Dear Sir, Subject: Counter Comments on "Consultation Paper on USSD-based Mobile Banking Services for Financial Inclusion

Transcription

1 1 Counter comments Consultation Paper on USSD-based Mobile Banking Services for Financial Inclusion of Telecom Regulatory Authority of India. New Delhi, the 20th September, 2013 For kind attention of Shri Manish Sinha, Advisor (F&EA) Advisor (F&EA), TRAI. Mahanagar Door Sanchar Bhawan, Jawahar Lal Nehru Marg, New Delhi Tel. No Fax: Copy send to NPCI / RBI From P. Abraham Paul. Trivandrum dated 20 October Dear Sir, Subject: Counter Comments on "Consultation Paper on USSD-based Mobile Banking Services for Financial Inclusion Paul Abraham: Counter Comments on TRAI Consultation Paper On USSD Based Mobile Banking Services for Financial Inclusion Released on 20th September Chapter-III Issues for Consultation It may please be noted that answers/comments to the issues given below should be supported with justification. The stakeholders may also comment on any other issues related to the use of Unstructured Supplementary Service Data (USSD) as a bearer for mobile banking services, along with all necessary details. My response to the Consultation Paper and Counter comments can be seen in the link: Q1: Do you agree that USSD is one of the most appropriate modes for mobile banking for financial inclusion? If not, which mode do you think is more appropriate? Please support your viewpoint with reasons. CC1: P. Abraham Paul. CC.1.1. My View is USSD is one of the most appropriate bearers. Most important factor in Mobile banking transaction is Connect time and response time.

2 2 In malls, shopping centers, various vending machines etc., quick disposal of service is of prime importance. For this USSD is the most appropriate bearer. Standing in Q at cash counters, whole transaction could be completed within 15 to 20 seconds with USSD bearer based service. To make the keying in action faster, frequently used B party number can be prelisted and stored as two digit codes that the system will automatically translate and use while processing. CC.1.2. Need of different bearers: The USSD based aggregator system should have facility to handle USSD, SMS, IVRS and web based interworking. Language issue: While using IVRS, language can be made optional and customer dependant. CC.1.3. Non availability of USSD feature in CDMA systems. CDMA system providers cannot refuse advance technology services just because their systems do not have the feature. This need not be a bottle neck as CDMA systems use SS7 signaling to PSTN interface and also on SS7 on 64 kbps time slots for roaming signals. If the system can process SS7 for these, it can be incorporated suitable interface to receive DTMF signals from phone and send as USSD in SS7 link to the USSD server in the aggregator system. Till such arrangements are made CDMA based Mobile networks shall be able to provide connectivity on Circuit switched links to the IVRS and USSD sever will take care of DTMF signals and send voice response, without charging the user for it. Even most CDMA customers may prefer to have a GSM phone in addition for mobile banking. Therefore, CDMA system providers should make USSD facility available for their users in their own business interest to avoid churn of subscriptions. CC.1.4. Adaptability issues. May not be problem for illiterate population. i) Being identical to making normal phone calls, everyone who are capable of using their phone for making phone calls can access and avail USSD based services in the same way without any difficulty. ii) Use of Multi-lingual key pads that are readily available can be considered who are not conversant with English numerals.

