Indian telecoms firms agree on basic SMS banking

03 December 2014 |


10 telcos in India have agreed to share their infrastructure in the country for the delivery of basic banking services via SMS.

The companies have signed contracts with the National Payments Corporation of India (NPCI) to facilitate services such as fund transfers, mini statements and balance enquiries using text messages instead of accessing the internet.

The services will operate on the telcos’ unstructured supplementary service data (USSD) channel – a simple text messaging system that allows for credit and debit card transactions – which will be restricted to basic services and low-value payments.

Rajan Mathews, director general of GSM industry body the COAi, said that telcos were initially concerned about using USSD, as they felt it was an outdated technology which was unable to support volume. There were also concerns over telcos being reduced to dumb pipes.

“The initial interconnect charges which were offered were very low,” added Mathews. “Then Trai (Telecom Regulatory Authority of India) intervened and the charges were raised.”

The charges will now cover the cost for the telcos and the banks will be largely responsible for the quality of service and customer care, with telcos simply providing access.

SMS banking services are relatively common in African countries, where internet connectivity is harder to come by, but the move from Indian operators hints towards a more global adoption and the revival of SMS revenues.