RBI Regulations and how They Impact Your Subscription Business

Last week I wrote about how PSD2, SCA and 3D Secure V2 are going to impact your renewal rates and briefly touched on some of the issues. 

Today I’m going to walk you through one country that’s currently most impacted by the rules and that’d be India. 

What’s the Deal With India and 3D Secure?

Back in November I was digging into some failed renewals as part of my day job, I found the majority were in India and so the rabbit hole began. 

What followed was a busy week of trying to find out what was going on and eventually I found out about the regulations implemented by the India central bank (RBI regulations). 

What are the RBI regulations?

In short, if the renewal payment is over 5000 INR (roughly $60-70 depending on exchange rate at the time) then you must bring the customer back on session to authenticate the payment. 

But that isn’t the headline grabber, as you may think “well, we’ll split our charge into quarters for Indian customers”. Not possible. At least not easily. 

See the regulations require that the customer pays for the transaction in INR. So if you’re performing a USD, GBP, EUR, or any other currency charge you have to bring the customer back to session to authenticate the payment. 

When was RBI implemented? 

You’d think this would be easy to find information, apparently not. However, Stripe started writing documentation in Q3 2021 and was updated in October 2021. I personally noticed issues with payments in November 2021. 

So it’s safe to say mid-late 2021. 

How do I Stop all These Renewal Failures?

The entire platform for RBI regulations isn’t yet implemented in full. Technically it’s not the same as PSD2 and SCA. However, the core of the issue lies in the same area. 

Which is why the best way right now is to make use of 3D secure V2 to authenticate the transaction by bringing the customer on session. 

To mitigate the overall impact to your business make sure you do the following. 

1: Implement Renewal Failure Emails

Likely you already have these but if you don’t, make sure you have renewal payment failure emails and a process in place to follow up with customers whose payments failed. 

2: Contact your Indian Customers Before Renewal 

If you use Stripe billing (direct, not via the API) you can send an email to impacted customers and have them come back on session to authenticate the subscription and continue, send this email out earlier and perhaps offer a small discount to try and keep the customer. 

It’s also possible to do this via the Stripe API but it requires more configuration. 

3: Change Your Payment Currency to Local Currency

Not an easy thing to implement especially with rapidly fluctuating currencies like INR but the safest way, charge Indian customers in their local currency and if the payment is over 5,000 INR split the payment into multiple transactions.