Payments solution provider Razorpay on Tuesday said it has partnered with Mastercard to launch ‘MandateHQ’ – a payment interface that will help card-issuing banks to enable recurring payments for its customers.
Razorpay, which is backed by Sequoia Capital, GIC, and others, aims to integrate MandateHQ with more than 50 banks in the next 12 months.
The Reserve Bank of India (RBI) had issued a framework for processing e-mandates on recurring online transactions. It has made AFA (Additional Factor of Authentication) mandatory for all recurring transactions below Rs 5,000 on debit cards, credit cards, UPI, and other Prepaid Payment Instruments (PPIs), and all stakeholders are required to ensure full compliance with the framework by September 30, 2021.
This directive is applicable to all recurring payments which were earlier debited automatically from customers’ cards (credit/debit/prepaid) for mobile, utility, other recurring bills as well as subscription payments like OTT streaming services.
“Razorpay’s Mandate HQ is an API-based plug-n-play solution that reduces the go-live time for any card issuing bank that wishes to enable recurring payments for its customers. MandateHQ will also enable businesses, especially subscription-based businesses, to get access to a wider customer base, who use debit cards, as recurring payments were mostly supported via credit cards previously,” Razorpay CTO and co-founder Shashank Kumar told PTI.
The MandateHQ solution can be fully integrated with any bank within seven days, as opposed to other solutions which normally take a few weeks, he added.
In addition to the Mastercard partnership, Razorpay has also collaborated with three banks and is in talks with over 20 banks to help integrate this technology into their existing payment infrastructure in the next few weeks. The companies, however, did not disclose the names of the banks that have been onboarded so far.
“Our goal is to integrate MandateHQ with 50-plus banks in the next 12 months. As adoption of the product increases, we expect even the smallest of banks from India’s hinterlands to bolster their offerings by enabling recurring payments to millions of first-time digital banking customers and businesses while complying with RBI guidelines,” he said.
With products like MandateHQ, the subscription economy is expected to scale up to 5-6x in the next year, he added.
MandateHQ is a unified platform that will help banks with end-to-end mandate lifecycle management including creating, viewing, updating, canceling, and pausing mandates and processing debits for valid mandates.
In addition, the MandateHQ platform will also help banks to enable a 24-hour pre debit notification via email, SMS, and WhatsApp while providing end-users with a portal to manage card mandates.
“We started thinking about a plug-n-play solution right after the initial circular from RBI was issued back in 2019. We spent a lot of time discussing with Banks, card networks, and subscription-based businesses to understand pain points with an intent to develop the best possible solution to address them,” Kumar said.
He added that the product development for MandateHQ began late last year, and after testing the product for a couple of months, the company is now ready to offer the solution to banks across India.
“Industry estimates suggest that the overall market opportunity for recurring payments is between Rs 20-25 billion. Over the past couple of years, there has been a 3X growth in recurring payments, which continues to grow at 40 per cent year-on-year, thanks to the rise of newer subscription-based business models,” Kumar said.
Industries like OTT platforms (especially regional ones), edtech, food tech, health tech, and shared economy are among the major industries that have benefitted the most, he added.
The majority of the transactions are below Rs 5,000. The general norm that has been observed is that a customer can have multiple mandates of different transaction values.
Kumar said MandateHQ is a white label product that provides end-users with a portal to view and manage all current mandates, along with a history of all recurring transactions.
Customers will be notified by banks 24 hours before a mandate will be debited, providing enough time for a consumer to alter or cancel a payment, he added.