What is the new e-mandate, which the Reserve Bank of India (RBI) implemented for recurring transactions, what’s its immediate impact on merchants and consumers, and what can you do to keep your business going? We tell you all about India’s new subscription payment regulations here.
The subscription model
Usually, subscriptions are made very easy for the consumer: you sign up and give your consent to be billed recurrently, until you decide you no longer need or want the service. Done.
That has changed drastically for consumers in India: instead of customers giving a one-time confirmation, banks will be required to inform customers in advance about each and every single recurring payment. In addition to that, consumers with an ongoing subscription will have to authenticate once more in order to enroll to the new e-mandate.
What is the current situation in India?
The new RBI e-mandate for recurring transactions came into full effect on September 30, 2021. The changes should provide consumers with more control and transparency in the transaction process of payments.
With the new rules in place, payments higher than ₹5,000 (~US$67 as of March 2022) require AFA alongside a one-time password (OTP) to the customer at every transaction before they are approved, whereas payments below ₹5,000 require a one-time AFA when opting for auto-debits and then subsequent charges are automatically processed.
What does this mean for merchants?
Firstly, merchants need to either adopt or create a new compliant solution or halt all services until a compliant solution is provided to customers. Unless changes are made any kind of payment transaction will be declined if the payment is occurring through a model that does not comply with the new regulations.
Secondly, customers who were once under a recurring subscription are no longer under the subscription and must renew the service.
How to quickly be compliant with the RBI guidelines
As a payment solution company, dLocal has updated and evolved their subscription solution in India with consideration of the new RBI guidelines and is providing merchants with several options to allow new customers to make payments while existing customers can swiftly and seamlessly return to being serviced as they were previously.
A small sample of the solutions available through dLocal accommodate:
- Subscriptions with UPI
- Recurring payments
- Payments of variable amounts
- Auto-debiting guidelines
- Charges below and above ₹5,000, and
- Failed transactions that require reattempts
If you’d like to know more about how dLocal’s solution and compliance to India’s new regulations can help your business function and remain compliant, get in touch and let’s talk about your business.