Interpreting and Implementing the New Auto Debit Rules - A Quick Guide for Businesses: Native Payments in India

If your business is directly affected by the latest automatic deduction rules and you want more clarity, then you've come to the right place!

The Reserve Bank of India (RBI) recently announced new regulations for subscription payments. You might be wondering what these regulations mean for your business. Don't worry! Here is our simplified guide for you:

1. What are the latest automatic debit rules?

2. How will the new rules affect your business?

3. Do businesses need to worry? With PayU, there is absolutely no need to

What are the latest auto debit rules?

From 1 October 2021, businesses will need to comply with new regulations in order to continue auto-debiting subscription amounts on credit and debit cards. Under the latest regulations, reinstatement of automatic debit will require customer approval of an Additional Factor of Authentication (AFA) or One Time Password (OTP). All businesses are required to notify customers at least 24 hours in advance of an auto-debit transaction of up to ₹ 5,000 and are also required to provide the customer with an "opt-out" link in the auto-debit notification.

While there may be some disruption in the short term, the new regulations will ensure a convenient, secure and safer recurring payments ecosystem for all. They give customers more control over transactions and allow them to easily manage subscriptions on the bank's portal.

How will the new rules affect your business?

All subscription-based businesses, from the largest OTT platforms to emerging subscription box companies, are subject to these new regulations. However, transactional entities such as UPI and netbanking based mutual funds, EMIs (instalments) or loans are not directly affected by the new regulations.

Commenting on the future of India's subscription economy, Nimit Bhatia, Associate Director, Product Division, PayU, said, "In the long run, this will make more customers feel comfortable with using card payments. These regulations will give confidence to the end-customers which will lead to more business growth over time. There may be some pain in the short term, but overall the subscription or card business will grow in the coming quarters."

To learn more, click on the link below:

Do businesses need to worry? With PayU, there's absolutely no need

If you're worried about complying with the latest regulations, PayU is here to help make the transition smooth. With PayU's recurring payment suite, businesses can comply with the new regulations.

Our recurring payments suite will help your business maximise revenue potential in the following ways:

PayU has its own proprietary solution, Zion Hub, which covers all payment methods. It manages subscriptions on your behalf and provides faster go-live.

Final thoughts

While the new regulations may have affected businesses in the short term, they are a huge step forward in improving India's payments ecosystem. They give consumers more control and will improve the way digital transactions are conducted.