3 3 CC.1.5 Records of transactions: i) Maintaining records is not an issue as IN systems handling USSD based services readily do Charging and Statistics generation. The USSD based aggregator system shall incorporate generation of statistics of all transactions handled by it. ii) Appropriate USSD interaction need to be adopted depending on type of calls either menu based or session based or both. Mobile phones users can take their own sweet time in Entering keys and cross verifying the USSD string without time limitation as the circuit is seized only when the call button pressed. Response from the system also remain there without time limit, which is true in both stream based as well as menu based service. iii) Most interesting feature of USSD bearer is that as it use the signaling path, one can key in and send USSD signal and receive responses, while you already speaking on an outgoing or incoming call. The USSD message response remains in the screen until seen and OK key is pressed. Storage of USSD transaction in the SIM or in a data folder in the Mobile phone can be developed. Once the service comes into use many more features can be incorporated. Even the CCITT SS7 signaling can be upgraded or version upgrade can be thought of by CCITT for enhancing the DATA fields in the signaling as a next version CCITT SS8 which is long overdue. ` CC1.6. Inclusive Finance being the main object, Money through mobile facility shall be available, accessible, acceptable, adaptable and affordable to common man especially of those in low social & economic strata. Need of futuristic planning: Another important factor is that planning is to be done not for an India in perennial poverty and illiteracy dumping progressive measures that are exactly meant to make this change because of it but with a futuristic and pragmatic vision of a poverty and illiteracy eradicated India in the next few years. It points to the need of a simple and easily adaptable common Universal system that take care most of the concerns as suggested in my presentation; Money through Mobile (mtm) for Inclusive Growth.

4 Q2: Do you agree that the Mobile Banking (Quality of Service) Regulations, 2012 should be amended for mandating every TSP, acting as bearer, to facilitate not only the banks but also the agents of banks acting as the aggregation platform providers to use SMS, USSD and IVR to provide banking services to its customers? Please support your viewpoint with reasons. CC2: P. Abraham Paul. Before deciding on Mobile Banking (Quality of Service) Regulations, 2012 need be amended making it mandatory for every TSP to follow it; the following points need consideration. CC2.1. Different scenarios of Mobile Banking: i) Money management using phones involving Banks that is generally known now as Mobile banking as being done now by banked population. ii) iii) iv) Money management using phones as a Non-telephony value added service (VAS) independently handled by individual TSPs as different stream of Mobile money by both banked and unbanked customers. Money management using phones as a Public utility system that is provided by number of third party service providers leaving Mobile banking and Money management VAS as different streams. All forms money management by every phone (Mobile and landlines and also special purpose Cards) involving and not involving banks that are handled by a Universal money management system, by both banked and unbanked population in a fully regulated environment. My considered view is that option (iv) above is ideal and futuristic and meeting the objective of inclusive Finance for the following reasons. For convenience let me call it Money through Mobile (mtm) as given in my presentation that can be accessed and viewed in the link Few slides from it are reproduced hereunder for general understanding.

5 CC2.2. It may be seen in the above presentation that most of the money management needs using phones can work without involving banks and banking industry. In this system, Banks, Post Offices and other financial institutions involved will be on same functional level as that of every other mtm user. 5

6 CC2.3. Money management system shall be a universal system that can be accessed by all users using uniform access code, and provides uniform methods, products and services. 6

7 CC2.4. Advantages of unbanked money management systems. 7

8 CC2.5. Urgent need of regulatory control of Mobile banking. As seen above an un-banked system would be ideal in many ways. However, considering the huge amount of public money amounting to trillions, it can cause problems in nation s economy and therefore, need to be centrally regulated. 8

9 9

10 10 CC2.6. Idea of an exclusive bank. Though unbanked services are advantages due to reasons mentioned above, any form of money management needs to be done systematically using banking methods. Therefore, the via media solution is to have an exclusive bank integrated with Universal money management system that can regulate, mobilize and tap the huge potential of Money management using phones and make it fully regulated and accountable in the interest of the nation. Due to most part of people in the lower economic and social strata are unbanked, the exclusive bank shall be convenient and comfortable and at the same time shall take care of regulatory and security needs in a transparent manner while enabling them advantages of unbanked service.

11 11

12 12 CC2.7. Exclusively banked Universal mtm system. CC2.8. It does not mean that all other banks in the country will not be handling Mobile Banking as a convenient tool for performing banking needs of its customers. The difference is that every bank will have its own mtm account in the Universal mtm Bank. Every bank owning mtm account will be functionally at par with every other mtm user. For every customers of other banks who are also mtm users, every money transaction between their mtm account and mtm account of their banks will go through mtm bank. This way the whole money management using phones involving m\tm system directly and through other banks can work in a fully integrated way. Mobile banking not involving mtm access will continue same way as being done now.

