Businesses to face disruptions due to new RBI guidelines
Startups, merchants and tech platform providers are set to face difficulties following the implementation of the RBI framework for processing e-mandates for recurring online card transactions. Coming into force on October 1, the new guidelines require that for transactions up to Rs 5,000, customers set up an additional factor authentication with a one-time registration process; If above Rs 5,000, transactions are required to be authenticated every month, 24 hours before the transaction is due.
The twenty-four hour authentication window is what the Merchants Payments Alliance of India (MPAI) takes issue with. As per Vishal Mehta (strategic partnerships and payments, Microsoft and member, MPAI), the problem lies in the complexity behind the transaction with multiple parties involved.
A certain portion of these concerns lies in the fact that a significant portion of the MPAI relies on a subscription-based model in its operations. Social media marketing is another concern as the new RBI guidelines may require downtime and pre-optimisation, thus directly harming D2C businesses.
“Using auto top-ups is no longer possible and customers will have to do so manually using one-time transactions as the 24-hour pre-debit notification period is pointless for an auto top-up,” commented Mehta.
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