New guidelines on recurring payments may send SaaS companies out of India, say experts

The new auto-debit guidelines for recurring payments kicked in from today, October 1, but the Indian software-as-a-service (SaaS) industry expects this new regulation to have a much deeper impact on their businesses.

Before getting into this, it is important to understand what the guidelines really say. The Reserve Bank of India (RBI) has decided to do away with automatic recurring payments by adding a layer of authentication for transactions. A user will have to manually mandate such transactions every month, dropping the idea of recurring payments altogether.

The Indian SaaS companies — which are poised to meet a fifth of world’s software demand and pocket a revenue of $75 million in the next four years — are worried that this would lead to default or delayed payments, impacting their revenue.