Financial Services Institutions, Web Businesses Must Study New TRAI Guidelines or Face Consequences - Valerie Rozycki, ZipDial

The new policy differentiates SMS between two categories, namely transactional and promotional. Promotional SMS are highly restricted, while transactional SMS are allowed for particular use cases. Financial institutions, railways, airlines or educational institutions may use transactional SMS with their registered users for delivery of certain services such as information updates (e.g. bank balance, PNR status).

However, related services are restricted and risk interruption and fines. For example, an SMS from an bank delivering the customer’s bank balance update or the confirmation of a debit card transation are considered transactional. However, any marketing messages pushed by a bank or financial institution, for example, advertising a new insurance policy is considered promotional and will be restricted. All promotional SMS (e.g. response to request for information about new insurance plan, even if the consumer explicitly requests it) are banned between the hours after 9pm and before 9am.

While the TRAI names banking and financial services as an allowable category of transactional messages, the marketing departments of these institutions must also recognize that many messages sent are also promotional and risk complaints and fines. The financial services category does not have blanket allowance.

Additionally, there are several use cases where ecommerce and web busineses rely on sending SMS to customers for verification of the customer’s mobile phone which will now under the new regulations be considered promotional and be restricted, including:

·        Customer registration

·        Purchases or transactions

·        Change in password or account details

Typically the customer mobile number is verified by the system generating and SMS to the customer’s mobile with a unique code. That unique code is then entered into the web page for verification that the customer on the site is in fact the owner of the mobile phone. Some businesses also solve this with an outbound call to the customer’s mobile phone.

There are cases where a customer tries to register someone else's mobile number, by mistake or in a malicious attempt, and the SMS or call goes to an unknown third person who would consider this as SPAM. In such a case if the customer who received the potential SPAM complains against the web business, then the business is liable for a penalty of Rs. 25,000. Every subsequent penalty increases up to Rs. 2.5 lakhs eventually resulting in a two year ban.

While TRAI may revise these regulations over time, there will inevitably be a period starting at the end of March when businesses are negatively affected, risking fines and interruptions in service. These web businesses should both approach TRAI collectively and propose a suitable middle ground as well as look for alternate solutions urgently.

Authored by: Valerie Rozycki (Founder & CEO, ZipDial)