13 13

14 CC2.9. Mode of working of exclusively banked mtm system. 14

15 15 CC2.10. Advantages of exclusive mtm-banking system CC2.11. mtm Internet cloud. Interbank transactions in settlement of mtm accounting can be using exclusive mtm cloud. Integration of other banks with mtm-bank using mtm-cloud.

16 16 CC2.12. Coming back to CP-Q2 about whether is it agreeable that the Mobile Banking (Quality of Service) Regulations, 2012 should be amended for mandating every TSP, acting as bearer, to facilitate not only the banks but also the agents of banks acting as the aggregation platform providers to use SMS, USSD and IVR to provide banking services to its customers? My viewpoint on the above is as follows. CC2.13. It appears many stake holders are not favorable to TRAIs proposal in CC Q2. How to address issues raised by various stake holders? As a consensus would be difficult, my considered opinion is that TRAI with RBI shall together formulate the idea of an exclusive mtm bank integrated with Universal mtm system as proposed above with necessary regulations in place leaving it to various stake holders and users to decide what they want.

17 17 Such a system can straight away take care of the needs of the government for Direct Benefit transfer, payment of subsidies and other welfare payments etc to start with. Once it takes of along with low tariff to the user and revenue sharing for TSPs, as proposed in my presentation, I am positive that every stake holders will find it advantageous and turn around and agree to tow the line. Therefore, is the need to create the mtm bank. It is in this in this context I am suggesting creation of mtm bank integrated with Universal mtm system exclusively for this purpose. Few mtm-bank integrated with mtm system located at zone centers can handle entire mobile money management using phones in the country. mtm franchisees as needed shall take care of local service delivery and O&M it and of mtm-atm kiosks at every other locations across the country.

18 18 In addition authorized mtm agents can be entrusted mtm prepaid coupons and charging and refilling of mtm account. Please see my paper on Universal un-banked or exclusively banked Money Management by phone. CC2.14. Mode of working: Prepaid Vs Post paid Q3: Do you agree that in case of USSD transactions for mobile banking, the TSPs should collect charges from their subscribers as they do in the case of SMS based and Application (App) based mobile banking? Please support your viewpoint with reasons. CC3. P. Abraham Paul. The answer to this question depends on the mode and architecture of the systems and service delivery method need to be in place.

19 19 Based on my proposals of a Universal mtm system integrated with exclusive mtm-bank, I have suggested various methods of charging in my presentation in the link The basic focus being realization of the primary object of Financial inclusion of poor and through it Inclusive growth, cost to mtm user for their money management using phones shall be kept minimum and affordable to common man. Nonetheless, the revenue part of TSPs and other stake holders need to be taken care of. For this, my proposal is to have appropriate revenue share arrangement.

20 20 Counter comments related to Q4 to Q8 have already been covered in my above comments. Conclusion: Since a consensus of various stake holders will be difficult to achieve, my suggestion is that Instead of mandating TSPs to make it compulsory, TRAI along with RBI/NPCI shall go ahead defining regulatory parameters and create an universal exclusive bank to handle money management using phone dealing with money transfer under Governments DBT and other welfare schemes as single point delivery mechanism on a common access code as *91#, to reach the system to start with lest it remain as a never ending process. It shall be left to the discretion of TSPs and other stake holders and phone users and the market place as whole to decide whether to adapt the system or do it in their own way, but only according to TRAI and RBI s regulatory norms. Comments and my detailed presentation available in the link. Money through Mobile (mtm) for Inclusive Growth.

21 21 A write up on Universal un-banked or exclusively banked Money Management by phone. is in the link: For more information or detailed consultation on this, I can be contacted in my phones or given below. P. Abraham Paul (Paul Abraham) Telecom Consultant. Ex: MD. Future communication Networks, Vice President TS, SPCNL, SIEMENS ICN, Germany / G.M. & SMT TBG, BPL Mobile India / TES (I) DOT India. P: M: p.abraham.paul