Update: As in the case of CCAvenue, Anand Ramachandran, CFO of TechProcess, says that the standing instructions on recurring payments will have to go through a second factor of authentication via an OTP or for the first time. Customers will have to consent that subsequent payments to the merchant will go through these standing instructions and by pass the OTP.
Separately, we noticed that Airtel also has an option for customers to pay postpaid bills through standing instructions and takes down a customer’s card details.
Earlier: Recurring payments in India are picking up and more payment gateway providers are offering transactions without the need to enter a one-time password (OTP). TechProcess Payment Services’s mobile payment gateway Paynimo has tied up with fitness app BookMy Game to pay for recurring monthly gym memberships through cards without the need for a second factor of authentication.
Paynimo’s deal with BookMyGame allows the merchant to access this through standing instructions (SI) where users will be notified about that the payment was deducted without an OTP. Payment gateway CCAvenue offers such standing instructions for merchants, but the customer needs to have a credit card. However, TechProcess mentioned that this can be done on both credit and debit cards.
A spokesperson for Paynimo said that it has other merchants who are availing the standing instructions feature. We have asked the company on how it handles such payments and for details on how standing instructions work on debit cards.
Readers will remember that in the case of CCAvenue, recurring payments without OTP was only offered on credit cards as there are liability issues related to debit cards which the issuing bank may not allow.
“Credit cards have a limit and beyond that customers can’t use them. And as such they are sort of a virtual currency. But transactions on debit cards are still hard earned cash in bank accounts,” Pankaj Dedhia, senior marketing manager at CCAvenue opined.
Many global digital services (such as news subscription for the Financial Times, video services like NetFlix and BoxTV, email marketing services like MailChimp and Software-as-a-service tools such as VWO) charge user credit cards on a monthly basis. In India, recurring payments has historically not been done because of the second factor of authentication requirement, which adds an additional layer of friction to the transaction and users end up thinking again about whether they really need this service, or they deprioritize the decision to make the payment and hence drop out.
Bharat bill payment operating unit
Note that Techprocess has got the Reserve Bank of India’s approval to operate as a Bharat Bill Payments Operating Unit (BBPOU). The approval from the RBI will allow BBPOUs to connect with the central bill payments and settlement system called Bharat Bill Payment System (BBPS) of National Payments Corporation of India (NPCI).
As such, card payments without the need for OTP would allow for more recurring bill payments and perhaps may even even be used for phone recharges once the balance reduces to a certain point.