Friday, April 20, 2018

Initiative to boost MFS

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As many developing countries have cut down Unstructured Supplementary Service Data (USSD) prices significantly to boost mobile financial services the government has formulated USSD pricing policy based on session based model.

Mobile network operators (MNOs) in Bangladesh are demanding higher prices from mobile financial services (MFS) operators under this model which will hit the country's fast growing MFS industry where about 50 millions of people who are in the  low income poor workers and women are improving their living standard.

With a view to setting a sustainable USSD price model, the Post, Telecommunication and ICT Ministry held a meeting on April 15 with the stakeholders of different sectors like the Bangladesh Bank, MFS, BTRC and MNO authorities. After a prolong discussion, the meeting fixed a reasonable USSD price for only six  month on trial basis, but the meeting sources remained unwilling to disclose other information.

 The USSD, a communications service controlled by MNOs, is believed to be a critical piece of infrastructure used to provide MFS on nearly any phone, at low costs, and without requiring access to the user's SIM card. MFS operators use USSD data as their primary mechanism for communication between customers and their mobile payments platform. Industry experts say the high USSD price would hit millions of poor people of Bangladesh who are using MFS service under the financial inclusion of Digital Bangladesh programme of the present government.

"Bangladesh needs a pro-people USSD pricing policy to address consumers' concern and boost financial inclusion', industry experts said at a discussion meeting held at the National Press club last month organized by Bangladesh Journalists' Foundation For Consumers and Investors-BJFCI.

Leading MFS operators have expressed their concern over the MNO proposal saying that the poor customers will bear the brunt of higher USSD price, which is detrimental to financial inclusion. They have urged the regulatory authority to intervene in the market and introduce a conducive pricing model for USSD service in the interest of millions of poor people.

Currently, MFS operators pay 7 per cent of income to MNOs for USSD service under revenue share model. If a MFS customer cashes out Tk1,000, s/he will pay 18.50 taka a cash out fee. Mobile operators get 7% of BDT 18.50 taka (i.e. BDT 1.3) for providing the network and service providers(i.e. bKash) get BDT 2.63 and the agents and distributors get the rest.

But MNOs are not happy with their income from MFS services and they want to increase the price. They want to introduce session-based pricing for USSD where an MNO will charge 1.50 taka for a 90-second USSD session and 0.20 taka for each SMS excluding VAT.

MFS companies have said, under the session based model, the cost of service would be too high. If we consider that a garment worker made three transactions, as per current pricing of leading MFS provider, total service charge paid for the 3 transactions will be 23.5 taka where MNO charge is 1.65 taka. In the new session-based pricing model, MNO charge will be 6.56 taka, which is 300% more than existing charge.  

This will put a serious blow to the MFS industry, industry experts say noting that the government should formulate a pro-poor policy for USSD price considering the interest of its people.

-P R Biswas

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