Home Africa and the Middle EastAfrica and the Middle East 2007 USSD – mobile payment systems Africa

USSD – mobile payment systems Africa

by david.nunes
Jean-Claude MartinezIssue:Africa and the Middle East 2007
Article no.:12
Topic:USSD – mobile payment systems Africa
Author:Jean-Claude Martinez
PDF size:192KB

About author

Jean-Claude Martinez is the CEO of Esmertec. He joined the company as Vice President of Sales and has also served as the companyís COO. Jean-Claude Martinez has over 25 years of international experience in sales, marketing and strategic development in the telecom and IT industry. Prior to joining Esmertec, he was Vice President, Sales for the European, Middle Eastern and African markets at Bitfone, a software provider to handset manufacturers and carriers, and at Openwave. Previously Mr Martinez served as general manager of Global Knowledge Network AG and of Riva Hugin Sweda AG. Mr Martinez holds a business administration degree from the Ecole SupÈrieure de Commerce et díAdministration des Entreprises, France.

Article abstract

USSD, Unstructured Supplementary Service Data, is a little-known and, until recently, little-used facility. USSD lets GSM operators establish bi-directional open channels between users and applications for near real-time messaging with almost immediate response. Every GSM handset supports USSD; the operator need only implement it. USSD has been a boon in developing regions, where it has been used to implement, at very low cost, efficient mobile payment systems for people previously without access to banks or credit cards.

Full Article

Low cost mobile data services for the African mass-market In an isolated South African village where the nearest bank is a five kilometre walk away, a man loans his brother-in-law money to purchase farmland by transferring funds through the m-banking, mobile banking, services on his mobile phone. A woman in a remote village in Senegal subsidizes her income by selling voucher-less prepaid airtime to local villagers via Peer-2-Peer credit transfer on her mobile phone. In the most-developed countries, m-payment and m-commerce services are both innovative and expensive for the average mobile user. Operators in mature markets have invested heavily in the latest technologies only to find the mass-market is not quite ready for the price tag that comes with ultimate mobile connectivity. So how are African carriers offering the same cutting-edge services at a fraction of the cost? So how can African consumers with limited financial resources and out-of-date handsets enjoy the same level of connectivity? Surprisingly, the answer to these questions is a data-bearing technology that has existed in GSM networks since 1992, but only recently have operators begun to realize the hidden potential of this mature technology. Unstructured Supplementary Service Data, USSD, is a native feature of the GSM standard that enables enhanced data services with minimal network investment and remarkably low operational costs. More impressively, USSD functions on every GSM mobile phone without requiring costly end-user handset upgrades or complicated configurations. In practice, this means that from the moment of launch, enriched data services over USSD are accessible by every mobile customer regardless of the cost or age of their handset and network. USSDís hidden potential With deregulation efforts opening markets and international investors swooping in, African operators, like their counterparts in developed markets, are scrambling to gain a competitive edge by lowering prices for voice calls. However operators are looking beyond voice-based revenue and see strong earning potential from inventive data services. The result not only benefits operatorsí bottom lines but also the quality of life for many Africans. With prepaid users representing over 95 per cent of the African subscriber base, providing customers with various top-up options is vital to prevent churn and keeping users active. Mobinil, a leading operator in Egypt with over 6.5 million customers, launched a USSD top-up service in addition to their retail scratch card option. By publicizing this free service the operator is seeing an increase in voucher-less top-ups and, as a result, generating considerable monthly savings in card printing and distribution. Additionally, this unique feature allows almost any customer to become a retailer, by simple peer-to-peer, P2P, credit transfers. Orange Cameroon is also improving the prepaid-customer user experience while generating additional revenue via USSD. The operator allows customers to extend the validity period of their prepaid airtime for 30-day periods by executing demands via USSD. The USSD request is free, but the service cost is 1,000 FCFA (1.52 euros). Orange Cameroonís USSD service portfolio also includes such customer-benefiting applications as ëPlease call meí and peer-to-peer credit transfers. Algeriaís Djezzy offers customers free USSD-based services to ensure prepaid users, regardless of their credit status, can always stay in touch with friends and family. The operator has included free pre-scripted SMS messages in its USSD browsing menu that allow customers to send messages, such as ëThinking of youí or ëIím waiting for youí to contacts. The goal of these messages is to stimulate return calls ensuring that customers are never without a means of communicating. Orange Senegal, a leading telecommunications provider in Senegal, has recently released the first mobile email service available over USSD. For a small service fee, Orange enables customers to send and receive emails from their email accounts via a text-based USSD interface accessible through their handset. Email access via USSD does not require special handset configurations or upgrades, thus allowing email functionality on low cost, entry-level handsets. For customers with limited access to the Internet, their handsets are no longer seen as a voice-only communication tool but also a key connection to the high technology world. USSD and m-commerce Given the rapid uptake of m-payment services such as prepaid top-up and credit transfers, the future of m-commerce holds great promise in emerging economies. Users have proven they are ready to entrust their money to mobile-enabled financial transactions, which is a significant step in cash-based societies where banking resources are limited and the average person never enters a bank or uses a credit card. Historically, financial institutions in emerging markets have overlooked the underprivileged population, especially those in remote areas, since the cost of maintaining the financial records of such customers was too great to be of economic value to the institution. Consequentially, many lower-class communities function primarily on cash, contribute very little to the growth of their countriesí economies and further hinder their communitiesí developments. Thankfully, with the advent of the mobile telephone and all-inclusive technologies such as USSD, financial institutions and network operators can bring financial services to an entirely new customer base, thus substantially improving the quality of life for many Africans. M-commerce over USSD is quick, secure and inexpensive for customers, operators and financial firms. With responses given within two to four seconds of a command, users are quickly informed of the success of their transaction; such rapid response time is vital to the success of any m-commerce service. USSD also offers maximum security since data sessions rely on GSM/UMTS signalling plane security mechanisms. Since USSD commands cost less than one-eighth of a voice call, operators and financial firms can execute transactions and communicate with customers at minimal cost. The evolution of USSD In its original Phase 1 stage, USSD was developed as a GSM data-bearing standard the capabilities of which were limited to a user-initiated request and a single application response. The technology has since evolved into Phase 2, which now includes open sessions for an unlimited number of exchanges between users and applications. USSD goes a step beyond its short messaging counterpart, SMS, since it is not a store-and-forward oriented technology. Instead, USSD establishes a bi-directional communication session between end users and applications and then maintains this open channel for rapid data exchange until the session is terminated. The result is near real-time messaging that allows users to receive responses within seconds. USSDís most attractive feature, especially for operators in emerging markets, is the technologyís ubiquitous power to function on virtually every handset. Whether a customer is using the latest 3G mobile phone or an out-dated handset with little or no upgrades, the USSD end-user experience remains the same. Such capabilities are possible because the power and intelligence of the technology resides in the carrierís USSD platform. Consequently, the carrierís network is completely transparent no matter what transaction is involved or what handset the subscriber is using to monitor and key in data. USSD for the people While some operators in the Middle East and Africa region are still creating marketing strategies based on the latest technologies of developed markets, others are profiting from a more realistic approach that recognises their customersí needs, behaviours and financial limits. These operators are partnering with innovative USSD providers to bring users advanced mobile connectivity at an affordable price. USSD products enable operators to offer rapid interactive services to their entire customer base at minimal operational costs. As a result, mobile users across the Middle East and Africa are enhancing their communication abilities with services that are inexpensive, readily available and easy to use. From email to online banking, the future of USSD has no limits. The features and quality of USSD mobile data services are constantly improving as is the userís quality of life.

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