RBI Governor Shaktikanta Das on Wednesday, besides raising repo rate by 50 basis points, announced to raise limit on e-mandates on cards for recurring payments from ₹5,000 to ₹15,000.
The facility of e-mandate was introduced last year in October when users were empowered to give standing instructions to their banks for automatically debiting their account in favour of merchants so that they could automate the payments for mobile bills, OTT subscription and website subscription etc.
However, the limit set that time was ₹5,000 and any amount above that called for an additional factor of authentication, also known as AFA.
What is e-mandate?
E-mandate is a standing instruction on a debit or credit card given by cardholder on a merchant platform such as a website or a mobile app for regular transactions made at telecom service provider, OTT platforms and insurance partners.
A framework for e-mandate for processing of recurring payments was introduced by the Reserve Bank last year under which over 6.25 crore mandates have already been registered in favour of a large number of domestic and over 3,400 international merchants.
What does the new rule imply?
Since the maximum limit of ₹5,000 kept the options of vendors limited, the increased limit will widen the options which include payment of insurance premium, subscriptions, education fee, among others.
“To further facilitate recurring payments like subscriptions, insurance premia, education fee, etc. of larger value under the framework, the limit is being enhanced from ₹5,000 to ₹15,000 per transaction. This will further leverage the benefits available under the framework and augment customer convenience,” Shaktikanta Das said on Wednesday.
If your monthly subscription amount for any service exceeds ₹15,000, then an additional factor of authentication (AFA) will become mandatory.
For automated debits, your card issuer or bank needs to send a notification at least 24 hours in advance.