RBI Guidelines on Recurring Payments

ShikshaDaan’s website is hosted on Hostgator.com. Just a few days back, we received a note about a recurring payment being declined and that we should pay immediately for the services to continue.

Recurring Hostgator

RBI (Reserve Bank of India) made some changes to its guidelines on recurring payments that actually make the payments safer and puts the customer in control. An excellent article in Forbes about these changes – How to fix recurring payments under new RBI auto-debit norms.

Some excerpts from the above article that help in understand this change –

“…. Not all online payments require you to provide an OTP, especially when payments are recurring. The RBI has now made Additional Factor Authentication (OTP verification) mandatory for bill payments higher than ₹5,000. But even if your payment is less than ₹5,000, one-time additional factor authentication (AFA) has to happen when opting for auto-debits.

So, if your monthly payment to, say, Netflix has not happened this month, you only have to re-register yourself for auto-debits. Netflix will do your AFA while registering. Future Bill Payments to Netflix up to ₹4,999 per transaction, can be processed without AFA.”

“… ‘According to the RBI Annual Report 2019-20, the number of registered frauds (cards and net-banking) have been increasing at a CAGR of 14% while value of frauds has increased at a CAGR of 34% in the last three years. This is of serious concern. Merchants/Billers are storing card details in India in the name of providing single click convenience and auto pay facility for their recurring/subscription payments. The latest RBI regulations for recurring payments will curb such frauds,’ says Digital Payment Strategist Ram Rastogi.”

Recurring Payment and the “jugaad” Workaround

As soon as I received the email about the payment being declined, I went into Hostgator’s accounting page and tried updating the card details. The payment still didn’t go through. There was an option to pay using PayPal. Tried that, and it didn’t work.

Tried changing the card on record, still a no-go.

Doing this for a couple of days was frustrating, so finally opened a chat line with Hostgator’s customer service team. Apparently there are only three ways of making the payment – credit card, PayPal or Wire Transfer. I got the Customer Service rep to send me the details for Wire Transfer since the Credit Card and PayPal options weren’t working.

Note : You have no way of shifting to Hostgator India. I was told that I could shut down the US account and reopen a new one in India. Didn’t want to go through that pain.

When I realised that I couldn’t do wire transfer easily from my Citibank account, I called them up. That’s when I realised that PayPal and Citibank don’t work with each other in India. I was trying to pay using a Citibank issued credit card on PayPal 😔.

I went back to the PayPal account and changed the card to Amex and immediately the host gator payment got through !!


  1. On an international website where recurring payments happen and you have an Indian credit card on file, payment will be declined. Find a payment gateway to ensure your services continue. RBI wants an OTP to be generated for every transaction as a safety measure.
  2. Amex is not issuing any new cards, and whoever has Amex cards, hold onto them till things shake out in this space. It comes in handy when Visa and Master are not accepted.
  3. Ideally avoid recurring payments that don’t need an OTP. Its not just a safety measure, but it will also help in reducing unnecessary expenses.

Would appreciate the readers sharing any additional information that they might have regarding this in the comments.

#RBI #RecurringPayments

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