Economic Times: November, 2016
New Delhi: Indian telecom regulator Tuesday reduced tariffs for USSD-based mobile banking transactions to a third of existing rates, in a bid to achieve greater financial inclusion and the drive towards cashless society.
The Telecom Regulatory Authority of India (Trai) lowered the tariff to a maximum of 50 paise per transaction, each having 8 steps, from earlier rate of Rs 1.50 per session, where each session comprised 5 steps.
“The USSD channel is being used by people with featurephones, which is more than 65% in India,” said Trai chairman RS Sharma, adding that high price was one of the reasons behind low usage of this medium for making mobile banking transactions. About 84 lakh transactions were recorded in October.
“We have notified today, and have re-fixed the price to 50 paise per session, based on recommendations of banks and RBI, and we also consulted National Payments Corporation of India (NPCI),” Sharma added.
USSD or Unstructured Supplementary Service Data is a service that uses short code for making transactions or inquiries - for instance, checking talk time balance or bill till date from an operator. Since it does not need data connection, it is used by a large majority of people, primarily featurephone users and is therefore also used as a medium for no-frill banking transactions. The change in tariff emanates from views of stakeholders, after the regulator had issued a consultation paper on reviewing the regulation around USSD services and charges on August 2. USSD service is used by a number of featurephone users to inquire the balance in their bank accounts, peer-to-peer money transfers, cash withdrawals and deposits from banking correspondents in smaller towns and rural areas. With a significant penetration of mobile telephony in rural India, the mobile phone can be leveraged to achieve the goal of financial inclusion. “We hope that the decision will increase the number of transactions by 10 times,” Sharma added.
Together, these amendments will facilitate the banks, their agents or any entity authorized by the Reserve Bank of India for better delivery of banking and payment services to the consumers through mobile phones over USSD, the regulator said.
Apart from tariff, a number of other steps also that need to be taken, the regulator added, which include relooking at the architecture of the USSD framework by NPCI for improving the software design elements. Further, consumer awareness about this service should be increased through a time-bound, targeted communication strategy and a mechanism of linking bank accounts with mobile phones through a simplified process should be put in place.