Mobile Banking on Basic Handsets without Internet!

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Nov 24, 2014:  The banking sector has been subjected to several advancements lately. With the increased usage of net banking and mobile banking owing to their convenience, the industry will be coming up with enticing features in future. One such aspect is the support for mobile banking on basic handsets without the necessity to be connected to the internet. This is important in the context of India, where still a majority of population is still on feature phones.

Soon, the telecom regulator will ask the telcos to enable bank authorized mobile payment firms in order to provide such services to their subscribers. Many telcos have resisted including such a feature till now, but now the telcos are expected to associate with the domestic and international payment firms such as Visa with this direction coming in from regulators.

The Unstructured Supplementary Service Data (USSD) channel of telcos is a simple interactive text messaging system that can be used by a subscriber to contact the bank to perform fund transfer, bill payment, balance check, cheque book requests, obtaining account statement and purchases using credit or debit cards as well. Interestingly, those customers without internet access or smartphone can key in *67# or other number provided by their telco to communicate to their corresponding bank.

Last week, the executives of Movida, a mobile payment joint venture between Visa and Monitise, a mobile money specialist headquartered in US sought for the intervention of TRAI (Telecom Regulatory Authority of India) for getting USSD code from the telcos, claimed a source. After this move, the telcos had to agree to share their infrastructure with National Payments Corporation of India (NPCI), a state backed payments gateway. This was featured in the financial inclusion plan of Modi government as well.

As per another source, TRAI officials told Movida that they will ask the telcos to share USSD access and also mention the dates by when this done. There should be no issues until the mobile payment firms meet the specified conditions such as authorization from bank.

A government official claims that the telcos are forced to provide connectivity to any payment aggregator with the USSD gateway set up. And, TRAI will ask the telcos to comply with the norms.

The mobile subscriber base is growing and 75 percent of the users do not have smartphones, hence this decision would definitely increase the penetration of banks and provide more convenience for the customers without imposing much cost for banks.

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