MFS providers oppose new pricing model for short messages

The mobile financial service providers are opposing the session-based pricing model for the Unstructured Supplementary Service Data (USSD) that allows banking services from one's basic feature phone without the need for internet connection.

Bangladesh Telecommunication Regulatory Commission proposed a charge of Tk 0.85 for a 90-second session, which will include the cost for two text messages.

If the new model is introduced it will ward off the five crore customers from the MFS platform, said market leader bKash. Rocket, the second largest MFS provider, echoed the same.

It will also hurt the financial inclusion agenda of the government, the MFS providers said.

However, the mobile operators said it will not create any extra burden on customers and will instead help bring clarity and transparency to the sector.

At present, the MFS providers charge 1.85 percent of the transaction amount for over-the-counter transactions, and a Tk 5 service fee for account-to-account transfers.

The MFS providers are delivering the services by piggybacking on the mobile operators' network and for that they share 7 percent of the revenue with the carriers.

But in the last few years, the mobile operators have been complaining that the MFS providers were delivering different services free of charge, putting pressure on their network.

Subsequently, they are now calling for session-based charges.

“If the session-based USSD pricing is introduced, the MFS customers will have to bear the high transaction fees regardless of successful or unsuccessful session use,” said Md Monirul Islam, chief external and corporate affairs officer of bKash.

Moreover, the charges would apply on some of the services that are now offered free of cost such as balance check, statement check, pin reset and so on, he added.

Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank, the parent company of MFS provider Rocket, said they are now paying Tk 0.20 on average to mobile operators for every successful transaction.

“If the government goes on to implement something like a session-based USSD pricing model it will definitely impact the sector -- we will have no option but to pass it on to customers.”

The move will make the MFS services costlier and unattractive to customers, he added

TIM Nurul Kabir, secretary general of the Association of Mobile Telecom Operators of Bangladesh, said they are observing a lack of transparency in the segment over the last few years.

“We found no transparency here in the charging and revenue sharing policies and we want transparency in place. We think a new model can ensure that.”

The session-based pricing model is a global practice and the industry should move towards that, he said. 

“We have been running this service on a pilot basis thus far. Now, we need to adopt the global practices,” he added.

MFS providers argued that the telecom operators are getting a fair amount of revenue from them, which is increasing every year with the rising popularity of the platform.

In 2016, bKash shared Tk 94 crore with the mobile operators, up from Tk 67 crore a year earlier.

The number of active mobile money transfer accounts stood at 5.7 crore at the end of August, when Tk 32,182.96 crore was moved, according to a monthly report of Bangladesh Bank.