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Is the RBI deliberately trying to handicap credit cards in India? The decision to make recurring payments impossible, followed by having to enter card informati

Is the RBI deliberately trying to handicap credit cards in India? The decision to make recurring payments impossible, followed by having to enter card information every time I do an online transaction is making for a very frustrating experience. The justification for these decisions is always "consumer interest" but how is making consumers jump through hoops to do transact online in consumer interest? I wish the industry was more co-ordinated in lobbying against these crazy policies Edit: A couple of replies below that say they don't mind authorizing subscriptions/recurring charges every time. I respect that view but I think people underestimate how much friction it adds if a business needs to ask your for permission every time to renew. Consumers are forgetful. They may not be available to authorize a payment when it's time to renew. Subscriptions reduce transaction costs, give businesses a predictable stream of income and allow consumers continued access to services without having to remember to renew it. If you don't believe me, just look at the data and anecdotes posted by tech journalists and software devs on twitter - it's a shitshow. If a businesses make cancellation hard, the right policy would have been to allow consumers to "stop" charge from the card issuer's website or app - not ask consumers to approve a charge everytime it happens.

deleted 5y ago
[deleted]
paxys 5y ago
If you'd bother to read the article (or heck the first two lines of the article) you'll see that this rule does not mean you'll have to re-enter your credit card info on every order.
- kranner 5y ago
  From the HN guidelines: > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
vlovich123 5y ago
I would love to be able to have to proactively authorize every single recurring purchase via a tap on my phone. If I have enough that I’m being overwhelmed there’s a good chance I’m not tracking my purchases very well and there could even be fraud I’m missing. There’s some use-cases maybe where automatic billing is required but the vast majority would do better to need to prompt the user.
- mrweasel 5y ago
  There’s a Danish company that provides a service which will integrate into online banking platforms, that will allow you to cancel recurring payments directly from your banking app. How they make it work I don’t know, but I hope that my own bank will signup shortly.
sudhirj 5y ago
So the order doesn’t prohibit tokenizing or saving cards, it specifies who can save them. Earlier, merchants could save the details, and this ability leads to massive amounts of fraud and theft (see US right now). Then only regulated payment aggregators could save them, and issue a token to the merchants. Stealing the token wasn’t too helpful because you couldn’t grab the money, the token was tied to the merchant. But this still means my card number is stored on a bunch of companies that can suddenly take whatever funds they want, and I can’t cancel these tokens. Fast forward to 2022, where only the issuer I got my card from can give out tokens - so I can now see a list of every single merchant who has access to my card tokens, and I can cancel them whenever I want. So the functionality is not going away, it’s moving to another part of the regulated system that’s more in the control of the consumer. As a person I welcome the move (no more struggling to understand card charges or pleading with companies to cancel my subscriptions). As a developer it’s more work to implement the new system, but it’s not much more work than the old one. Projects using Stripe or Razorpay will get the new system with no changes.
- vishnugupta 5y ago
  Thanks for clear and jargon-free response. I wish this were top-level and top comment.
- sidm83 5y ago
  This is a great response throwing light on the actual new protocol which does seem to make sense.
- ratww 5y ago
  Yep, this is how most of the companies I worked for handled recurring payments. The only time the customer needs to input their credit card again is when the credit card number changes. Some providers even had integration with banks, so when a credit card was auto-renewed and the expiration changed (the CC number was still the same), we didn't even have to ask the customer for an update. Only when the customer specifically asked for a new card. So there's even the possibility of even more convenience to customers.
ramraj07 5y ago
As a consumer in India I’m so happy at least some part of this government is doing what it’s supposed to do. A century of unchecked lobbying is pretty much the reason why the US is at the state it is. The difference I’ve seen between how things run in india and the states is that in India what’s illegal and called corruption is called legal and lobbying here. What exactly are you worried about ? Clicking authorize on nytimes subscription every month?
- sumedh 5y ago
  > Clicking authorize on nytimes subscription every month? Why is that a good thing?
  - bobthepanda 5y ago
    Why is it bad? One of the first pieces of advice for anyone sorting out personal finances is "figure out what subscriptions you aren't using." Cancelling in many cases is an anti-pattern (looking at you, NYT)
  - blntechie 5y ago
    Because for NYTimes e.g. they don't allow online cancelation and need to through the phone retention loop. RBI mandate thing could have been implemented better but I absolutely support the idea that recurring payment control should be with the consumer and not the merchant.
