Exclusive: After Freshworks, Zoho says RBI should provide some leeway on new auto-debit rule

A day after the Software-as-a-Service (SaaS) firm, Freshwork’s CEO, Grirish Mathrubootham raised concerns on Reserve Bank of India’s (RBI) new auto-debit rules, another SaaS leader, Zoho Corporation has voiced similar concerns.

Sivaramakrishnan Iswaran, Vice President, Zoho told BusinessToday.in in an emailed interaction that this move has come as a challenge for businesses, which will now have to modify the processes they have been following for a long time now.

“To make it easier for the businesses to comply with the new rules, RBI could come up with a scoring system to evaluate them, and provide some leeway for these trusted businesses,” Isawaran said.

He added that RBI’s new rule, which kicked in from October, puts the customers in the driver’s seat while increasing security. It provides the customer with the freedom to cancel or update the amount, and the duration.

“Furthermore, the upcoming requirement of encryption of a customer’s card details from January 1st is expected to curb unauthorised and fraudulent transactions. Overall, these regulations provide customers with granular control over how their money is collected,” according to Isawaran.

On Wednesday, Freshworks CEO said at the Nasscom products conclave that the RBI should build a whitelist of the companies that will not be affected by the new rules on payments. “For SaaS businesses where you have to have customers’ credit cards on file, there is some improvement that we could do with RBI payment infrastructure. The rules are not helping SaaS companies,” Mathrubootham said.

Under the new directive, the RBI states that there will be no automatic recurring payment for various services which include utility bills, recharge of phone, DTH, and OTT, among others as the additional factor of authentication (AFA) will become mandatory . Additionally, banks will have to notify the customers before recurring transactions and for the payments above Rs 5,000, the banks will have to send one-time passwords to the customers.

However, the new rules will not apply to loan repayments, simple investment plans (SIPs), stocks etc.

Zoho, Freshworks are among those SaaS companies which offer subscriptions as a part of their services to businesses for helping customers transact via recurring payments, which as per the startup ecosystem also helps retain the customers and makes the process more efficient.

Also Read: Over 80% Indians back RBI’s move to stop auto-debit, shows survey

Also Read: RBI’s new auto-debit rules kick in from today; check out details

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