Trai to identify and address issues for poor uptake of USSD-based mobile banking

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.

Trai had in 2013 come out with guidelines and rate on USSD-based mobile banking services. The regulator had prescribed ceiling rate for an outgoing USSD-based mobile banking service as Rs 1.50 per USSD session. USSD technology is used by telecom operators to send alerts to their users. It can be used for pre-paid call-back service, location-based content services, and menu-based information services.

However, the USSD-based mobile banking has not gained traction in the country. Trai said the 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 Dhan 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.

"Even after two years since August 2014, when it became available to all GSM subscribers' in the country, the progress of USSD-based mobile banking has not gained traction," Trai added.     

It further said that in May 2016, only 3.7 million mobile banking transaction attempts (over USSD channel) reached the National Payments Corporation of India platform.

"In order to identify and address the various issues for the use of USSD-based mobile financial services, the Authority has issued the Consultation Paper," it said.  

The stakeholders are required to send their comments by August 31 and counter-comments by September 14.