Last week, tech giant Apple officially stopped stopped Business Standard Apple stops accepting payments using credit cards issued by Indian banks Read more accepting payments via Indian debit and credit cards for subscriptions and purchases from its App Store. Now, if Apple’s Indian users want to make any App Store purchases, they have to add money to their Apple ID Apple ID Apple ID a wallet like feature where users can add money to use across apps in the app store using real-time payments system UPI or internet banking, and then use those funds.
This is one step too many in a world of one-click and scan-to-pay purchases. But it was the only route the $2.5 trillion company could think of to circumvent the unpredictability around card payments in India over the last seven months.
On 1 October 2021, the Reserve Bank of India dealt a massive blow to digital subscription businesses by disallowing recurring card payments without a one-time registration. In a bid to bring more transparency and give control to customers, it said for every recurring transaction below Rs 5,000 ($65), banks need to send a notification to customers about the auto-debit at least 24 hours before the renewal date, along with the option to cancel the subscription. For amounts over Rs 5,000, users must enter a one-time password (OTP) to authorise every renewal transaction.
Since then, Indian cardholders have been forced to play card bingo. To win, their bank, the merchant whose product they want to buy, the merchant’s payment aggregator aggregator aggregator Platforms that help merchants accept different forms of payments and the hubs that help set up these recurring transactions, and the users themselves all need to fall in line.
So far, about 29 banks have complied with the rule change, covering 70% of credit cards and 50% of debit cards in India. However, banks’ compliance doesn’t guarantee successful recurring transactions. Success rates have varied from 30% to 75%, according to executives at banks and payment aggregators The Ken spoke to. One senior executive at a payment aggregator said that 100% of international payments have failed since October, as merchants abroad are finding it too cumbersome to comply with Indian guidelines. The executives requested anonymity as they aren’t authorised to speak to the media.
But it’s the merchants who have been the worst affected. A senior executive at a large payment aggregator said that merchants who accept recurring payments are seeing only a 30% success rate. Most of these merchants don’t have the privilege of yanking card payments altogether like Apple.