If you make digital transactions, you may know about auto-payment. Auto-payment is the system which is used to pay fixed monthly expenses/bills/subscriptions through which amount is automatically deducted from your account every month.

Recently, RBI has released new guidelines regarding auto payments and amount deductions which are as under:

New RBI Guidelines on Debit, Credit card auto-payment

• RBI has asked banks to send a pre-transaction notification to their credit/debit card users 24 hours before an actual amount deduction.
• The notification can be made either through SMS or email, as per customer's preference.
• The pre-transaction notification should include the name of the merchant, transaction amount, date/time of debit etc.
• When cardholder receives pre-transaction notification, he/she should be provided the facility to cancel or stop the particular auto-transaction or the e-mandate. That means after getting the pre-notification of amount deduction, if you feel that you are not going to use the service for next month, you can cancel/unsubscribe the transaction.
• There should be a validity period for e-mandate, which will have to be provided at the time of registration of the e-mandate. For example, if you have subscribed to Netflix, you can choose the time limit of auto-payment, which means you can choose for how many months the amount should be automatically deducted.
• RBI has also issued certain audit-trail-related requirements that the service providers and banks will have to meet.
• While making the registration, an option should be given to the cardholder to provide e-mandate for either a pre-specified fixed amount of recurring transaction or for a variable amount of the recurring transaction. For example, if you have chosen the auto-payment option for mobile recharge plan, you can define the maximum deduction limit, which means if amount crosses the defined limit, then it won't be automatically deducted from your account. RBI has also put the limit of maximum 5000 Rs for recurring transaction, which means amount more than Rs 5000 will not be automatically deducted.
• A cardholder who wants to opt for e-mandate facility on the card should undertake a one-time registration process, with additional factor of authentication validation by the issuer.
• The issuer will have to provide an online facility to their card holders to withdraw any e-mandate at any point of time, following which no further recurring transactions should be allowed for the withdrawn e-mandate.

Note: These regulations apply only to cards and not on internet banking.