RBI auto-debit fiat: Google stops auto-renewal of apps

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All android users who have subscribed to auto-renewal apps such as Netflix, Amazon Prime, Zomato for the first time might face a problem this month.

Google has stopped all new auto-renewal mode on subscriptions and free trials on every app on the Google play store from this month itself.

The step follows the notification of the Reserve Bank of India on March 31.

RBI instruction

The auto-debit instruction of apps like Netflix, Amazon Prime, etc. was deferred up to September 30, 2021, by the Reserve Bank upon pleas by different banks to postpone it since they were not yet technologically prepared to carry out the instruction of the central bank.

However, though the decision was deferred for existing subscribers, RBI ruled that no new subscribers should be allowed to opt for the auto-debit mode until a new framework is put into place.

Only Google

In April Google asked developers to suspend all free trials and introductory pricing plans on their apps. That will come into effect from early May.

Google is the first company to carry out the RBI instruction. Other players such as Apple and Microsoft are yet to take any decision on the matter.

Renew every month

The users have to now enter the respective website or app every month to renew their subscriptions of these apps until there are no uniform instructions by RBI.

RBI wants to incorporate an additional factor authentication for the recurring payments through standing instructions. Standing instructions registered on credit or debit cards for services such as Netflix, Amazon Prime, Disney+ Hotstar as well as a host of other online services such as online games and insurance providers, among other things will get deactivated as the new rules kick in.

Five days

Banks would send out a notification to customers five days before a recurring payment is done and allow the debit to go through only after the customer agrees to the transaction.

But for auto-debit payments of over INR 5,000, banks would be required to add another layer of sending a one-time password (OTP) to the customer. Only after the customer types in the OTP would the payment be processed.

The logic

The new rules for e-mandates come as part of customer data protection in digital payments. RBI’s new guidelines disallow different auto payments players from storing customers’ card details with them in order to curb the online data and bank hacks and leaks.

So no new customers will be added from May onward to these apps over the google play store. Customers have to pay every month individually for the subscription of popular apps such as Netflix, Prime, Hotstar.

Android Users

In India, most smartphones are on the android platform. As of January 2021, the total number of smartphone users in India stood at around 77 crores. Almost 80%, or 61 crores, of them, are users of android phones.

The rest are using iPhone or windows phone. Google’s decision to ask developers to stop free trials and a new auto-renewal mandate will impact a large number of users.