Furore over ussd charges on financial transactions

The furore over USSD charges on financial transactions refers to the controversy surrounding the practice of charging customers for using Unstructured Supplementary Service Data (USSD) to access financial services, such as mobile banking, money transfers, and bill payments.

USSD is a technology that allows mobile phones to communicate with a network operator's servers to access various services, including financial services. In many countries, especially in Africa and Asia, USSD is a popular way for people to access financial services, as it is often the only way to do so, especially in areas with limited internet connectivity.

However, the use of USSD for financial transactions often comes with a cost. Mobile network operators typically charge customers a fee for each USSD transaction, which can range from a few cents to several dollars per transaction. This fee is usually deducted from the customer's mobile phone account or added to the cost of the transaction.

The controversy surrounding USSD charges on financial transactions stems from several issues:

  1. Hidden fees: Many customers are unaware of the USSD charges until they receive their mobile phone bill, which can be a surprise and a shock.
  2. High fees: The fees charged by mobile network operators can be high, especially for low-income customers who may not have the financial means to absorb the costs.
  3. Lack of transparency: The fees are often not clearly disclosed to customers, making it difficult for them to make informed decisions about their financial transactions.
  4. Inequitable access: The use of USSD charges can create barriers to financial inclusion, as low-income customers may be unable to afford the fees, limiting their access to financial services.

The furore over USSD charges has led to calls for regulatory action to address the issue. Some of the proposed solutions include:

  1. Regulatory oversight: Governments and regulatory bodies can establish rules to ensure that mobile network operators clearly disclose USSD charges to customers and limit the fees they can charge.
  2. Price caps: Regulators can set price caps on USSD charges to prevent excessive fees and ensure that they are reasonable and affordable for customers.
  3. Alternative payment methods: Financial institutions and mobile network operators can explore alternative payment methods, such as mobile wallets or digital payment platforms, that do not rely on USSD and may be more cost-effective for customers.
  4. Financial inclusion initiatives: Governments and financial institutions can implement initiatives to promote financial inclusion, such as offering low-cost or free financial services to low-income customers.

Examples of countries where the furore over USSD charges has led to regulatory action include:

  1. Kenya: The Kenyan government has introduced regulations to cap USSD charges at KES 1.50 (approximately USD 0.015) per transaction.
  2. Nigeria: The Nigerian Communications Commission has introduced regulations to ensure that mobile network operators clearly disclose USSD charges to customers and limit the fees they can charge.
  3. India: The Reserve Bank of India has introduced regulations to promote digital payments and reduce the use of USSD for financial transactions.

Overall, the furore over USSD charges on financial transactions highlights the need for regulatory oversight and consumer protection measures to ensure that financial services are accessible, affordable, and transparent for all.