India’s Department of Telecom has notified notifying *99# as the USSD (Unstructured Supplementary Service Data) code for the National Payment Corporation of India (NPCI) for operating mobile banking services through the channel. Telecom operators have been asked to connect with the NPCI’s USSD gateway through the allocated code.

The development comes shortly after the NPCI proposed the use of mobile phones for non-financial banking transactions such as account balance enquiry, to reduce the burden on ATMs, and in turn resulting in cost savings for banks which pay Rs 5 to Rs 8 per ATM query. Although going down the USSD path will allow NPCI to offer mobile payments to users who own basic GSM mobile phones without requiring Internet connected mobile apps or SMS, the issue is that USSD is limited to handsets that work on the CDMA networks (MTS, RCOM & Tata Tele have CDMA deployments).

The NPCI runs IMPS (Interbank Mobile Payments Service), an inter bank mobile payments service with 30 banks on board, which has not witnessed widespread adoption and has seen a decline in the total transactions taking place through the platform, over the last couple of months. Despite the low transaction charges, the service has failed to take off as banks have not shown much interest in promoting it. The lack of a centralised application, and the need to remember additional IDs and PINs, are also reasons for the service not gaining popularity. The NPCI had also blamed Internet banking for low IMPS transactions in urban regions, but really, that shouldn’t be an issue. An alternative to USSD is the hybrid SMS-IVR service which PayMate had planned.

We feel that the NPCI should make the service centralized and available on different channels including mobile apps, mobile web, SMS and IVR, in addition to USSD for a wider reach. We also hope that merchant payments are enabled as soon as possible, so that the service can expand beyond person-to-person payments.

November 2011: 16.04M IMPS Mobile Money IDs; 11,853 Transactions
NPCI Proposes USSD Based Mobile Banking Transactions
– October 2011: 15.11M IMPS Mobile Money IDs; 12,511 Transactions
– September 2011: 14.97M IMPS Mobile Money IDs; 12,281 Transactions
– Poor Transaction Volumes Despite 14.31M IMPS Mobile Money IDs Issued In India
– July 2011: 11.70M IMPS Mobile Money IDs
– June 2011: 11.38M IMPS Mobile Money IDs; Transactions Decline Marginally
– IMPS To Pilot Merchant Transactions; Should Not Increase Rates
– Why Are Banks Not Promoting The IMPS Money Transfer Service?