9
TRAI Proposes
Mandatory USSD
Based Mobile
Banking Solution
27th Aug 2013
The Telecom Regulatory Authority of
India (TRAI) has released a consultation paper on USSD based mobile
banking services for financial inclusion. TRAI has asked for suggestions
for the technology to be used by
stakeholders – bank, RBI, TSPs, aggregators, for providing banking services
to the unbaked/ underbanked citizens.
It has asked stakeholders to send
written comments by October 4, 2013
and counter comments by October
11.
Some of the issues raised by the
consultation paper include:
- Whether USSD is the most appropriate mode for mobile banking for financial inclusion. It states that transactions through USSD are in real time,
and the accessibility cost of information through the technology is also
low as all low end phones can use the
technology.
- TRAI asks whether mobile banking
as a means of financial inclusion can
be enhanced by creating an aggregation platform to connect banks and
TSPs, through which banks can
provide USSD based mobile banking.
TRAI argues that while banks such as
SBI and ICICI have already implemented USSD based mobile banking,
it’s not available on all TSPs. Besides
this, customers having accounts in
various banks have to remember
different USSD codes to access
accounts on different banks. However, to enable aggregation platform
providers to assume their role in the
delivery model, it is necessary that
they are able to establish a connection with the network of the TSPs.
- It further asks whether the Mobile
Banking (Quality of service) Regulations, 2012 should be amended for
mandating every TSPs to work with
banks and its agents to use SMS,
USSD, and IVR to provide banking
solutions.
- While it recommends that TSPs
should be mandated to provide
these services to banks, it has also
asked for suggestions on whether
TSPs should collect charges for
USSD transactions for mobile from
their subscribers as they do in case
of SMS-based and app based
mobile banking. It suggests following economic cases:
1. The TSPs collect charges from the
subscriber for every USSD session
(B2C pricing model)
2. The TSPs collect charges from the
banks for every USSD session (B2B
pricing model)
TRAI has also asked for suggestions
on how much TSPs should charge
per session. It has suggested a fix a
ceiling of `1.50 per USSD session for
mobile banking.
- Another problem with USSD based
transactions is that TSPs are not able
to charge for the transactions. It
instead sends an SMS after the
transaction,
after
which
the
subscriber is charged. Hence TRAI
has asked whether records for USSD
transactions should be generated by
TSPs to audit the transactions.
While TRAI is recommending USSD
based mobile banking solution, it
should keep in mind that National
Payment Corporation of India
(NPCI)‘s, which had launched USSD
based Interbank Mobile Payment
Service (IMPS) in 2011, had hit a
roadblock with telcos over revenue
sharing model. Besides this, Visa
also claimed that telcos were blocking its USSD based payment service.
However, the issue now seems to be
resolved and Visa’s USSD based
mobile banking solution is available
on Loop Mobile, Aircel, BSNL &
MTNL.
This only points to the fact that in
order to make the USSD based
mobile banking service work, TRAI
will have to closely work with telcos
in the country.
Last year, NPCI had proposed the
use of mobile phones for non-financial banking transactions such as
account balance enquiry. In January
2012, the department of telcom had
allotted *99# as the USSD (Unstructured Supplementary Service Data)
code for the NPCI for operating
mobile banking services through the
channel. NPCI has been pushing
mobile banking for a long time now.
Another thing to note is that USSD
based codes only works with GSM
telecom operators and not with
CDMA telcos. Also, USSD based
communication is quite cumbersome as compared to apps. The only
advantage it offers is that users don’t
have to send an SMS or require a
GPRS enabled device and this
system can be used even on a basic
mobile handset.
Earlier this month, newly appointed
governor of the Reserve Bank of
India, India’s Central Bank, Raghuram Rajan identified mobile payments
as “game changer both in the financial sector as well as to mobile companies”, and that the Reserve Bank
of India will be setting up a technical
committee to look into the feasibility
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