• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

What RBI New Auto-debit Rules Store For OTT Platforms?

The worrying reason for the video streaming platforms is the fear of losing customers, who may get difficulties making payments, after the implementation of rules.

Photo Credit :


As the deadline for Reserve Bank of India’s new rules on auto-debit payments (September 30) is around the corner, it is creating turbulence among Over-the-top (OTT) giants. 

The worrying reason for the video streaming platforms is the fear of losing customers, who may get difficulties making payments, after the implementation of rules. 

According to the new rules, all recurring transactions will require extra authentication. Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities Ltd said, "As per RBI, all recurring transactions will require additional authentication. For payments above Rs. 5,000 a one-time password (OTP) will have to be validated by the customer each time a payment is due. This latest guideline is effective from 30th September 2021."

Usually, monthly plans for OTT services are not expensive, however many OTT giants are still concerned as all automatic payments will also need approval from the customer at the time, when an alert is generated. 

Nitin Menon, Co-Founder and Managing Partner, N V Capital, Fund for media and entertainment sector said, "It will have an impact on the OTT business but the magnitude will be limited since, as per the RBI circular, they have increased the amount from Rs 2,000 to Rs 5,000 to continue for recurring transactions. Since the majority of the recurring monthly OTT subscriptions are less than INR 5000, the impact should be limited."

Many believe that the whole process can make it complicated which can further affect the consumer experience, mostly, in case they have subscribed to multiple services. 

The Streaming services think that approximately 10-15 per cent of customers, who directly subscribe to services and don't get them as part of a bundle package with a telecom operator, can either don't have the time to renew their subscriptions or they choose not to renew them.

Menon said, "There could be an impact, especially for high-value transactions, since it would be tedious for the customer to always visit the website of a particular OTT platform and subscribe to the service monthly. Currently, it would be difficult to quantify the amount of loss, however, recurring high value bundled services with Telcos could face the brunt." 

The ongoing coronavirus pandemic has already affected the finances of almost every household, especially after the deadly second wave. Hence, an extra inconvenient customer experience can put them in a tough spot.

Talking about whether the new rules make customers forgo their entertainment expenses, Menon said, "Consumers will continue to subscribe to a host of Entertainment services as long as they are hooked onto them, the issue is with the operational inconvenience of subscribing to these services on a monthly basis. As long as the transactions are of low value and below the RBI threshold, the impact would be marginal."

The impact on OTT services could be limited but higher value transactions like utility bill payments would face the impact. On the positive side, Banks are already figuring out ways alongside third-party payment providers to create additional factors of authentication (AFA) through push payment messages that they can onward to customers for recurring transactions, Menon added. 

Meanwhile, Chouhan mentioned, "The implicit impact of these guidelines will be on customer experience, fall in subscription renewals and payments. We are hopeful some middle path will be worked out which will be beneficial for all."

We tried to reach SonyLiv and Netflix, however, they were unable to respond. 

Tags assigned to this article:
ott Auto-debt rbi