Press P For Policy: Subscriptions and recurring payments

Rohan was an avid baker since childhood. With passion, and lots of butter, he would make the perfect cookies, cakes, tarts, everything indulgent. Friends, family, acquaintances, every Tom, Dick and Harry wanted a piece of his sweet-sweet pies. He eventually came to be known as the Greater Noida’s Gordan Ramsey.

Soon Rohan saw the potential in his gift and started “Rohan’s bakery”. And just as the sugar rush hits, his bakery saw a rush of customers, some wanting their regular orders, more regularly. Till the point that they were willing to pay a monthly subscription fee for their fix of sugar.

And so, he created a monthly subscription for his desserts. This would automate the payments for Rohan and his customers, and make for consistent business. But, as unfortunate as burnt cake, it came to his attention that RBI had made OTP mandatory for recurring payments.

What could this mean for his business? Will he have to make changes to his subscription?

It was time to visit Paul the policy expert!

Rohan: Hey Paul, what is this new update as per the RBI?

Paul: Well, to be straight with you, new rules have come into effect since June 2022. Now, customers will have to confirm certain recurring payments with OTPs.

Rohan: OTP for monthly subscription payments? But this will be a huge problem for me. Payments for my business are usually auto-debited. I want my customers to fill their tummies, not OTPs!

Paul: Don’t worry, they won’t have to.

It all depends on the total payment. The RBI has mandated an OTP for recurring payments above Rs.15,000.

So if your subscription costs less than 15,000 rupees, you’re good, bro.

Rohan: Wait wait wait, so this doesn’t impact me at all then? Aww sweet!

Paul: Just a little.

Now, your customers will have to sign up for your subscriptions by authenticating once with an OTP. And for every payment, they’ll be notified 24 hours beforehand. It’s how the cookie crumbles.

Rohan: But I’m a bit confused. OTPs were supposed to be a one-time thing, why must customers enter them again and again?

Paul: In a way, this is great for Indian businesses. It prevents their customers from losing a large amount of money without confirmation. For example, a customer might change their mind about a certain subscription. The OTPs give them more control over the payments.

But since your subscription does not cost above 15,000 rupees, your payments will happen automatically. You’ve got nothing to worry about. Except maybe diabetes.

Rohan: Oh sorted. On that note, how about that creamy caramel chocolate cookie?

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