The build-up in transaction momentum comes ahead of
Reserve Bank of India (RBI) rules for card-based transactions through standing instructions that take effect next month.
Autopay allows users to make recurring transactions below Rs 5,000 through UPI apps. Most of these currently take place through card-based mandates that are more sophisticated, and settlements more expensive. Autopay’s likely uses include loan repayments, rent payments, educational fees and subscriptions
Two of India’s largest over-the-top (OTT) streaming services, Netflix and Disney+ Hotstar, went live on UPI Autopay this month.
At least 100 other online merchants across categories such as streaming, financial services, wealth management, news media and education are learnt to be in various stages of testing before full-scale rollouts, people aware of the matter told ET.
State Bank of India, Paytm Payments Bank and Bank of Baroda are the three top banks live on UPI Autopay, having registered 660,000, 204,000 and 186,000 mandates, respectively, in August, according to the NPCI website, the first time this information has been made publicly available.
“Already nearly two million monthly mandates on UPI Autopay are being registered on UPI Autopay which is double the volume NPCI is doing on NACH mandates,” said a person in the know.
“The recurring mandates solution is gaining traction, and Netflix and Hotstar are in the initial stages of going live.” NACH or National Automated Clearing House is used by companies and financial institutions to handle bulk payments.
UPI Autopay was officially launched in July 2020, only bank UPI apps such as those of SBI, HDFC Bank, ICICI Bank and Paytm Payments Bank were processing such transactions. India’s leading UPI app PhonePe went live only in June, whereas the second largest UPI app Google Pay is yet to do so, said people with knowledge of the matter.
This also led to hesitancy among top merchants owing to concerns over implementation and failure rates, they said. Others on UPI Autopay are The Hindu, Times Prime, PayU, FSS, Testbook.com, Open, Angel Broking and
“UPI is already the most preferred digital payments option for consumers and merchants alike,” a Google Pay spokesperson said. “The UPI Autopay functionality is an important addition which we are working with players across the ecosystem — including banks, merchants, etc.— to enable end-to-end for UPI and Google Pay users.”
NPCI and didn’t respond to queries.
With two of the top three UPI apps — PhonePe and Paytm — on the platform, more merchants are getting on board.
“We launched in June and saw very good adoption,” said Deep Agrawal, head of payments, PhonePe. “We are majorly live for three use cases which are wallet top-ups, mutual fund SIPs and now with subscription services.”
Autopay is expected to be a gamechanger for small businesses collecting monthly fees, as it allows them to have a customisable debit agreement with customers through one-time consent. The mobile-native design of UPI also makes it easier for merchants to send pre-debit notifications to customers for these transactions.
Experts also attribute the uptick to the RBI rule that makes recurring payments through debit and credit cards more stringent. Banks have been mandated to re-engineer the transaction flow by adding new authentication factors such as pre-debit notifications to customers every month.
The deadline for implementing this was extended by six months by the RBI from April to October after banks collectively expressed their inability to comply with the initial deadline of March 31.
“We see massive opportunity for this piece to scale in the financial services, loan repayments and SIPs and insurance premiums,” said Harshil Mathur, chief executive of Razorpay. “We are also seeing the use case of wallet top-up driving a good chunk of the transactions.”
UPI Autopay can help change India’s recurring payments landscape.
“With UPI, such onboardings are relatively easier and less complex,” said Reeju Datta, co-founder of payment gateway Cashfree. “Autopay has a lot of promise and is a great opportunity to expand India’s recurring payments market, which till now has not really picked up. The use case can stretch from loan repayments, rent payments, education fees, subscriptions.”
ET was the
first to report in March 2021 that banks including SBI, Axis Bank, HDFC Bank and ICICI Bank as well as card companies such as Mastercard and American Express were not in compliance with the new RBI rule on recurring payments and were thus prepared to decline all such transactions from April. Transactions worth more than Rs 5,000 crore were set to be disrupted in April due to this rule
before RBI extended the deadline by six months.
Most banks are not yet in compliance, according to people with knowledge of the matter, which could lead to a further uptick in Autopay transactions as merchants migrate to the platform.
RBI’s extension of the deadline also came with the caveat that banks were not allowed to onboard any new card-based recurring mandates unless they were compliant with new rules. According to sources, this has also led to an uptick in traction on Autopay.