A little more than six months after the Reserve Bank of India (RBI) came out with its revised guidelines on payment processing of Indian users on foreign and domestic websites, users are still facing problems in making recurring payments on international websites due to them being unable to comply with the guidelines.
Recently, a user (@Ashwin Mushran) posted on Twitter about a unique payment problem he was facing while transacting on an international website. He needed to buy a software subscription for some audio work, but he could not do it.
He is not alone; there are many other users too, including Apple’s iOS users who were facing this exact problem of failed recurring payments.
Apple quickly came out with an alternative arrangement using Apple ID credit, and somehow solved the problem for its users. Click here to read how to use that-
Why Are Some International Websites Facing Issue Processing Indian Cards?
There can be many reasons why a payment is failing for users on certain international websites. Two primary reasons are:
RBI’s New Rules: In October 2021, the RBI came out with certain directives which impacted the operations of international websites and Indian websites, too. Failure to adhere to these guidelines meant they could neither process one-time payment, nor could they process recurring payments. The RBI made these guidelines for the safety of Indian users, since a significant portion of them were facing issues with cancelling their auto debit recurring payments on international websites despite clear communication to do so.
“In India 3D secure card authentication is mandatory for all online transactions as per RBI’s direction. But in foreign countries it may or may not be mandatory. Hence Indian debit and credit card users may not be able to transact with those websites if they do not comply with these RBI directions.” said Shatrughan Sharma, global head, payment security, Wibmo, a PayU company that is a global full-stack paytech company.
The RBI’s directive of October 2021 said that banks, financial institutions, payment gateways and others, needed to obtain the respective user’s approval by way of providing them an additional factor of authentication (AFA) before the payment transaction was completed on websites.
Says Pranay Jhaveri, MD, India and South Asia, Euronet Worldwide, a payment service provider company: “The transactions that did not comply with these rules were declined by banks and card issuers. Many of the international websites were not complying with these additional rules, resulting in transactions being declined. These measures are for safeguarding interests of the population as there were complaints of inability in cancelling auto debits with these international websites, despite proper communication by customers.”
In the said RBI directive, it was also mentioned that going forward, card details should not be stored by websites; rather they would be replaced by a unique token. This process is called card on file tokenisation. In this process, the merchant will request your approval to initiate tokenisation on your card. Tokenisation refers to replacement of actual card details with a unique alternate code called the “token”, comprising combination of card, token requestor, and device.
“Transactions will be completed after providing additional authentication and card particulars,” Jhaveri further says.
“Another reason for international payments failing could be due to the international merchant sending 3D secure 2.0 card authentication request but the user’s bank is using 3D secure 1.0 card authentication method hence due to technology compatibility issues the payment may get declined,” added Sharma.
FEMA: The Foreign Exchange Management Act, 1999 (FEMA) states that no Indian user shall use foreign exchange to buy prohibited goods and services.
When a user transacts on an international website, the payment transaction will always be by default in the website’s host currency, such as dollar or euro, although it may be shown as Indian rupees for the user’s convenience. The underlying payment will always be in foreign currency, and thus, FEMA rules will apply.
“There can be many reasons why an international transaction of an active card is being declined. It may be because of FEMA rules violation, as the user may be doing a prohibited transaction, such as buying lottery tickets, buying banned goods, others,” adds Jhaveri.
So all these changes were difficult to implement by various international websites, since it takes a lot of backend process changes and resources. Hence, some websites took the alternative route of using credit codes, gift cards, others, while some international websites completely stopped accepting cards issued in India.
What’s The Solution?
Some websites took the alternative route of using credit codes, gift cards, others, while some international websites completely stopped accepting cards issued in India.
Check if the said website or application supports iOS and Android credit payment system or not. For instance, you can pay for a Jio Saavn music subscription by way of iOS credits. For all Apple services including icloud+ too you can pay via this method.
Adds Jhaveri: “Apple has taken a decision that they will no longer store card data on their files. They have asked customers to use alternate payment methods, such as UPI or Netbanking. In case, someone still wants to use a credit or debit card to recharge his/her Apple ID, he/she can buy Apple recharge codes available with several online merchants, such as Amazon, PhonePe and Paytm.”
For Android users, Google has a tie up with telecom operators like Vodafone-Idea, Airtel so that their postpaid customers can use their carrier billing feature to pay for subscriptions, e-books, movies rent, and others on Google Play.
“Google Play’s billing system is a payment platform that offers numerous payment options, on which UPI and all supported UPI apps are available, along with many other forms of payment, including Netbanking, credit and debit cards, carrier billing, and gift cards,” read a post by Google.
