The Reserve Bank of India (RBI) is India's central bank and is responsible for the regulation of the Indian banking system. The RBI announced a host of new guidelines to streamline the process and security measures for card payments, including the requirement of Additional Factor of Authentication (AFA), especially for 'card-not-present' transactions. This brings changes to the existing e-mandates that are set up to manage recurring payments.
All financial institutions, associated partners, and gateways must comply with these guidelines starting September 30, 2021.
What are e-mandates?
An e-mandate is a digital payment service initiated by RBI for customers to virtually authorize merchants to collect recurring payments, primarily using debit or credit cards.
Chargebee associates each mandate with a subscription, and it is recommended that you set up separate mandates for each subscription.
What are the new guidelines?
The following guidelines are prescribed by the RBI:
E-mandates must be set up with Additional Factor Authentication (AFA).
An e-mandate must be configured for each subscription separately to automatically collect recurring payments.
The AFA requirement for transactions is mandatory only for transactions that exceed INR 15,000.
Banks must inform the customer at least 24 hours before the actual debit or charge and process payments upon confirmation that the pre-debit notification has been sent.
Banks must also provide a post-debit notification, which includes the name of the merchant, transaction amount, date/time of debit, reference number of transaction or e-mandate, and the reason for debit.
Banks must allow the cardholder to withdraw an e-mandate at any time and immediately stop all recurring payments.
No charges can be levied on the customer for the creation or modification of e-mandates.
What happens if the guidelines are not followed?
Non-adherence to these guidelines will mean your customers will experience failures for their recurring payments. Additionally, customers will be required to complete AFA for each transaction as a one-time transaction.
Limitations
These changes are supported in the V4 Full-page checkout, V3 In-app checkout, and legacy V2 Full-page checkout (currently only for Stripe).
Adding a payment method to a customer ID will not result in the creation of an e-mandate. An e-mandate will be set up only once a subscription is associated with the payment method.
Consolidated invoicing is not supported since individual subscriptions are associated with a mandate; therefore, consolidated invoices with multiple subscriptions cannot be associated with a single e-mandate.
A customer's backup payment methods may also fail until an individual e-mandate is set up with the backup payment method.
Merchants cannot use the Chargebee Merchant App to create or update subscriptions on behalf of customers, since these actions require customers to complete the mandatory AFA to process payments and set up e-mandates.
In the case of Account Hierarchy, if child accounts use payment methods associated with the parent account, you must ensure that an e-mandate is set up on the parent account.