adi2907 5y ago
As an entrepreneur, I empathise with fellow startups losing customers due to mandatory check for recurring payments. However as a customer, this has been a godsend as I had almost 15 subscriptions totalling $300 monthly, quite a large amount in India. The constant reminder of how many of those subscriptions are useless has allowed me to cut my expenses. Case in point, was subscribed to linkedin premium for last 2 years, while I make use of it only once in 3-4 months. Now I simply dont recharge my credit card and only do so once its required. Not sure if its the ideal solution but definitely am thankful to it!
manojlds 5y ago
It just adds onus on the vendor. Google have implemented it very well and I love this a lot more as the end user gets more visibility and control. It's going to be a short-term pain but I think it's going to be great in long term.
ghoomketu 5y ago
Yes this is stupid and it has caused me a lot of trouble since this all started. I am now seriously thinking of leaving this country and going to NZ or Canada (something which I did not want to do because of my parents). Doing business in India is so frickin hard, especially after GST. I have to spend so much time on accounting nowadays and it's getting harder and harder every day (even though all the ads say otherwise). I almost got my Digitalocean account suspended few months back because the credit cards won't bill anymore. Now i have to constantly monitor GCP, Porkbun, AWS, etc since nobody can bill me like before. Also for some reason Indians aren't allowed to keep balance in Paypal but a lot of my customers prefer to pay via it, which means in the end I cannot process any refunds on time and makes customers angry (Paypal wants me to snail mail checks to them to add the USD balance since govt has banned adding the same from Bank account). For recurring charges now you have to create an account with https://www.sihub.in https://www.sihub.in which doesn't accept small businesses kinda making it an exclusive club for big companies. It's really a shit-show here. If it were not for Stripe Atlas I would have been out of business a long time ago. So thank god for that.
- fareesh 5y ago
  This is primarily because those companies haven't updated their payments systems to be compliant. The e-mandate system seems to be pretty good. Netflix is compliant and it worked seamlessly from day one of the switch. It could be because they have incorporated locally, which can be difficult for many other companies.
  - spookthesunset 5y ago
    > This is primarily because those companies haven't updated their payments systems to be compliant. For big companies with decades or more of legacy cruft, it's a hell of a lift to make their universe compliant. Especially if your large company tends to fall onto the "decentralized org structure" part of the spectrum where a billion teams run around doing their own thing with very little top-down oversight. It's the same kind of story as it was for GDPR (and CCPA to some extent). Some companies can pull it off easy because their org structure is way more top down. Others that are bottoms up have a much harder time because you have to heard a million different teams towards something new that doesn't really deliver much immediate business value. I assure you though, these companies are all no doubt hard at work making life better for their india customers... it is just a much harder lift for their organizations to handle. Which is not to say their org structure is a bad one. It just isn't optimized for top-down mandates like these.
naruvimama 5y ago
A lot of business around the world are built around this silent charges and people being forgetful or not active in checking their expenses.
naruvimama 5y ago
Credit cards are from an era where magnetic stripes was a novelty. It is just a bunch of numbers and very lax in security. Visa & Mastercard are just global duopolies, they have used their dominance to keep the cards easy to use but insecure. The cost of fraud is ultimately borne by the merchants, who try to pass on the hefty fee to the card holders. India is trying to move to digital payments, a vast majority of the people are first time card holders or even account holders. Frauds do not make it easy, and we do not want to make digital payments more expensive than cash payments. This is not a move against any card network. However, I personally think it is wrong for Visa/Mastercard to use their market dominance to charge 2-3% of every transaction. As we move more and more into a digital economy, this duopoly starts to sound like a New East India Company.
- rowls66 5y ago
  You should know that a small portion of the 2-3% transaction fees goes to the card networks. Most goes to the card issuing bank. Now in fairness, the banks also cover the cost of some fraud, and payout generous rewards to their best customers.
tlogan 5y ago
This “authorize charge” change is really giving headache both to customers and companies. If person owning CC is not available, emails are misses, etc. so scheduled e-mail campaigns are not sent, backups are not done, scheduled data loads were not performed, etc. Basically running business is getting harder and harder in India. So this one thing why USA is still leader: not because it is “great” but because it is still “Wild West” (sure somebody will say “free country” - let’s be honest it is more of a “Wild West”)

