Starting Oct 1, 2021, issuing banks in India were introduced to the new Reserve Bank of India’s (RBI) directive on the processing of e-mandates for recurring transactions. Merchants have seen higher payment failure rates on recurring transactions as a result of these actions initially. Over the course of 2022, RBI has introduced a series of additional regulations heavily impacting the ability to transact on India-issued cards affecting local and international businesses, to the extent, that some providers have stopped supporting Indian payments.
Key guidelines under the RBI framework
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Online transactions using India-issued cards are subject to customer authentication.
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Issuing banks must send a notification for a recurring charge to their credit card users 24 hours before an actual charge to the credit card. This can be either through SMS or email, as chosen by the customer. This pre-transaction notification should, at minimum, inform the cardholder about the name of the merchant, transaction amount, date/time of charge, etc.
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Transactions processed with an e-mandate cannot exceed 15,000 INR (approximately 180 USD). Any transactions over this amount will require AFA (additional factors of authentication) and consent from the end-user
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With an e-mandate, customers will be able to cancel a subscription through their bank account via sms in lieu of going through the merchant.
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Additionally, network tokenization has been fully enforced, requiring all merchants, processors or providers in India to comply, limiting their ability to store customer data
Useful references are available under the following link.
Which transactions does this apply to?
The framework affects all Indian-issued credit and debit cards, and all types of recurring transactions, including those for OTT (over-the-top) subscriptions, bill payments, and other subscription-based offerings.
Impact of non-compliance
Non-compliance with the new RBI mandates can result in higher transaction failure rates. Businesses operating in INR may see higher failure rates if they do not meet the RBI's guidelines for new recurring payments.
What can I do now to prevent transactions from being declined?
Since standard recurring payments are no longer accepted, don’t use them for customers in India, as there is a high chance they’ll be declined. Piano currently works with Stripe and PayU India to enable merchants to manage RBI-compliant transactions. In case your business handles subscriptions with India-issued cards, recurring payments will fail.
Therefore, you may consider either setting up one-off terms and adjusting your India offers to longer periods on your provider or setting up an account with Stripe or PayU India to enable recurring INR payments to be supported.
Leverage Piano’s email notifications to send automated messages to Indian customers when their recurring payments are declined. Explain to these subscribers that payment declines are expected and tell them how to activate customer-initiated transactions (CIT) based on how you configure them. Make it easy for these customers to subscribe to a new offer. These can happen through a variety of methods; for instance, you could ask the customer to come back and purchase from you every month, or offer a new type of subscription that’s for multiple months or a year so customers don’t have to confirm transactions every month.
Targeting Indian Customers
As mentioned above, you may opt for enabling additional payment providers in Piano Management + Billing if you do not already use Stripe or PayU India. You can use multiple providers concurrently. Piano clients may set up targeted offers and terms for Indian customers. Once you secure an account with one of the supported providers (Stripe Elements and PayU India) configure the provider to handle INR currency (if you’ve set up INR on other providers, consider removing it, unless you have active customers on this term currency). Set up a Checkout flow with the provider for the Indian offers. Then set up INR terms/offers and target them to India in your experience segment.