No OTP needed for UPI payments up to Rs 1 lakh for credit card bills, MF SIPs

This will be helpful to users who regularly use UPI for their SIPs and credit card bills as these transactions would now be automated and will not require their intervention every month to process pay

 RBI has proposed to exempt the requirement of additional factor authentication (AFA) for recurring transactions up to Rs 1 lakh for  subscription to mutual funds, payment of insurance premiums and payments of credit card bills. 

This will be helpful to users who regularly use UPI for their SIPs and credit card bills as these transactions will now be automated and will not require their intervention every month to process payment of insurance premiums and payments of credit card bills.

"To ensure the security of digital transactions, especially recurring online transactions, the RBI mandated an Additional Factor of Authentication (AFA) for processing e-mandates. However, to enable better convenience for customers, the upper limits for the execution of e-mandates without AFA was maintained at Rs 15,000. However, some of the biggest recurring transactions tend to be for savings and insurance, such as for payment towards mutual fund subscriptions, insurance premiums, and credit card bills.  

 Keeping this in mind, the limit for these three transactions have been hiked to Rs. 1 lakh, explained  Adhil Shetty, CEO of Bankbazaar.

This implies that users will not have to provide the -time password (OTP) based authentication for payments made up to Rs 1 lakh for the above three transactions.  Currently, OTP-based AFA kicks in when an auto payment via UPI exceeds Rs 15,000.

"The RBI's recent proposals aim to expand e-mandate limits for recurring online transactions. For mutual fund subscriptions, insurance premiums, and credit card repayments, the limit may increase from Rs.15,000 to Rs.1 lakh per transaction. This change is poised to further promote the use of e-mandates," added Shetty.

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 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 crore 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," said RBI in a statement.