Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

USSD: Simple but not obsolete

September 16, 2020

Helen Whelan

USSD is an inclusive technology that appeals to a large number of South Africa’s consumers. Learn why USSD will remain relevant for years to come, and make sure your business isn't overlooking this service.

Although many South Africans may not recognise the term USSD, it is safe to say that we all recognise the format of the *123# code for redeeming airtime, purchasing other value-added services (VAS), or simple banking.

Unstructured Supplementary Service Data (USSD) is a global messaging protocol that has been around since the 1990s, when phones had limited complexity. Today, USSD still works on any feature phone, even the most basic basic phones, since these services continue to be designed to be as simple as possible.

Even with smartphone adoption across South Africa sitting at over 80%, and the ICASA (Independent Communications Authority of South Africa) State of the ICT Sector in South Africa 2020 report indicating that national coverage for 3G has risen to 99.7%, USSD still remains extremely popular. Let’s explore some of the main reasons behind this popularity.

1. An inclusive technology

The basic and menu-driven structure of USSD makes it a truly inclusive form of mobile technology, especially in an emerging market such as South Africa. Being built on simple codes, with limited text, means that it is easy to operate and understand. Users do not have to be tech-savvy in order to access and use services via USSD and it works across all mobile networks.

2. Low transaction costs

Users only need a cellphone to access USSD and this service only costs a fraction of a cent. Even with the high national coverage of 3G and LTE, data costs remain inhibitively expensive for many South Africans with the price of 1G of prepaid data ranging from R100 - R149. Even the cost of an SMS is much higher than transacting with USSD. Nothing is downloaded, no internet is needed, and no space is taken up on the phone.

USSD is not only affordable for end-users, but also for businesses looking to add the service. It is a highly cost-effective service to implement and to run.

3. Interactive and fast

Despite the simple technology, USSD can be customised to be highly interactive, more so than an SMS. The interactive, menu-driven nature of the navigation and responses means that two-way communication is also much faster.

Purchasing VAS products, such as prepaid airtime, via USSD is clear, convenient, and quick. Consumers can make use of the service from anywhere, and access the required digital product immediately.

4. An added business case

One of the main challenges when purchasing VAS at a till point is the possibility of the transaction timing out.

When customers leave without paying and without their desired product, merchants remain liable if the VAS request was ultimately fulfilled by the service provider. This leaves the burden of paying for the digital goods on the retailer. Prepaid electricity and direct airtime are prime examples of this. USSD removes this risk, as the customer never ‘leaves the store’ and remains available while the transaction is processed to completion. In addition, the customer does not hold up the queue at the till while waiting for the transaction to be processed, resulting in happier customers all round.

Including USSD in your digital strategy is a great way to leverage your store of value, such as your customers’ store accounts. If they can use their store credit or loyalty points to purchase digital goods and services without being in-store, it strengthens their reasons for utilising your offerings.

5. Proven, simple solution

USSD has successfully been implemented all around the world, proving this technology reliable and functional. Amongst other services, this includes the purchasing of prepaid airtime, paying bills, buying prepaid electricity, and redeeming vouchers.

It is clear that USSD remains one of South Africa’s most popular channels for transacting. Capitec recently stated that of their 6.7 million digital users, 4.9 million users make use of USSD. Electrum’s USSD solution also allows Capitec a deep understanding of customer behaviour, ensuring that they can continue to meet their customer’s needs.

Major South African retailers are continuing to take advantage of USSD. Allowing your customers to easily buy digital goods and services and to perform simple banking operations is becoming more important than ever before. Do not overlook the value and opportunities that this simple but effective technology can offer you.

USSD is here to stay. We would love to chat about how we can easily implement USSD for your business. Pop us an email to get in touch.

Helen Whelan

Helen Whelan is a Content Writer at Electrum. With a BSc (Hons) from Rhodes University, she enjoys the combination of creativity and technical topics that content creation at Electrum involves. Cats and coffee fuel her day.

More posts by 
Helen Whelan

Recent Blog Posts

Electrum Newsletter

Quarterly insights and news to help you keep up with the latest changes in the payments landscape