Promoting Competition in Mobile Payments: The Role of USSD

This brief outlines why unstructured supplementary service data (USSD) is important for mobile payments and highlights the main types of complaints arising as a result of restricted USSD access for mobile financial services (MFS) providers. It suggests that USSD is a critical piece of infrastructure that can provide MFS on any phone, at low cost, and without requiring access to the user’s SIM card. The brief also explores various regulatory issues related to USSD such as when regulatory intervention may be required, what types of regulations are likely to be most appropriate, and which regulator might be best placed to intervene. Key findings include:

• While regulators have good reason to advocate that mobile network operators (MNOs) offer reliable access to USSD, this should be encouraged in a manner least restrictive to MNOs, ideally through commercial agreements with MFS providers;
• In the absence of such agreements, regulators should consider a coordinated dispute resolution mechanism (DRM) to seek a potential mutually acceptable outcome;
• If a DRM does not reveal a mutually acceptable outcome, regulatory intervention, in the form of a mandate to provide USSD access, may be appropriate;
• Coordination between the telecommunications and financial regulators is critical for establishing efficient regulations.