• Sat. Jul 2nd, 2022

Mobile banking: NPCI says it cannot bear the cost burden of USSD mobile banking


National Payments Corp of India (NPCI), the country’s umbrella organization for operating retail payment and settlement systems, has urged the telecommunications regulator not to burden it with the costs of providing banking services and data-based mobile payment from Unstructured Supplementary Services (USSD).

In a counter-submission to the Telecom Regulatory Authority of India (Trai), the central agency rejected the call by telecom operators for banks to bear all costs associated with providing these mobile banking services through NPCI. , claiming that it is already grappling with “the cost for SMS and PSP (payment service provider) charges on the BHIM application extended to banks and its users”.

“All telecom operators should be live with USSD service to ensure maximum reach and adoption, and the cost of this service should not be added to NPCI as it already bears the cost of SMS and PSP charges on the BHIM application which is extended to banks and users, ”NPCI said in its submission to Trai.

He also called on the regulator to push “telecommunications operators to promote USSD service through flash messages and communications” to increase levels of public awareness.

BHIM or “Bharat Interface for Money” is a local mobile payment application developed by NPCI and based on the Unified Payment Interface (UPI) – a payment system that allows people to instantly transfer money from their account to another account linked to a mobile phone.

The Cellular Operators Association of India (COAI), the telecommunications industry association representing Reliance Jio, Bharti Airtel and Vodafone Idea (Vi), told Trai “that it is imperative that the cost of USSD ( service) or supported by banks via NPCI ”. This is because he believes that the central relationship in the value chain of mobile banking is between banks and citizens as customers of banks, and that a telco is only an intermediary who must be properly remunerated. .

Vi, in fact, said that since USSD-based mobile banking services are provided by banks, the cost of providing these services should be borne by the banks, not the telecom operators.

The telecommunications joint venture between Britain’s Vodafone Plc and India’s Aditya Birla group added that banks are the true providers of mobile banking services and the USSD only acts as one of their channels to provide points of contact. to consumers. As a result, “we recommend that it is the banks (or NPCI), which should bear the cost of providing this point of contact to its banking customers, through the USSD-based mobile banking services,” Vi said in his submission Trai.

Crown corporation BSNL supported the view, saying it “is prepared to provide USSD services for banking transactions free of charge, provided that NPCI is mandated (by Trai) to bear the cost of USSD sessions. to help the state-run telecommunications company recover platform and network costs. ”

Late last month, Trai, through his Draft Telecommunications Tariff Ordinance (66th Amendment), proposed the elimination of tariffs for USSD-based mobile banking and payment services in order to protect interests. mobile phone users and stimulate digital financial inclusion.

USSD is a service that uses a shortcode to complete transactions or inquiries. Since it does not need a data connection, the service is used by many cell phone users to check their bank account balances and to perform peer-to-peer money transfers, cash withdrawals and deposits with correspondent banks in small towns and rural areas. With increasing mobile penetration in rural India, the mobile phone is seen as a powerful tool to promote digital financial inclusion.