Payment gateway Razorpay is the latest to start offering recurring payments on credit cards without the need to enter a second factor of authentication (OTP or password). As with CCAvenue and Techprocess, Razorpay processes recurring payments from credit cards through standing instructions (SI).
For the first transaction, the user will go through a second factor of authentication and after that they will have to consent that subsequent payments can go through without an OTP. Users will be notified about the payment via SMS. Note that Techprocess said that it can do such recurring payments on debit cards as well, while Razorpay says that this is limited credit cards only.
“Some banks allow recurring payments on debit cards. It depends on the issuer bank. Most of them are comfortable with credit cards as money is deducted from the credit limit and actual money is not deducted from a bank account through a debit cards,” Harshil Mathur, CEO of Razorpay said.
To begin with, the company has signed up with software-as-a-service (SaaS) productivity solutions provider Zoho and Chargebee for recurring payments.
However, Razorpay differs from how CCAvenue processes recurring payments. Pankaj Dedhia, senior marketing manager at CCAvenue told MediaNama that it processes recurring payments in a batch on a specific date where they pass the request to the bank processing in the back-end. Razorpay’s API approach has more control over payment collection and merchants can charge customers in real-time without the to specify the amount and a predetermined date.
Recourse for customers
In case of a disputed transaction, a customer has three options for recourse if money is deducted from a card. Mathur explained that they can approach the merchant, the gateway or the bank. “Ideally, you should be approaching the merchant, if that fails, then the payment gateway and the card issuing bank,” he added.
He added that Razorpay takes two days once a transaction is processed to push the money from a nodal or escrow account to the merchant’s account. Within that time period, the transaction can be immediately reversed. But customers have 180 days to log in a disputed transaction on a credit card, Mathur said.