28 September 2021 | Brief | Shaz Elanie

INDIA: A Look at the RBI Initiative and its Impact on Nonprofits

The Reserve Bank of India (RBI) has announced that it will no longer allow merchants like Netflix, Amazon, and Spotify, to store customer card details in their databases or servers. This may seem like a drastic move, but it is an important cybersecurity measure to make digital payments in India more secure.

So, what does this initiative mean for charities and fundraisers? How will your donors continue to donate to your cause on a regular and automated basis?

Here’s a breakdown of what we know so far:

What is the RBI initiative?

Effective 30 Sept 2021, as part of the Additional Factor of Authentication (AFA) requirements, merchants and payment aggregators are no longer able to store donor card details OR transact regularly without an active and regular confirmation by the customer. This confirmation is referred to as the pre-debit notification (PDN), which is done by the bank on your behalf.

With this new initiative, nonprofits who rely on monthly donations to support operations will certainly be affected. Donors will now need to actively confirm their monthly donations via the PDN, before each deduction can be made.

Find out more on the RBI official website.

Does this mean I won’t be able to debit my regular give donors anymore?

The good news is that you can still transact donors on a regular basis! However, what will change is the process in which they will be transacted.

Essentially, the way in which you debit your recurring donors who have already registered their e-mandate with the bank will look like this:

In the meantime

We’ll have to wait for the change to be implemented in order to fully understand the impacts it will have on not just the fundraising industry, but also all subscription-based businesses in India.

The optimists in us say that this new change might just be a welcome addition in ensuring that donors feel secure when donating to support the causes they love.