61. Mandate on Cards — Comparison

One of the things that used to happen during my engineering days was — first, I would forget the assignment, then make a group and plead with the professor to extend the deadline and eventually, rush to somehow deliver ‘something’… (sorry, no leadership lessons here, as it’s not LinkedIn)

Looks like that’s not the typical behaviour of just college students but that is how even Payment Companies behaved w.r.t. eMandate on cards guidelines. And eventually RBI has to extend the deadline.

Only BillDesk (like a class topper/first bencher) remembered the guidelines and built the SI Hub platform. After that, RazorPay developed MandateHQ. Remaining Payment Aggregators (PAs) will either use these platforms or try to build on their own or probably, never build it.

There was a barrage of news articles on this topic with different degrees of opinions and views… to an extent, some publications concluded that RBI’s new guidelines have killed businesses.

Whenever there is a change in policy or regulation, things shake up and impact one or the other participants of the ecosystem. But this is one of those changes where everyone was impacted (next one would be Tokenisation… wait for it). The impact is not just on card schemes, issuing banks, acquiring banks, Payment Aggregators but also on merchants and customers.

I will not get into details of how bad the impact is on businesses or customers… but thought I will write about the difference between old and new models… what changed and what didn’t.

Before you jump into details, please do read these two articles.

• #22 Standing Instruction on Cards (talks about earlier model)
• #SI on Cards — SI Hub (covers new model)

Difference in processes between the earlier model and the new one.

Here is what changed in terms of other factors in the earlier model compared to the new model.

Too many boxes and colours… is it? So here is a quick summary of the new model (with lesser number of boxes :):

Positives:

• Issuing bank has visibility about the eMandate on the card
• More transparency with pre-debit notification and mandate view facility
• Customer has better control on cancellation (doesn’t have to be on the mercy of a merchant)

Negatives:

• Amount limited to Rs.5,000 (will impact high ticket transactions)

Note: Amount is revised to Rs.15,000 on 16–6–22 (Good enough but still doesn’t cover all use cases)

• Merchants have to re-integrate and then force its customer to re-register a mandate
• Yet to achieve complete coverage of cards (it will happen eventually)
• Mandate management platforms (e.g. SI Hub, MandateHQ) have to on-board each issuing bank individually (that is time consuming)

Important thing that didn’t change:

Acquiring Banks always dictated who gets the MID.

A merchant may think that his business model is subscription based (e.g. Subscription based shaving blade delivery) but the bank may (most probably) say it is not.

It is possible that even if it is a subscription model (e.g. monthly donation to an NGO), still the acquiring bank may decline quoting ‘risk’ as a reason. Payment Aggregators, who are good in circumventing the rules, do not care about all this — they will still on-board merchants on the Master MID.

My Hot(Star) new experience:

I will give you two examples… The first one is cancelling the subscription of ‘Audible’. My God… whoever came up with the cancellation process must either be a sadist or a fan of Maze Runner.

My point is… it’s not that RBI thinks that all merchants are bad. But there are bad merchants. And customers need to be safeguarded. Statistically a small fraction of users may have bad experiences… But what if you are part of that small fraction?

So I am really glad that the RBI thought about common customers like me and not just big merchants or publications who are angry because their subscribers are not able register mandates.

Wait for it…

I wanted to experience the new SI Hub flow.

First, I cancelled my HotStar Subscription (that was due in Sept’21). Then waited for a couple of weeks and then I subscribed again with the new eMandate flow (#PaymentNerd)

Stage 1: Select the subscription plan, complete standard card transaction with 2FA (HotStar doesn’t show mandate form so parameters are pre-filled by the merchant. Frequency: As and when presented; Validity: Until Cancelled; Amount Type: Variable; Maximum Amount: Rs.5,000)

Once the mandate was registered, I received an SMS with the mandate details and a link to check the mandate.

Neat… but… is it?

SI Hub worked well but that got me into thinking.

I have HDFC Visa Credit card and I registered for eMandate for different merchants via. different payment aggregators’ platforms. Then I will get different links/URLs to check view/cancel my mandate.

As you know, other Payment Aggregators may use SI Hub of BillDesk or Mandate HQ of RazorPay (until they build it on their own).

Let’s take a scenario, where I registered for eMandate for different merchants — one directly with BillDesk and the other one via PA — XYZ, who in turn uses BillDesk’s SI Hub. So will I get different links to view/cancel mandates?

Using different links is a bit cumbersome (not as much compared to being at the mercy of a merchant for cancellation).

And it will be awesome if I can see all my mandates along with the merchant name (on which it is set) and Payment Aggregator name (who has processed it) in a single place. There are three possible ways (Right now, none exist):

• Mandate management platforms(SI Hub, Mandate HQ) should provide an interoperable feature to view mandates in single place
• Issuing bank to show all mandates in its net-banking portal
• New idea for FinTech startups — build wrapper over different mandate management platforms

Violation:

Just because RBI published the guidelines, that doesn’t mean every one has to adhere to it… that is what Policy Bazaar believes in.

Policy Bazaar has simply migrated earlier mandates (registered as per older SI on cards model) to new model by simply forcibly debiting the card.

By doing so, it is clearly violating few rules

• RBI doesn’t allow migration of new mandates
• Cardholder has to re-register the mandate and has to go through 2FA
• Send pre-debit notification before debiting the amount

Maybe it is possible that PolicyBazaar thinks it is bigger than RBI and they have right on my card (for that everyone’s card).

Hope RBI will take notice of the same thing and take some action.

Closing Remarks:

Including eMandate on cards, we have three more recurring payment solutions — NACH (Paper), eNACH, UPI Auto-Pay. But all these solutions have their own limitations.

NPCI’s blue eyed recurring payment solution UPI AutoPay didn’t work the way it should have. There were delays from banks and PSP Apps. And as I understand, there are issues with the performance as well.

In a world where everyone is imperfect, our dear eMandate on Cards has ‘some’ value for some merchants and some customers.