India’s telecom regulator, the Telecom Regulatory Authority of India (TRAI), has proposed to completely remove tariffs for USSD-based banking and payment services following a recent request made by the Department of Financial Services (DFS).
The regulator, in its draft Telecommunication Tariff (66th Amendment) order, said that the proposal is aimed at protecting the interest of feature phone users and promoting financial inclusion, especially in rural areas of the country. The draft was notified on Wednesday.
India had previously launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts scheme to drive financial inclusion, especially among the rural population. Feature phone customers in small towns and rural areas use USSD service to check the balance in their bank accounts, as well as peer-to-peer money transfers and cash withdrawals and deposits.
The DFS recently requested the regulator to waive USSD charges to facilitate faster adoption of banking and payment services by common people especially in rural areas. Additionally, a high-level committee on deepening of digital payments (CDDP) by the Reserve Bank of India (RBI) also recommended rationalization in charges for USSD usage.
The regulator noted that the USSD service is fairly popular amongst rural, under-privileged and low-income groups.
The regulator said that the charges for banking and payment services must be rationalized, as the current tariff of 50 paise per USSD session is several times higher than the average tariff for a one-minute outgoing voice call and outgoing SMS. Notably, in 2016 the regulator reduced the tariff from Rs 1.50 to 50 paisa per session.
The sector regulator said the “relatively high charge” for a USSD session is acting as an “impediment” in increasing the number of transactions, despite significant improvement in success rates. Indian telecom operators charge (Re 0.04 per minute for one minute outgoing voice call and Re 0.01 per text message for outgoing SMS).
In its draft regulation, the regulator also noted that customers are being charged for both successful as well as failed transactions. Such an arrangement, it said, puts extra financial burden on consumers.
“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 regulator said, adding that it “may review the charge after two years, based on experience gained”.
TRAI has sought stakeholder comments on the new draft regulation for USSD-based banking services and has set a December 8 deadline.
(1 USD = 74 rupees. 1 paisa = 1/100 rupee)