Payment execs laud RBI's move on e-mandate for card transactions

Fintech executives are hoping that the 'recurring transactions' mandate can be introduced to other payments methods like UPI, and the maximum cap on these transactions will be increased from Rs 2,000.

22nd Aug 2019
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After receiving several requests from industry players, the Reserve Bank of India (RBI) on Wednesday said it will permit processing of electronic mandate on cards for recurring transactions (merchant payments). 


With the directive, which will come into effect from September this year, and a recurring transaction capped at Rs 2,000, the RBI will be reviewing this facility closely, and introduce this feature to other digital mode of payments, based on feedback.


Debit card



At present, this facility allows users to create electronic mandates for all types of cards – debit, credit, and prepaid payment instruments (PPIs), including digital wallets.


Following the announcement, the industry lauded the central bank for announcing the much-awaited move. 

Harshil Mathur, CEO and Co-founder of Bengaluru-based digital payments provider, Razorpay, believes this release from the RBI is a positive move for the Indian digital payments ecosystem, and will clear out safety concerns for users and businesses. 


He said,

“This is certainly a significant step and something that the industry has been asking for a long time now. At Razorpay, we have been working on empowering businesses with various forms of recurring payment platforms for a while, helping them have a certain requirement of Additional Factor of Authentication (AFA). It’s also great news that the recurring mandate will now be applicable for all types of cards - debit, credit, and PPIs, including wallets. It will clear out any safety and security concerns around recurring transactions that businesses and customers are most concerned about.”


The Payments Council of India (PCI), which represents the players in the payments and settlements systems, also welcomed the RBI's move.


Naveen Surya, the Chairman Emeritus, PCI, & Chairman, Fintech Convergence Council, said,


“This RBI directive would drive the growth for subscription-based recurring payments and will reduce failure rates, besides bringing convenience to consumers.”


However, the industry believes the transaction cap of Rs 2,000 is low for many subscription-based payments. Vishwas Patel, Chairman, PCI, said:  

“The cap of Rs 2,000 is low for many subscriptions, bill payments, education fees, etc. Further, electricity bills from commercial shops, offices, 3 BHK plus residences in metro cities are in excess of Rs 2,000 per month, and will not have the facility of automatic recurring payments due to this cap. Hopefully, RBI will give it a re-look and increase the cap in the near future.”


Vishwas added,

“We would have appreciated if RBI had included UPI as a payment option in the above circular for recurring payments. UPI 2.0 is a non-starter because RBI has blocked its biggest feature recurring billing.”


According to the RBI, a cardholder desirous of opting for e-mandate facility shall undertake a one-time registration process, with AFA (Additional Factor Authentication) validation by the card issuer.

An e-mandate on card for recurring transactions shall be registered only after successful AFA validation, in addition to the normal process required by the issuer.


Also, the cardholder has the option to provide the e-mandate for either a ‘pre-specified fixed value’ or a variable value for the recurring transaction.


In addition to this, digital payment processing behemoths believe that recurring payments are a rapid growing trend amongst Indian households, and this move from the RBI will give a boost to the Indian digital payment economy.


Commenting on the same, TR Ramachandran, Group Country Manager, Visa, India & South Asia, said,

“Utility and entertainment services are a rapidly growing trend across most Indian households. The volume and the frequency of these payments make these some of the best use cases to transition into digital payments. Towards this end, the RBI’s decision to permit e-mandate on cards will be a strong enabler to grow digital payments across the country. We welcome the RBI’s decision, in particular the emphasis towards ensuring safety and security of card transactions alongside customer convenience.”


The RBI also stated in the circular that card issuers have to provide the cardholder an online facility to withdraw any e-mandate at any point of time, following which no further recurring transactions shall be allowed for the withdrawn e-mandate.



(Edited by Megha Reddy)




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