RBI Regulations Update

RBI regulations update for recurring card transactions in India

What is happening?
Starting 10/1/2021, issuing banks in India need to comply with the Reserve Bank of India’s (RBI) new directive on the processing of e-mandates for recurring transactions. Merchants may see higher payment failure rates on recurring transactions as a result of these actions.

Key guidelines under the RBI framework include:

  • Issuing banks must send a notification for a recurring charge to their credit card users 24 hours before an actual charge to the credit card. This can be either through SMS or email, as chosen by the customer. This pre-transaction notification should, at minimum, inform the cardholder about the name of the merchant, transaction amount, date/time of charge, etc.
  • Transactions processed with an e-mandate cannot exceed 5,000 INR (approximately 67 USD). Any transactions over this amount will require AFA (additional factors of authentication).
  • With an e-mandate, customers will be able to cancel a subscription through their bank account in lieu of going through the merchant. Learn more.

Which transactions does this apply to?
The framework affects all Indian-issued credit and debit cards, and all types of recurring transactions, including those for OTT (over-the-top) subscriptions, bill payments, and and other subscription-based offerings.

Impact of non-compliance
Non-compliance with the new RBI mandates can result in higher transaction failure rates. Businesses operating in INR may see higher failure rates if they do not meet the RBI's guidelines for new recurring payments starting September 30, 2021.

What is Recurly doing?
To enable your success, Recurly is working closely with our gateway partners to understand which updates we need to make to our gateway integrations so that issuing banks have the information they need to comply with the RBI’s mandates.

What can I do now to prevent transactions from being declined?

  • Since standard recurring payments are no longer accepted, don’t use them for customers in India, as there is a high chance they’ll be declined.
  • Take advantage of Recurly’s new dunning campaigns to send automated messages to Indian customers when their recurring payments are declined. Explain to these subscribers that payment declines are expected and tell them how to activate customer-initiated transactions (CIT) based on how you configure them.
    • Note: CIT transactions can be created using line-items in the purchase API call, or the initial transaction on a subscription create call (but not one set to occur in the future using a trial or next_billing_date).
  • Ask for customer-initiated transactions. These can happen through a variety of methods; for instance, you could ask the customer to come back and purchase from you every month, or offer a new type of subscription that’s for multiple months or a year so customers don’t have to confirm transactions every month.
  • With Recurly’s prepaid account balance functionality, you can set up a multi-month or annual subscription, ask subscribers to add to their prepaid account balance (customer-initiated transaction), and then decrement subscribers’ account balances on a monthly basis.