Tuesday, November 25, 2014

Soon, access mobile banking without internet

Soon, access mobile banking without internet
Almost all dealings between a customer and her bank will be possible with a basic handset and without accessing the internet. 
Banking will have a new look with some of the jigsaw pieces slowly falling into place. Almost all dealings between a customer and her bank will 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 debt 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.

At a meeting last week, executives of Movida - a 50:50 mobile payments joint venture between Visa and the UK-headquartered mobile money specialist Monitise — sought the intervention of Telecom Regulatory Authority of India (Trai) for obtaining USSD code from telcos, a person familiar with the development told ET.

A month and a half ago, Movida had written to Trai asking for USSD access. This was soon after telcos, rather grudgingly, had agreed to share their infrastructure with the state-backed payments gateway, National Payments Corporation of India (NPCI) which features prominently in Modi government's financial inclusion plan. Firms like Visa and MasterCard - though the latter has not yet approached the government - strongly feel that the state should ensure a level playing field to payment companies instead of providing USSD code to a single entity like NPCI.

"Trai officials have told Movida they will ask telcos to share USSD access and also specify the dates by when it would be given. As long as mobile payment firms meet certain conditions like authorization from a bank, there should be no problem. For instance, in case of Movida, it should be clearly spelt out that bank X can provide certain services to its customers through Movida," said another person who is aware of the discussions.

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% of users do not have a smartphone, the decision could increase bank penetration and customer convenience while lower cost for banks. Under the circumstances, Movida's entry may give USSD a new push.

​Even though NPCI has the code and is ready to provide USSSbased 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. On the other hand, the marketing prowess and higher ad budgets of Visa and Movida may make a difference.

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