USSD CODES SERVICES IN KENYA
What is USSD & Why Does it Matter for Mobile Financial Services?
ByMichel Hanouch
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USSD – unstructured supplementary service data. It sounds a bit complicated, and can get technical very quickly, but for the purposes of financial inclusion, there are two key things to understand. First, when you dial a number that starts with * and ends with #, you are using USSD. Second, USSD is currently the best available communications technology to deliver mobile financial services to low-income customers.
With the notable exception of M-Pesa in Kenya, the majority of large scale mobile financial services (MFS) deployments in the developing world use USSD as their primary mechanism for communication between customers and their mobile payments platform. These include bKash in Bangladesh; Wing in Cambodia; EasyPaisa in Pakistan; Tigo and M-Pesa in Tanzania and EcoCash in Zimbabwe, to name a few.
GSMA and others have documented the success of MNO-led business models to advance financial inclusion – with a number of countries having registered more mobile money accounts in a matter of years than bank accounts opened in decades. From my perspective this is clearly positive for financial inclusion. However a potential regulatory concern arises when MNOs not only compete in the provision of MFS, but also control a key input competitors need to offer these services – namely the communications infrastructure, and specifically USSD. The issue is more pronounced in countries where the MNO has market power in telecommunications, meaning constraining access to USSD (by withholding access, charging a high price or offering poor quality USSD) could prevent the MNO’s competitors in MFS from reaching scale. This can effectively block customers from realizing the potential benefits of competition (such as lower prices, increased investment in agents, improved service levels, customer choice and product innovation).
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