USSD and Mobile Banking: Why It Works So Well

The move to mobile banking has happened so fast that most people haven’t even had time to digest it. Performing transactions using mobile devices is increasing rapidly in developing countries with Unstructured Supplementary Services Data (USSD) and Short Message Services (SMS) among the technologies widely used in conducting these transactions.

South Africa has a huge unbanked population according to News24, with some researchers estimating it as high as 67%, who get turned off by the banking system.

At the same time, South Africa has one of the highest mobile penetrations in the world with 87% individual mobile phone ownership and 36% of those being smart phone owners according to the Mobile in South Africa 2014 AMPS Report.

This penetration of mobile phones is driving a massive switch in the mind-sets of people regarding mobile banking. The advantages of mobile banking are endless; mobile money can give people a means of having money on them without the constant fear of losing it or being robbed.

USSD technology in mobile banking is perfect for developing countries because it offers a simple browsing experience through a menu system on your mobile device.

Benefits of USSD

  1. Increase Revenues by making it easy for prepaid users to re-charge accounts and generate higher call volumes.
  2. Reduce Operating Costs by providing a low cost customer care alternative. It is much cheaper than SMS for two way transactions.
  3. Global Access – USSD works worldwide on almost every handset with familiar connection options.
  4. Intuitive menu based access options provide you with interactive real-time communication.
  5. Increase Loyalty – Convenience and user experience with USSD speeds up to seven times faster than SMS.

A technology for everyone

Unlike banking apps and online banking alternatives that require internet access and smart phone functionality, USSD banking can work on any mobile device including feature phones at a minimal cost.

This technology gives a portion of the population the ability to be part of a society where they can make use of a non-traditional banking system without the fear of being exploited.

The cost of using USSD technology is approximately 20 cents per 20 seconds with sessions capped at 3 minutes which means that if a user takes too long to respond, their session will automatically be timed out which means you never spend more than necessary.