TRAI Proposes Zero Tariff Charges on USSD Transactions

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TRAI

The Telecom Regulatory Authority of India (TRAI) released a proposal on Wednesday proposing to reduce tariffs on USSD-based mobile banking and payment services to zero from 50 paise. The proposal is issued to protect the interest of users of functional telephones and also to promote digital economic inclusion. Unstructured Supplemental Service Data or USSD is a service that uses a card code to make transactions. Many people, mainly phone users, use this facility as it does not require any internet.

The need to rationalize USSD taxes

TRAI went on to explain that the current charge for an outgoing phone call is 0.04 Rs per call. minute, while for an SMS it is 0.01 Rs per. text message. The current tariffs for the USSD exceed both of the aforementioned tariffs and therefore need to be rationalized. TRAI said that while there is an improvement in success rates, the higher fees for USSD sessions act as an obstacle to the increasing number of transactions.

USSD is also more common among people in rural areas, those who are underprivileged or come under low-income groups. The USSD charges apply in both scenarios, whether the transaction is successful or not, which increases the financial burden on the users. According to the draft of the TRAI, the Department of Financial Services (DFS) has also requested that the USSD taxes be waived so that they can be adopted among the general masses, especially those belonging to rural or difficult areas.

Even the Reserve Bank of India (RBI) had formed a committee that would focus on further improving the quality of digital payments. One of the main recommendations of this high-level committee was to rationalize USSD tariffs and make the technology feature-rich so that it gains its popularity and adoption by the people as informed by the country’s telecommunications authority.

Mobile phone use is rising and seeping through in the central places of India which include rural in remote places. The mobile devices thus play a crucial role in deepening the digital payment method in the country. Earlier in 2016, USSD taxes were reduced to 50 paise from Rs 1.50.

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