandated by the Reserve Bank of India (RBI), banks and other financial institutions will need to require customers to provide additional factor authentication if the direct debit mandate for payment is above Rs 5,000.

As of October 1, 2021, under the new additional factor authentication rules, a bank is required to notify the customer at least 24 hours before the direct debit payment is taken and to authorize debit only. after the customer confirmed it. The pre-transaction notification will be sent by SMS, email, etc. The notification will inform the cardholder of the name of the merchant, the amount of the transaction, the date / time of the debit, the reference number of the transaction / electronic mandate, the reason for the debit, i.e. ie, e-money order registered by the cardholder. The cardholder will have the option of opting out of this particular transaction or the electronic mandate.

You need to make sure that your correct mobile number is linked to your debit / credit cards so that you can receive a notification for approval.

However, note that there will be no impact of the new rule on your mutual fund SIP, insurance premiums, and other recurring payments if the standing direct debit instruction is from your bank account.

What type of payments will this have an impact?

This new rule will impact users who have given direct debit mandates for recurring payments from their debit / credit cards and / or mobile wallets for payments such as subscribing to OTT platforms such as Netflix, Amazon Prime, music apps like Spotify, Apple Music, payment of mobile phone bills, insurance premiums, utility bills, etc.

Keep in mind that additional factor authentication will be required for recurring transactions and not for “one-time” payments. Standing instructions must be for payment from your debit / credit card. For example, so far Netflix asks you to provide your debit / credit card details that the subscription fee is debited on the 8th of each month.

As mentioned above, additional factor authentication does not apply to automatic debit transactions below Rs 5,000. Any recurring payment over Rs 5,000 will require customer approval before being charged to their card. debit / wallet and debited from bank account / wallet.

Extended deadline for banks

The additional factor authentication for the aforementioned payments was due to go into effect from April 1, 2021. However, since many large banks such as HDFC Bank, ICICI Bank, State Bank of India (SBI) failed to comply The standard, the RBI extended the date by six months. Thus, a new rule will now come into force from October 1, 2021.

The Central Bank, in its circular dated March 31, 2021, said any further delay in ensuring full compliance with the framework beyond the extended deadline would result in strict prudential action.


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