RBI says no OTP authentication needed for UPI recurring payments for mutual fund, insurance, credit card payments up to Rs 1 lakh

The Reserve Bank of India (RBI) on Friday said that no one-time password (OTP) based authentication will be required for payments made up to Rs 1 lakh. As per the announcement, the service can be used for buying mutual funds via systematic investment plans (SIP), paying insurance premiums, and making credit card payments, among others. 

Before this, OTP-based AFA (additional factor of authentication) was applied when an auto payment via UPI exceeded the Rs 15,000 limit.

"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," said RBI in a statement.

It is to be noted that the framework for processing of e-mandates for recurring transactions was introduced in August 2019 in a bid to have a safety and security cover for digital transactions. The number of e-mandates registered currently stands at 8.5 crore, processing nearly Rs 2,800 crore of transactions per month.

E-mandate can be defined as a digital payment option for retail users, which allows for seamless recurring payments with the user's authorisation. Users can give consent to merchants for regular payments, enabling auto-debit mandates on credit or debit cards, domestically or internationally, so that they don't miss the deadlines.

RBI governor Shaktikanta Das: "e-Mandates for making payments of recurring nature have become popular among customers. Under this framework, an additional factor of authentication (AFA) is currently required for recurring transactions exceeding Rs 15,000. It is now proposed to enhance this limit to Rs 1 lakh per transaction for recurring payments of mutual fund subscriptions, insurance premium subscriptions and credit card repayments. This measure will further accelerate the usage of e-mandates."

"The move 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, will further enhance convenience of payments for users. People have got used to setting e-mandates and streamlining their recurring payments up to Rs 15,000. Now, enabling large value e-mandates without AFA highlights the user centricity, which will further enhance its adoptability," said Mandar Agashe, Founder and MD, Sarvatra Technologies.

Mahesh Shukla, CEO & Co-Founder, PayMe, said: "The RBI's move to raise the ceiling for recurring transactions via e-mandate from Rs 15,000 to Rs 1 lakh mutual fund payouts, insurance premium payments, and credit card payments is a major relief for investors. Furthermore, the proposed increase in the limit for e-Mandates for recurring payments of mutual fund subscriptions, insurance premium subscriptions, and credit card repayments aims to boost their usage."

In another major announcement on UPI, the RBI on Friday increased the UPI transaction limit for education and healthcare facilities to Rs 5 lakh. Earlier, the transaction limit was Rs 1 lakh.

“We propose to increase the UPI transaction limit for education and healthcare facilities to Rs 5 lakh,” RBI Governor Shaktikanta Das said in his MPC statement.

In addition, the RBI announced the establishment of a “Fintech Repository” to gain deeper insights into developments within the fintech ecosystem and to offer support to the sector. Governor Das mentioned that this repository, to be operationalized by the Reserve Bank Innovation Hub by April 2024 or earlier, will encourage FinTechs to voluntarily contribute relevant information.

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