Limit for UPI auto payments for these txns hiked

The Reserve Bank of India (RBI) announced today that it has proposed to hike the limits for UPI auto payments for specified transactions. As per the announcement, additional factor authentication (AFA) is required when auto-payment is made via UPI. Currently, this AFA kicks in when auto-payment is made for an amount exceeding Rs 15,000. As per the proposal this limit is being hiked to Rs 1 lakh for mutual fund subscriptions, insurance premium subscriptions and credit card repayments only.

As per the development statement issued by RBI, “The framework for processing of e-mandates for recurring transactions was introduced in August 2019 to balance the safety and security of digital transactions with customer convenience. The limits for execution of e-mandates without Additional Factor of Authentication (AFA) currently stands at Rs 15,000/- (last updated in June 2022). The number of e-mandates registered currently stands at 8.5 crore, processing nearly Rs 2800 crores of transactions per month. 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 Rs 15,000, a need to enhance the limit has been expressed as adoption has been lagging. It is, therefore, proposed to exempt the requirement of AFA for transactions up to Rs 1 lakh for the following categories, viz., subscription to mutual funds, payment of insurance premium and payments of credit card bills. The other existing requirements such as pre- and post-transaction notifications, opt-out facility for user, etc. shall continue to apply to these transactions. The revised circular will be issued shortly.”

The UPI auto payment feature has become successful in recent years after RBI asked banks to replace the actual credit card and debit card details with tokenisation. Tokenisation refers to the replacement of an actual or clear card number with an alternate code called the “Token”.

According to the RBI, “Tokenisation refers to replacement of actual card details with an alternate code called the “token”, which shall be unique for a combination of card, token requestor (i.e. the entity which accepts request from the customer for tokenisation of a card and passes it on to the card network to issue a corresponding token) and device (referred hereafter as “identified device”).

There are various advantages of setting up UPI auto payments which are as follows:

  • Timely payments avoiding late fees/ penalty.
  • Customized payment options ( like monthly, quarterly etc) and amounts ( Rs.1/- to Rs.15,000+) for each and every customer is available in recurring mandates
  • Modify/ Revoke/ Pause features also available for changing the orders placed as and when required
  • Secure and Convenient way to do recurring payments
  • Cashless way of transacting
  • No waiting in long queues
  • No documentation and Paper work

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