Introduction
The Unified Payments Interface (UPI) has revolutionized the dynamic digital finance landscape, making peer-to-peer transactions and bill payments more straightforward. One of the innovative features within the UPI ecosystem is UPI Autopay, a convenient solution for managing recurring payments seamlessly.
On July 22, 2020, the National Payment Corporation of India (NPCI) unveiled UPI AutoPay, a groundbreaking feature designed to simplify recurring payments through the UPI platform. This innovative offering was introduced with the primary aim of enhancing user convenience.
The digital transformation of bill payments, financial investments, and the rise of OTT platforms has increased the demand for subscription-based payments in India. UPI AutoPay aims to provide customers with seamless, disruption-free services, benefiting both customers and merchants.
With UPI AutoPay, users could establish automated monthly payments for a wide range of recurring needs using any UPI application. These include bill settlements, utility recharges, loan repayments, mutual fund investments, content subscriptions, grocery acquisitions, housing society dues, and membership fees.
What is UPI AutoPay?
UPI AutoPay, a short form of Unified Payments Interface AutoPay, is a digital payment service that simplifies recurring payments. UPI Auto-Pay deducts the specified amount from the linked bank account automatically on the due date, ensuring convenience, reliability, and better financial management.
UPI AutoPay enables users to automate recurring payments, enhancing convenience for various services, content subscriptions, and utility payments. This benefits customers with uninterrupted services and merchants with timely payments.
In August 2023, the Unified Payments Interface (UPI) crossed a major milestone, handling more than 10 billion monthly transactions, representing a remarkable 2.8% month-on-month growth from July 2023’s 9.96 billion transactions. UPI has achieved this feat in just seven years since its launch in 2016.
A Closer Look at UPI AutoPay’s Operation
UPI Autopay utilizes the robust UPI infrastructure to facilitate recurring transactions. Users can authorize service providers or billers to debit funds from their bank account regularly. This involves linking the provider’s UPI Auto-Pay ID or Virtual Payment Address (VPA) to the user’s UPI-enabled bank account. Once authorized, payments occur automatically on scheduled dates, eliminating the need for manual intervention.
Since the introduction of UPI AutoPay, major UPI apps have incorporated a ‘Mandate‘ feature. This feature allows users to create, modify, approve, revoke, or pause auto-debit mandates. To utilize these features, app users grant a one-time approval to merchants for automating payments on the platform. Additionally, they provide details like the subscription start date, merchant name, and debit frequency when setting up the subscription. Currently, 166 banks and 24 UPI apps are live on UPI Autopay with NPCI.
For UPI autopay recurring payments, it’s mandatory to send a notification at least 24 hours before the scheduled execution. This notification is sent by the customer’s issuing bank or, in some cases, by the PSP app itself. Execution can only be attempted if the notification is successful. In cases of successful notification but failed execution, merchants have the option to retry the execution up to nine times.
Regulations on UPI Auto-Pay (Auto-Debit)
On October 1, 2022, the Reserve Bank of India (RBI) introduced new guidelines for card-issuing banks regarding auto-debit transactions. The regulations mandate that customers must implement additional factor authentication (AFA) for all recurring payments made through debit cards, credit cards, UPI, and prepaid payment instruments (PPIs).
Users can now set up automatic monthly payments for various recurring use cases, such as stock Systematic Investment Plans (SIPs), subscription charges, auto ledger updates, and mutual fund investments. Autopay enables users to automate recurring transactions up to Rs. 15,000 through UPI apps and up to Rs. 1 lakh via authorization on the due date.
If the recurring mandate amount exceeds INR 15,000, 2FA is required. When the mandate is executed, the user receives a collect request on their UPI app where the mandate is established. For a successful recurring debit of an amount greater than INR 15,000, the user must approve the collect request within a 5-minute window.
Step-by-Step: Enabling Recurring Payments with UPI AutoPay
Setting up recurring payments with UPI Auto-Pay is a straightforward process. Users need to follow a few simple steps, including authorizing the biller, specifying payment details, and confirming the mandate. The process varies slightly among different banks and UPI service providers, but the core steps remain consistent.
- Select a Recurring Payment Plan : Choose the subscription plan that aligns with your recurring payment needs.
- UPI PIN Authorization : During the initial setup, you’ll need to authorize the transaction using your UPI PIN. This is a one-time authentication process that ensures the security of your recurring payments.
- Automated Recurring Payments : Recurring payments will be automatically deducted from your linked bank account on the scheduled due dates.
- Flexible Mandate Control :UPI AutoPay offers flexibility in managing your mandates. Through the UPI app, you can conveniently revoke or pause mandates at any point in time.
- Customized Payment Frequencies :You can set UPI Auto pay for recurring payments on a weekly, monthly, quarterly, half-yearly, yearly, or custom frequency, ensuring that they align perfectly with your financial schedule.
The Perks of Using UPI AutoPay for Recurring Payments
The adoption of UPI Auto-Pay brings a plethora of advantages for both consumers and businesses. From enhanced convenience and reduced manual effort to timely payments and improved financial planning, this UPI autopay automation feature offers numerous benefits.
- Seamless Automation : UPI AutoPay simplifies the process of automating recurring payments, allowing users to set up and forget, ensuring timely settlements.
- Flexible Payment Range : With UPI AutoPay, users can schedule payments from as low as Rs. 1 to a maximum of Rs. 15,000, providing versatility for various payment needs.
- Enhanced Security : UPI AutoPay offers a secure and convenient method for initiating recurring payments, eliminating the need for complicated paperwork and documentation.
- Paperless Setup : Setting up mandates with UPI AutoPay is entirely paperless, reducing administrative hassles and streamlining the process.
- Digital Transaction Facilitation : Embracing UPI AutoPay promotes cashless and digital payments, aligning with the growing trend toward digital finance, and minimizing late fees and penalties, benefiting businesses and individuals alike.
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