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Trai proposes cutting USSD charges for mobile banking to zero

The telecom regulator on Wednesday proposed reducing tariffs for USSD-based mobile banking and payment services to zero from 50 paise, in a bid to protect the interest of feature phone users and boost digital financial inclusion.

“The Authority proposes to revise the framework for USSD-based mobile banking and payment services by prescribing a “nil” charge per session as rationalisation is a necessity to protect interests of target user groups and promote digital financial inclusion,” the Telecom Regulatory Authority of India (Trai) said in its draft Telecommunication Tariff (66th Amendment) order, notified Wednesday.

It, though, said it “may review the charge after two years, based on experience gained”. The regulator has set a December 8 deadline for stakeholder comments on the new draft regulation.

The USSD (Unstructured Supplementary Service Data) is a service that uses a short code for making transactions or inquiries. Since it does not need a data connection, the service is used by a large majority of people, primarily feature phone users, and is therefore also used as a medium for no-frills banking transactions.

Trai attributed its call for rationalisation to the fact that the present tariff of 50 paise per USSD session is several times higher than the average tariff for a one minute outgoing voice call (Re 0.04 per minute), or an outgoing SMS (Re 0.01 per text message).

The relatively high charge for a USSD (session), it said, is “acting as an impediment” in increasing the number of transactions, despite significant improvement in success rates.

The regulator added that “a consumer is also being charged for both successful as well as failed transactions,” which puts extra financial burden, given the potential popularity of USSD amongst rural, under-privileged and low-income groups.

In its draft order, Trai said the Department of Financial Services (DFS) had requested it to “waive USSD charges to facilitate faster adoption of these services” by common people — especially in rural/difficult areas –- the population segment for whom the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts scheme was established to drive financial inclusion.

In this context, the sector regulator said the Reserve Bank of India (RBI) had also constituted a high-level committee on deepening of digital payments (CDDP). And a key recommendation of the panel is that “charges for USSD usage be further rationalised and the technology be made feature-rich” to increase adoption and popularity.

In fact, the USSD service is used by many feature phone users to check balance in their bank accounts, do peer-to-peer money transfers, cash withdrawals and deposits from banking correspondents in small towns and rural areas. With rising mobile penetration in rural India, the mobile phone is seen as a powerful tool to promote digital financial inclusion.

Back in November 2016, the sector regulator had cut the per session rate for USSD-based mobile banking transactions to 50 paise from Rs 1.50 previously.

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