Razorpay and Mastercard launches MandateHQ for recurring payments

Fintech unicorn Razorpay and payments technology giant Mastercard launched MandateHQ, a platform that the companies claim is a safe and secure recurring payment interface.

“With the launch of MandateHQ in collaboration with Mastercard, we stand in support of the RBI directive of making auto-debit transactions safer from potential fraud,” said Shashank Kumar, co-founder, and chief technology officer, Razorpay. 

 “While this has created a certain level of challenge for the ecosystem in how they will pay monthly bills post-September, we want to make it easier and faster for banks to implement the e-mandate framework issued by RBI and also ensure that businesses and end-consumers are not inconvenienced,” he added.

The Reserve Bank of India (RBI) has issued a framework for processing e-mandates on recurring online transactions in order to accelerate the adoption of digital payments safely and securely.

It made AFA (Additional Factor of Authentication) mandatory for all recurring transactions on debit cards, credit cards, and even UPI and other Prepaid Payment Instruments under Rs 5000. (PPIs). By September 30, 2021, all stakeholders must ensure full compliance with the framework.

By the RBI circular, Razorpay and Mastercard have partnered to launch MandateHQ, a new recurring payment interface, to assist banks in complying with the directive and providing convenience to banks' customers.

Mandate HQ by Razorpay is an API-based plug-and-play solution that reduces the time it takes for any card-issuing bank to enable recurring payments for its customers. It will also give businesses, particularly subscription-based businesses, access to a larger customer base that uses debit cards, whereas previously, recurring payments were mostly supported by credit cards.

“I believe products like MandateHQ will now encourage more businesses to start and adopt subscription-based business models,'' said Kumar of Razorpay. “I expect the subscription economy to scale upto 5-6x in the next year.”

In addition to its partnership with Mastercard, Razorpay has partnered with three of the country's leading banks and is in talks with over 20 banks to help integrate this technology into their existing payment infrastructure in the coming weeks.

Tushar Vashisht, co-founder and CEO of HealthifyMe, one of Razorpay's leading health-tech customers, stated that in the digital economy, it is critical for consumers and businesses to have secure, dependable recurring payments as a payment option for their subscriptions.

“At HealthifyMe, we look forward to enabling that with Razorpay and are excited about what MandateHQ can deliver in the framework of new RBI guidelines,” said Vashisht. “Hopefully, it will help India move a step closer to global payments standards.”

Almost every industry has begun to adopt subscription business models in the last few months. According to Razorpay, the new MandateHQ offering will assist businesses in a variety of industries, including insurance, utilities, content, SaaS, lending, and charitable donations, in changing their payment models. They would probably also introduce subscriptions, allowing them to provide better value while maintaining revenue.

In the last three years, India's expenditure on digital media and entertainment subscriptions has more than doubled. Since the introduction of UPI-Autopay in July of last year, merchant demand for subscriptions has increased fivefold in the last six months. This has demonstrated a strong and ever-increasing demand for recurring payments from both businesses and cardholders.

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