Fintech unicorn Razorpay and payments technology major Mastercard have launched Mandate HQ, a platform, which the companies said is a safe and secure recurring payment interface.To further the adoption of digital payments in a safe and secure manner, the Reserve Bank of India (RBI) has issued a framework for processing of e-mandates on recurring online transactions.
RBI has made AFA (Additional Factor of Authentication) mandatory for all recurring transactions below Rs 5000 on debit cards, credit cards, even UPI and other Prepaid Payment Instruments (PPIs). All stakeholders are required to ensure full compliance with the framework by September 30, 2021.
“With the launch of MandateHQ in collaboration with Mastercard, we stand in support of the RBI directive of making auto-debit transactions safer from potential fraud,” said Shashank Kumar, co-founder and chief technology officer, Razorpay. “While this has created a certain level of challenge for the ecosystem in how they will pay monthly bills post-September, we want to make it easier and faster for banks to implement the e-mandate framework issued by RBI and also ensure that businesses and end-consumers are not inconvenienced.”
This RBI directive is applicable to all recurring payments which were earlier debited automatically from customers’ cards (credit, debit, prepaid) for mobile, utility, other recurring bills as well as subscription payments for different OTT streaming platforms. Razorpay believes this initiative by the RBI will bolster the safety and security of card transactions.
To help banks comply with the RBI directive and provide convenience to banks’ customers, Razorpay and Mastercard have partnered to launch MandateHQ, a new recurring payment interface, in accordance with RBI’s circular.
Razorpay’s Mandate HQ is an API-based plug-n-play solution that reduces the go-live time for any card issuing bank that wishes to enable recurring payments for its customers. MandateHQ will also enable businesses, especially subscription-based businesses, to get access to a wider customer base, who use debit cards, as recurring payments were mostly supported via credit cards previously. Razorpay’s MandateHQ solution can be fully integrated with any bank within 7 days, as opposed to other solutions which normally take a few weeks.
“I believe products like MandateHQ will now encourage more businesses to start and adopt subscription-based business models,” said Kumar of Razorpay. “I expect the subscription economy to scale upto 5-6x in the next year.”
In addition to its association with Mastercard, Razorpay has also partnered with the country’s three leading banks and is in talks with over 20 banks to help integrate this technology into their existing payment infrastructure in the next few weeks.
Kumar of Razorpay said previously all recurring payments were possible on credit cards and not mostly on debit cards. But now it would be possible for both.
“There are more than 900 million debit cards in the country,” said Kumar. “With the product going live, we are aiming to support all the 900 million debit cards and enable them for recurring transactions.”
MandateHQ is a unified platform that will help banks with end-to-end mandate lifecycle management including creating, viewing, updating, cancelling, and pausing mandates and processing debits for valid mandates. In addition, the MandateHQ platform will also help banks to enable a 24-hour pre debit notification via email, SMS and WhatsApp. It would also provide end-users with a portal to manage card mandates.
“It will enable all the partner banks to seamlessly adapt the new framework for recurring payments via debit and credit cards, UPI and other prepaid payment instruments (PPIs),” said Rajeev Kumar, senior vice president, market development, South Asia, Mastercard. “This is in compliance with RBI’s new mandate and ensures that bank customers can continue to enjoy hassle-free payments.”
One of Razorpay’s leading health-tech customers, Tushar Vashisht, co-founder and CEO, HealthifyMe said in the digital economy, its vital for consumers and businesses to have secure, reliable recurring payments as a choice to pay for their subscriptions.
“At HealthifyMe, we look forward to enabling that with Razorpay and are excited about what MandateHQ can deliver in the framework of new RBI guidelines,” said Vashisht. “Hopefully, it will help India move a step closer to global payments standards.”
Over the last few months, industries almost everywhere have begun to adopt subscription business models. Razorpay said the new MandateHQ offering will help businesses across a variety of sectors such as insurance, utilities, content, SaaS, lending and charitable donations, to alter their payment models. They can also introduce subscriptions, thereby delivering better value while sustaining revenue growth.
India’s expenditure on digital media and entertainment subscriptions has doubled in the last 3 years. With the launch of UPI-Autopay in July last year, merchant demand for subscriptions has grown by 5 times in the last 6 months. This indicates a strong ever-growing demand from both businesses and cardholders for recurring payments.