USSD in Nigeria: From the beginning and what has to change

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The Unstructured Supplementary Service Data (USSD) is one of the few payment innovations that have transformed the lifestyle of millions of Nigerians living in urban and rural centres. Its wide adoption rate gives the country a major opportunity to achieve its cashless ambitions.

To be sure, USSD refers to a communications protocol used by GSM cellular telephones to communicate with the mobile network operator’s computers. In simple terms, when you dial a number that starts with * and ends with #, you are using a USSD. It is similar to Short Messaging Service (SMS), but unlike SMS, USSD transactions occur during the session only. With SMS, messages can be sent to a mobile phone and stored for several days if the phone is not activated or within range.

In financial services, a USSD code allows Nigerian bank customers to have access to basic financial services by simply dialling a certain code. The customer does not require internet to make the transaction and they can enjoy several banking services that otherwise may have seen them walking into a bank branch.

Although Guarantee Trust Bank (GTBank), Nigeria’s third most valuable bank popularised the channel with its *737# code, the pioneers of the USSD technology is eTranzact International Plc.

Before USSD

In an interview with BusinessDay, Niyi Toluwalope, managing director and CEO of eTranzact traced the creation of the USSD to the first SMS banking product the company made shortly after it was established in 2003.

Then Nigerians were heavily cash-dependent – although electronic payments have gained significant adoption, so many people especially in the rural communities still prefer cash. It was also the period mobile phone was beginning to threaten the dominance of land phones. The influx of telecommunication companies and mobile phones created new opportunities. As … Read More...