The rules for auto debit and credit card payments will change from October 1

New Delhi: The auto debit system is set to undergo a major overhaul from October 1. The new auto debit system is likely to be implemented from the same day. Under the rule, digital payment platforms like Bank, Debit Card, Credit Card, UPI, Paytm, PhonePay have to seek approval every time before deducting installments or bills from a customer's account. He is going to change his system for this in such a way that once approval is given, he will not have to deduct your money again and again. The Reserve Bank has already said that those using debit cards, credit cards, UPIs or prepaid payment instruments (PPIs) will need additional factor authentication for recurring transactions.

Auto Debit means that if you put your electricity, gas, LIC or any other expenses in auto debit mode through your mobile app or internet banking, this amount will be automatically deducted from your account on a certain date.

Now if the new rule of auto debit is applied, your bill payment method will be affected. To take advantage of this facility, your active mobile number needs to be updated in the bank. This is necessary because the notification attached to the auto debit will be sent via SMS to the mobile number only.

Banks will have to send a notification five days before the last date of payment after the new rule comes into force. Reminder must be sent 3 hours before payment. The reminder will contain information on the amount and date of payment. It will also have the option of opt out or part-pen. This rule will be applicable from the first of October. In addition, OTP has been made mandatory on payments of more than Rs 5,000.

The Reserve Bank has issued these guidelines with a view to curbing fraud with banks and protecting consumers. Under the existing system, the bank deducts this amount from the customer's account without giving any information every month after getting approval from the customer once. This makes the chances of fraud much lower. This change has been made only to end this problem.