Monday, 24 November 2014


Mobile banking will soon be possible with a basic handset and without accessing the internet. The telecom regulator will soon ask telcos — many of which have been resisting for years — to enable bank-authorized mobile payment companies to offer such service. Telecom companies are expected to fall in line with local and international payment companies, including an associate company of Visa, lobbying with the regulator and the government for permitting them to tap the Unstructured Supplementary Service Data (USSD) channel of telcos.

The USSD channel is a simple interactive text messaging system that can be used by a mobile phone subscriber to reach out to her bank for anything -- transfer funds, check balance amount, pay bills, cancel a cheque, request for a cheque book, obtain an account statement, and even buy books and music using debit or credit cards. Customers - without 2G or 3G connectivity or a smartphone - have to simply key in something like *67# -- or any other number a telco provides - to 'talk' to her bank.

According to a government official, "The Telecommunication tariff (fifty Sixth Amendment) Order, 2013 states that all telecom operators are 'obliged' to provide connectivity to any payment aggregator who has set up a USSD gateway. Therefore, Trai will ask the telecom operators to comply with it."

Given the growth in mobile subscriber base and that 75 per cent of users do not have a smartphone, the decision could increase bank penetration and customer convenience while lower cost for banks. Even though NPCI has the code and is ready to provide USSS based banking in Hindi and other languages, its non-profit character and limited budget has held it back from launching a large ad campaign and striking joint promotion deals with banks.

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