The Reserve Bank of India (RBI) on Friday, December 8, increased the limit for e-mandate, popularly known as auto-debit, to ₹1 lakh per transaction. This can be used for buying mutual funds via systematic investment plans (SIP) as well as to pay insurance premiums regularly. It can be used for credit card payments too.
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Currently, one-time password (OTP)-based authentication kicks in for Unified Payments Interface (UPI) auto payments exceeding ₹15,000. However, the recent announcement acknowledges the need to expand this limit for certain categories where transaction sizes exceed the existing threshold.
With the proposal, the additional factor of authentication (AFA) won't be mandatory for transactions up to ₹1 lakh now. It's aimed at making it easier for individuals to set up and use e-mandates for larger transactions.
"The system has stabilised, but in categories such as subscription to mutual funds, payment of insurance premium and credit card bill payments, where the transaction sizes are more than ₹15,000, a need to enhance the limit has been expressed as adoption has been lagging," said RBI in a statement.
Understanding e-mandate
E-mandate is a digital payment option catering to retail users. It allows for seamless recurring payments with the user's authorisation. Merchants can obtain consent from users for regular payments, enabling auto-debit mandates on credit or debit cards, domestically or internationally.
The framework for processing e-mandates for recurring transactions was introduced in August 2019 to balance the safety and security of digital transactions with customer convenience.
The number of e-mandates registered currently stands at 8.5 crore, processing nearly ₹2,800 crore of transactions per month.
Decoding UPI AutoPay
The UPI Automatic Payment feature is known as UPI AutoPay. It enables the user to schedule fixed monthly payments like subscriptions, utility services, etc. The said amount is automatically deducted from the user’s bank account on the date set by the user and the payment will be made.
Most of the UPI applications offer the user a ‘Mandate’ option. Using this option, the user can create, approve, modify, pause, or revoke the auto-debit mandate. The user needs to provide a one-time approval to the merchants for whom they want to automate payments on the platform, to make use of this feature. The user also needs to fill in other details such as payment amount, merchant details, subscription start date, payment frequency, etc.
(Edited by : Amrita)
First Published: Dec 8, 2023 12:39 PM IST
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