Credit Card recurring payment limit changed. RBI says you can pay upto Rs 15,000 without OTP soon

Credit Card Recurring Payment Limit: Soon, no OTP, or other Additional Factor of Authentication (AFA), will be required for making recurring payments above Rs 5000 through e-mandate on credit cards. The Reserve Bank of India (RBI) has proposed to increase the limit for e-mandates on cards from Rs 5000 to Rs 15,000. Necessary instructions in this regard will be issued by the central bank soon. 

In its bi-monthly  “Statement on Developmental and Regulatory Policies” today (8th June, 2022), the RBI noted: “The framework on processing of e-mandate based recurring payments, inter-alia, provides for an Additional Factor of Authentication (AFA) during registration, sending a pre-debit notification, subsequent recurring transactions to be executed without AFA, and an easier avenue to withdraw such mandates. Benefits of convenience, safety and security are available to the users. The system also benefits from users’ confidence. Major banks are providing the facility and the transaction volumes are seeing good traction.”

According to RBI, over 6.25 crore mandates have been registered under this framework, including for over 3,400 international merchants, till date. 

Announcing the proposal to increase the recurring payment limit, the RBI said, “Requests have been received from stakeholders to increase the limit under the framework to facilitate payments of larger value like subscriptions, insurance premia, education fee, etc. To further augment customer convenience and leverage the benefits available under the framework, it is proposed to enhance the limit from ₹5,000 to ₹15,000 per recurring payment. Necessary instructions will be issued shortly.”

How will recurring payment limit change benefit customers?

Experts say that increasing cap on e-mandate for card recurring payment will benefit customers. The maximum limit for without-AFA e-mandates was Rs 5000 earlier. This meant that for subscriptions (like Netflix, Spotify), mobile recharge, etc, a recurring payment up to Rs 5000 could be done without any Additional Factor of Authentication (AFA) like OTPs. For payments beyond that, the customer had to enter the OTP. 

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“But with the limit now extended to Rs 15000, the process of subscription payments will become more hassle-free and convenient. This would also allow recurring payments to become a norm for slightly higher ticket size payments like rent, maintenance, insurance premium, annual subscriptions, etc,” Pranjal Kamra, CEO of Finology Ventures, told FE Online.

“Moreover, this will encourage more players to adopt the subscription framework, making the payment ecosystem more automated. A very encouraging move from the central bank, this is expected to take digital payments one step further, he added.

Experts say that capping of recurring payments at Rs 5,000 was creating a lot of hassles for consumers with large ticket sizes like insurance premiums or even annual subscriptions etc.

“With the new rule, when in effect, this would ease the life of a lot of subscribers as well as the credit card companies who would increase the transactions,” Rohit Kumar, Founder and CEO of XPay.Life,  a Blockchain enabled transaction company, told FE Online.  

“This in turn will lead to a larger digital transaction footprint and therefore becomes beneficial for the economy.  We believe this is a step in the right direction as taken by RBI,” he added.

No OTP required for upto Rs 15,000

With pre-paid payment instruments and card transactions gaining traction, the RBI’s move in hiking cap on e-mandate for card recurring payments is also being seen by experts as a big decision.

“It is a win-win for both: banks and customers. The proposed enhanced limit from the older Rs 5000 to Rs 15,000 will empower customers to stay in control of their own recurring payments,” Muralidharan Srinivasan, Head of Payments, APMEA Region, FIS, said 

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“The future transaction experience for them will be hassle-free as recurring payments of high values up to Rs.15,000 will not need an additional factor authentications (e.g. OTPs), after registration. Additionally, e-mandate with the increased cap for recurring payments will become a standard for making many common payments from rent to receivables, various maintenance payments and possibly embed into emerging IOT functions,” he added.