deleted 5y ago

[deleted]

paxys 5y ago

If you'd bother to read the article (or heck the first two lines of the article) you'll see that this rule does not mean you'll have to re-enter your credit card info on every order.

kranner 5y ago
From the HN guidelines: > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."

vlovich123 5y ago

I would love to be able to have to proactively authorize every single recurring purchase via a tap on my phone. If I have enough that I’m being overwhelmed there’s a good chance I’m not tracking my purchases very well and there could even be fraud I’m missing. There’s some use-cases maybe where automatic billing is required but the vast majority would do better to need to prompt the user.

mrweasel 5y ago
There’s a Danish company that provides a service which will integrate into online banking platforms, that will allow you to cancel recurring payments directly from your banking app. How they make it work I don’t know, but I hope that my own bank will signup shortly.

sudhirj 5y ago

So the order doesn’t prohibit tokenizing or saving cards, it specifies who can save them. Earlier, merchants could save the details, and this ability leads to massive amounts of fraud and theft (see US right now). Then only regulated payment aggregators could save them, and issue a token to the merchants. Stealing the token wasn’t too helpful because you couldn’t grab the money, the token was tied to the merchant. But this still means my card number is stored on a bunch of companies that can suddenly take whatever funds they want, and I can’t cancel these tokens. Fast forward to 2022, where only the issuer I got my card from can give out tokens - so I can now see a list of every single merchant who has access to my card tokens, and I can cancel them whenever I want. So the functionality is not going away, it’s moving to another part of the regulated system that’s more in the control of the consumer. As a person I welcome the move (no more struggling to understand card charges or pleading with companies to cancel my subscriptions). As a developer it’s more work to implement the new system, but it’s not much more work than the old one. Projects using Stripe or Razorpay will get the new system with no changes.

vishnugupta 5y ago
Thanks for clear and jargon-free response. I wish this were top-level and top comment.
sidm83 5y ago
This is a great response throwing light on the actual new protocol which does seem to make sense.
ratww 5y ago
Yep, this is how most of the companies I worked for handled recurring payments. The only time the customer needs to input their credit card again is when the credit card number changes. Some providers even had integration with banks, so when a credit card was auto-renewed and the expiration changed (the CC number was still the same), we didn't even have to ask the customer for an update. Only when the customer specifically asked for a new card. So there's even the possibility of even more convenience to customers.

ramraj07 5y ago

As a consumer in India I’m so happy at least some part of this government is doing what it’s supposed to do. A century of unchecked lobbying is pretty much the reason why the US is at the state it is. The difference I’ve seen between how things run in india and the states is that in India what’s illegal and called corruption is called legal and lobbying here. What exactly are you worried about ? Clicking authorize on nytimes subscription every month?

sumedh 5y ago
> Clicking authorize on nytimes subscription every month? Why is that a good thing?
- bobthepanda 5y ago
  Why is it bad? One of the first pieces of advice for anyone sorting out personal finances is "figure out what subscriptions you aren't using." Cancelling in many cases is an anti-pattern (looking at you, NYT)
- blntechie 5y ago
  Because for NYTimes e.g. they don't allow online cancelation and need to through the phone retention loop. RBI mandate thing could have been implemented better but I absolutely support the idea that recurring payment control should be with the consumer and not the merchant.

