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Use of USSD technology in Mobile Banking

Long Van,  
Date Posted: Friday, August 14, 2009

In a previous blog, I wrote about the use of SMS technology in mobile banking applications.  I spoke about the advantages and disadvantages to SMS.  USSD stands for Unstructured Supplementary Services Data and is only available on GSM carrier networks.  This communication protocol can be used for many mobile banking processes such as balance inquiry, money transfer, bill payment and airtime top up.  USSD is similar to SMS technology only in that it too has data payload limits between 160 – 182 alphanumeric characters in a single transmission.  However, USSD has a number of advantages over SMS technology.  Some of the advantages that make the USSD technology desirable are as follows:

·         USSD allows for session based communication between the server and the mobile device

·         Near real time messaging with very low latency due to the nature of session based communication, as opposed to the store-and-forward nature of SMS technology

·         Invoke commands by simply entering command codes, no need to open a messaging application or even to install an application onto the handset.

·         Guaranteed message delivery

·         USSD commands are routed back to the home mobile’s network using the Home Location Register (HLR), this allows applications to function consistently over roaming partner networks

·         Over 90% GSM mobile device penetration globally, all of which are capable of communicating with USSD

·         USSD applications can be implemented using a wide variety of mobile application platforms such as J2ME, WAP, SIM Toolkit, CAMAL, or simply using USSD commands.

·         More secure than standard SMS messages since USSD interactions can be stored locally within a secured SIM application, or on the server side. 

·         Contrary to SMS, USSD does not cost the end users anything to use.

As with all communication technologies in the market, there are disadvantages with USSD as outlined below:

·         Phase 2 functionalities include session based communication and only work on updated GSM phones.  

·         Most GSM global networks still not updated to Phase 2 USSD

·         Although USSD is part of the GSM standards, some GSM networks, especially in developing countries do not have support for USSD.  For instance, implementing USSD in rural areas of Ecuador was not an option due to lack of support for USSD on the GSM network.



Name: Long Van
Title: Mobile Financial Services Solution Architect
Company: DonRiver Inc.
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3 responses to this article

I am not so sure

The following should be considered when thinking of USSD

- I always thought that you do not want session based solutions when scalability is of concern. Session based solutions not only have scale problems, but also break badly when capacity is exceeded
- SMS can also be encrypted in a SIM application

by Rensburg on Monday, August 17, 2009 - 03:07

Rensburg, thank you for your comments...

I am thankful that you have taken the time to read my post and to provide me with your perspective on the subject.

In my experience, I have not encountered any scalability issues with session based solutions. In fact, there are many leverageable technologies in the market today that allow   

by Long Van on Tuesday, August 18, 2009 - 23:29

Mobile Banking

A wide spectrum of Mobile/branchless banking models is evolving. However, no matter what business model, if mobile banking is being used to attract low-income populations in often rural locations, the business model will depend on banking agents, i.e., retail or postal outlets that process financial transactions on behalf telcos or   

by Matt John on Sunday, January 31, 2010 - 23:57

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