UPI to allow blocking funds for multiple auto-debits

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Mumbai: The Reserve Bank of India (RBI) enhanced the capabilities of the Unified Payments Interface (UPI) by introducing a ‘single-block-and-multiple debits’ functionality, which allows a customer to enable a payment mandate against a merchant by blocking funds for specific purposes in his/her bank account which can be debited, whenever needed.

Also, the RBI said the Bharat Bill Payment System (BBPS) will now include a wider variety of recurring and non-recurring payments.

The single-block-and-multiple debits feature is expected to have multiple use cases in various segments, such as e-commerce transactions, investment in the secondary market and purchase of government securities using the RBI’s Retail Direct scheme. The RBI will issue instructions to the National Payments Corporation of India (NPCI), which runs and manages UPI, on this functionality shortly.

UPI currently includes functionality to process payment mandates for recurring as well as single-block-and-single-debit transactions. The new facility will enable a customer to block funds in his/her account for specific purposes, which can be debited whenever needed.

Meaning, customers can now allot a certain amount to a specific purpose or merchant by giving their consent. For future transactions, money can be debited by the merchant without the additional requirement of authentication, making payments faster.

For example, a customer can authorise a cumulative amount of Rs 10,000 at once for an e-commerce platform. They can then place 10 different orders of say Rs 1,000 each. The order amount will now be auto-debited by the platform until the Rs 10,000 limit, without the need for additional authorisation.

The New Changes:

  • The single-block-and-multiple debits feature is expected to have multiple use cases in various segments, such as e-commerce transactions, investment in the secondary market and purchase of government securities using the RBI’s Retail Direct scheme. The RBI will issue instructions to the National Payments Corporation of India (NPCI), which runs and manages UPI, on this functionality shortly.
  • This new functionality will play a key role in building the framework for blocking money for secondary market trades, a mechanism called Application Supported by Blocked Amount (ASBA), which the capital market regulator is planning to implement.
  • With the single-block-and-multiple debits capability, a customer will be able to block an amount for a specific merchant, who can keep debiting from the same blocked amount until it gets exhausted.

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