adi2907 5y ago

As an entrepreneur, I empathise with fellow startups losing customers due to mandatory check for recurring payments. However as a customer, this has been a godsend as I had almost 15 subscriptions totalling $300 monthly, quite a large amount in India. The constant reminder of how many of those subscriptions are useless has allowed me to cut my expenses. Case in point, was subscribed to linkedin premium for last 2 years, while I make use of it only once in 3-4 months. Now I simply dont recharge my credit card and only do so once its required. Not sure if its the ideal solution but definitely am thankful to it!

manojlds 5y ago

It just adds onus on the vendor. Google have implemented it very well and I love this a lot more as the end user gets more visibility and control. It's going to be a short-term pain but I think it's going to be great in long term.

ghoomketu 5y ago

Yes this is stupid and it has caused me a lot of trouble since this all started. I am now seriously thinking of leaving this country and going to NZ or Canada (something which I did not want to do because of my parents). Doing business in India is so frickin hard, especially after GST. I have to spend so much time on accounting nowadays and it's getting harder and harder every day (even though all the ads say otherwise). I almost got my Digitalocean account suspended few months back because the credit cards won't bill anymore. Now i have to constantly monitor GCP, Porkbun, AWS, etc since nobody can bill me like before. Also for some reason Indians aren't allowed to keep balance in Paypal but a lot of my customers prefer to pay via it, which means in the end I cannot process any refunds on time and makes customers angry (Paypal wants me to snail mail checks to them to add the USD balance since govt has banned adding the same from Bank account). For recurring charges now you have to create an account with https://www.sihub.in https://www.sihub.in which doesn't accept small businesses kinda making it an exclusive club for big companies. It's really a shit-show here. If it were not for Stripe Atlas I would have been out of business a long time ago. So thank god for that.

fareesh 5y ago
This is primarily because those companies haven't updated their payments systems to be compliant. The e-mandate system seems to be pretty good. Netflix is compliant and it worked seamlessly from day one of the switch. It could be because they have incorporated locally, which can be difficult for many other companies.
- spookthesunset 5y ago
  > This is primarily because those companies haven't updated their payments systems to be compliant. For big companies with decades or more of legacy cruft, it's a hell of a lift to make their universe compliant. Especially if your large company tends to fall onto the "decentralized org structure" part of the spectrum where a billion teams run around doing their own thing with very little top-down oversight. It's the same kind of story as it was for GDPR (and CCPA to some extent). Some companies can pull it off easy because their org structure is way more top down. Others that are bottoms up have a much harder time because you have to heard a million different teams towards something new that doesn't really deliver much immediate business value. I assure you though, these companies are all no doubt hard at work making life better for their india customers... it is just a much harder lift for their organizations to handle. Which is not to say their org structure is a bad one. It just isn't optimized for top-down mandates like these.

naruvimama 5y ago

A lot of business around the world are built around this silent charges and people being forgetful or not active in checking their expenses.

naruvimama 5y ago

Credit cards are from an era where magnetic stripes was a novelty. It is just a bunch of numbers and very lax in security. Visa & Mastercard are just global duopolies, they have used their dominance to keep the cards easy to use but insecure. The cost of fraud is ultimately borne by the merchants, who try to pass on the hefty fee to the card holders. India is trying to move to digital payments, a vast majority of the people are first time card holders or even account holders. Frauds do not make it easy, and we do not want to make digital payments more expensive than cash payments. This is not a move against any card network. However, I personally think it is wrong for Visa/Mastercard to use their market dominance to charge 2-3% of every transaction. As we move more and more into a digital economy, this duopoly starts to sound like a New East India Company.

rowls66 5y ago
You should know that a small portion of the 2-3% transaction fees goes to the card networks. Most goes to the card issuing bank. Now in fairness, the banks also cover the cost of some fraud, and payout generous rewards to their best customers.

tlogan 5y ago

This “authorize charge” change is really giving headache both to customers and companies. If person owning CC is not available, emails are misses, etc. so scheduled e-mail campaigns are not sent, backups are not done, scheduled data loads were not performed, etc. Basically running business is getting harder and harder in India. So this one thing why USA is still leader: not because it is “great” but because it is still “Wild West” (sure somebody will say “free country” - let’s be honest it is more of a “Wild West”)