In order to promote digital transactions through the USSD channel, the telecom regulatory authority of India (TRAI) has waived off the transaction cost from Rs 1.50 to Rs 0.5 paisa per session.

The new rates will be effective from January 1. 

Currently, per session on USSD channel includes five stages of transactions. As per the revised guidelines by TRAI, number of stages per session has increased to eight.

The reduction in cost will bring about financial inclusion in rural areas and will make cashless transactions a desirable option for feature phone-users, said RS Sharma, chairman, TRAI on Tuesday.

According to TRAI, India has more that 65 percent of feature phone in India. In October, volume of transactions via USSD channel was Rs 84 lakh.

The volume is very low for such a large number of people using feature phones, Sharma said.

The authority is expecting the volume to increase 10 times after reduction in transaction charge.

Sharma also mentioned that new rates are applied on both retail transactions as well as banking services like checking balance, withdrawal, deposits and peer-to-peer transfer.

Moreover, the chairman noted that failed transaction is also one of the key reasons that discourage poor citizens to use this channel, as they get charged for each failed transactions.

Therefore, TRAI has consulted National Payments Corporation of India to look into the causes behind the failed transactions.

NPCI has agreed to create a task force to look into the cause and see whether optimisation can be done to improve users' experience and convenience, Sharma said, adding that 54 percent of transactions are failing on this channel.

TRAI is also consulting RBI on whether software design of USSD can be simplified for merchants for receiving payment via this medium.
One of the optimisation that can be done, the chairman suggested, is by allowing feature phone users to save the account details like IFSC code and account number to transfer money, like in net banking user can save the payee's details.

Presently, user transferring money through USSD channel has to re-enter payee's details every time while making a transaction.
Digital payment and financial inclusion through USSD can be achieved by gaining the confidence of users, making it user friendly and by reducing the cost, Sharma added.