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USSD message based mobile banking to be reviewed by TRAI as tariff seems unreasonable


The Telecom Regulatory Authority of India (Trai) has come out with a consultation paper to identify and address issues related to poor uptake of unstructured supplementary service data (USSD) based mobile banking services in the country. The Unstructured Supplementary Service Data or USSD messages are those messages which are widely used to inform pre-paid consumers about deduction of balance after each call or SMS they make or send. These messages cannot be stored in mobile phone. Using short codes on USSD platform like *121#, people are able to check their balance and subscribe to telecom services. In case of mobile banking such codes allow account holders to access different services like checking bank balance, fund transfer etc. At present, Trai’s rule cap USSD rate at Rs 1.5 per session. The regulator has received requests from various authorities involved in banking services to reduce the rate of USSD session.

The USSD-based mobile banking has not gained traction in the country. According to Trai, expansion of banking and reach of financial services were vital for the long-term sustainable development of any country. From the standpoint of equity, financial services need to be provided at an affordable cost to those who are currently excluded from the formal financial system.

Trai said mobile telephony could be the answer to the problems related to last-mile service delivery of financial services. With close to 225 million Jan Dhaan accounts, around one billion Aadhaar cards, and one billion mobile connections in the country (450 million in rural areas), it was expected the USSD-based mobile banking service would gain popularity among the unbanked and under-banked population. It further said that in May 2016, only 3.7 million mobile banking transaction attempts reached the National Payments Corporation of India platform.

Clearly, the present tariff per USSD session for mobile banking offered by telecom service providers is several times higher than the average tariff for a Minute of outgoing voice call, or an outgoing SMS, or an MB of data transfer. The telecom operators have opposed lowering of tariff. Trai, in the paper, has sought opinion on various issues including method for prescribing the tariff and whether the present pricing model for USSD-based mobile banking in which consumers pay for the use of USSD should continue.


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