Paytm on has announced the launch of a recurring payments feature for merchants using its payment gateway. This will allow subscription-based businesses to collect payments through a variety of payment modes, including credit cards, debit cards, netbanking and Paytm Wallet, the company said in a release, adding that it can be used for Bill Payments, Content Subscription, Grocery Purchases, Membership Fees, Housing Society Payments and among other things. Paytm had launched recurring billing for businesses in 2017 but the feature only worked with its wallet. Companies such as Gaana, HotStar and Saavn had adopted the feature, but it suffered from one flaw – how would payments be processed if a user’s digital wallet was empty?
Individual users have been able to set up recurring payments on Paytm since last May, when the company launched its ‘My Payments’ feature. It lets users transfer money from their bank account or wallet to any bank account at no additional cost and is similar to the standing instructions that one would give a bank. Importantly, Paytm users who have not completed their KYC can also use the facility, and there is no upper or lower limit on the number of payments or the amount that can be transferred. The company also offers a feature called Paytm Automatic, which lets users set up recurring billing through a credit card or debit card.
Paytm claims to processes 400 million transactions for its merchant partners every month, and is being used by IRCTC, Zomato, Oyo Rooms, Grofers, Swiggy, Big Basket and Idea, among others.
7 banks allow customers to set up recurring payments online
Paytm’s announcement comes a week after seven banks said they would start allowing their customers to issue standing instructions for recurring payments online. The payments will be processed through the National Payment Corporation of India’s (NPCI) National Automated Clearing House (NACH). Standing instructions are a way of making an automatic payment of a fixed amount to a loan, bill or credit card at the same time every week or month. The process traditionally involved paper forms and cheques under the RBI’s electronic clearing services (ECS) and the newer NACH. Making the process paperless will speed it up, reduce handling costs and prevent problems such as signature mismatches. The seven banks are Yes Bank, Kotak Mahindra Bank, IDFC Bank, Axis Bank, Central Bank, Bank of Baroda and Punjab National Bank. All seven allow customers to provide standing instructions through netbanking, and Kotak Mahindra allows this through debit cards as well.
Lenders want recurring payments through UPI 2.0
One payment mode that currently does not offer recurring billing is the Universal Payments Interface (UPI). In March, Indian lenders had asked the RBI to allow customers with UPI 2.0-enabled devices to use the recurring payments feature for such things as the monthly instalments on their loans, insurance premiums, and mutual fund investments. UPI is a mobile platform that facilitates instant fund transfer between two bank accounts without requiring details of the beneficiary’s bank account. It also allows users to link multiple bank accounts to a single mobile banking app. When the National Payments Corporation of India (NPCI) launched the upgraded version of UPI, dubbed UPI 2.0, in August 2018, the absence of recurring payments had disappointed companies. The RBI said then that the feature was omitted because it was open to misuse. After UPI 2.0 was launched, the Indian Banks’ Association, with representatives from major public sector and private sector banks, sent a detailed proposal to the regulator seeking permission for regulated financial entities to use recurring payments for loans, premiums and so on.