Bangladesh Bank hears CGAP on USSD charging mechanism for MFS
29 September 2015, Nirapad News: CGAP (Consultative Group to Assist the Poor which is housed at the World Bank) is likely to submit its findings to Bangladesh Bank on Tuesday regarding an acceptable charging mechanism for using of Mobile Network Operator’s USSD channel, an essential channel for the low-cost handset to access mobile financial service (MFS).
Earlier last year, after a six-month long exercise among Bangladesh Bank, BTRC, MNO and MFS representatives could not come with an alternative of the current mechanism and Bangladesh Bank later appointed CGAP, a global advocacy platform to promote financial inclusion, to conduct a cost model analysis on USSD service to recommend a fairer alternative for charging the MFS operators accessing the network.
Officials of the Bangladesh bank is hopeful that CGAP may present the study findings at a meeting to be held on Bangladesh Bank on Tuesday.
Currently, the most of the MFS providers in the country provide their mobile-baking services over USSD and share a part of their revenues with the mobile phone operators. The level of revenue sharing varies depending on the agreements between the telcos and MFS providers. Bangladesh Bank, along with BTRC, worked for months to find a common USSD cost model to bring a uniform pricing which would be beneficial for all.
Bangladesh bank officials, however, said, since the MFS market is aimed for creating financial access for poor and unbanked, the charge should be minimal so that it would not create a burden for the MFS providers to operate the mobile banking service for the poor. During the last year’s discussion the price the MNO suggested was categorized by Bangladesh Bank as “anti-poor.”
Moreover, the government also is keen to take the mobile financial services to poor at a minimum cost. “The decision to fix the USSD charge should be taken carefully after proper analysis of the current market scenario” said a top official of the Bangladesh Bank, adding that any unreasonable move will raise the operational cost thus affecting the poor who are the users of the services.
The MFS operators are already sharing around 80 percent of its revenue with the agents and distributors as commission and 7 percent or more with the MNOs while none of them reaches break-even. Amid this situation, any USSD price fixing move without careful consideration may slowdown the growth of the sector which will ultimately affect the financial inclusion drive of the government.