Over the last decade, mobile phones—particularly smartphones—have had a significant impact on our lifestyles. From connecting with family, friends, and colleagues to keeping up to date with the latest news and trends, these pocket-sized supercomputers are now a fundamental part of how we live, work, and play.
In line with these advancements, mobile phone penetration has grown exponentially with over five billion mobile phone users across the globe. This increased usage and reliance on mobile phone technology has fueled the adoption of digital and mobile transactions, driven by constant innovation in the FinTech industry.
Mobile Transactions on the Rise
Today, mobile phones are more than just communication devices—they are platforms for endless opportunities. With their features extending beyond communication, mobile phones have become a critical part of how we pay for products and services in a contemporary business environment.
As more consumers opt for mobile payments via digital wallets and buy now, pay later (BNPL) solutions, the share of mobile transactions has grown at a staggering rate. In fact, mobile commerce made up 52% of all global e-commerce transactions in 2021—surpassing the share of desktop e-commerce.
Similarly, mobile wallet usage is predicted to increase as more contactless point-of-sale (POS) terminals are introduced and implemented. From a global perspective, the share of POS transactions via mobile wallets rose to 28.6% in 2021 reaching a value of USD 13.3 trillion. In APAC, mobile wallets are the most popular form of POS payment, accounting for more than 40% of transactions in 2021, with this number expected to grow to 56% by 2025.
There are many forms of mobile payment technology, with some more popular than others. For a better picture, let’s delve into the different mobile payment technology market types:
- Proximity Payment
Proximity payment is an umbrella term for mobile payments in which the payer and the payee are in the same geographical location. While the underlying payment method may be through credit or debit card, the technology used to make payments could be near-field communication (NFC), quick response (QR) codes, or bluetooth technology. Popular examples include Apple Pay and Samsung Pay, which allow for contactless payment through a tap of the mobile phone on the POS terminal.
- Remote Payment
Just like how it sounds, remote payments are transactions made via the Internet for orders placed online. Typical remote payments include internet payments, in-app purchases, telephone payments, and mail order payments.
- Direct Operator Billing (Credit/Debit Card-based)
Direct operator billing allows customers to complete purchases in just a few clicks as it directly links to their mobile operator. When customers opt for this form of mobile payment, the charges are reflected in their monthly phone bill. By utilizing direct operator billing, both customers and businesses can ensure a faster payment process with better fraud prevention measures and monitoring.
- Digital Wallets
Digital wallets are widely perceived to be the most convenient type of mobile payment. These financial applications securely store payment information and passwords. Customers can use digital wallets to make payments, transfer money, and earn cashback or rewards. They allow for contactless payments, eliminating the hassle of carrying cash and multiple cards when you go out shopping.
- SMS-based Payment
Many businesses opt for SMS payments as the infrastructure needed to set it up is inexpensive. SMS payments can be used for both online and offline purchases as the cellular service provider handles the banking transactions. To put it simply, the mobile payment providers approve or deny the transactions between a customer and a business. If a transaction is approved, the payment is added to the customer’s monthly phone bill or deducted from a prepaid balance by the mobile phone operator.
- USSD Payment
Unstructured supplementary service data (USSD) is a text-based platform that allows financial institutions and other organizations to offer services directly through the phone, without Internet connectivity. Not to be confused with SMS-based payments that allow users to text each other, USSD allows short messages to be sent directly to the mobile network using short codes. For instance, customers can key in short codes, like “#127”, to access a menu that allows them to purchase add-ons, view available balance, or transfer credit to other phone numbers.
Making the Most of a Changing Landscape
Apart from digital wallets, customers today still favor transactions via an SMS gateway or a USSD gateway. In fact, a recent study by Kaspersky on the future of digital payments in APAC revealed that 61% of mobile payment users prefer the implementation of one-time-passwords (OTPs) via SMS for every transaction. This goes to show that customers still rely on tried and true methods of communication to enable mobile payments.
SMS and USSD are major technologies for mobile transactions, benefiting both customers and businesses in a myriad of ways. For starters, using USSD eliminates the need for constant access to the Internet as it is linked directly to the mobile network provider. Similarly, businesses can use USSD to empower customers to improve their experience by giving them the freedom and flexibility to serve themselves with an interactive menu that’s available in real-time. As a result, this reduces operational costs significantly—since it’s essentially a self-service portal that can be used globally and on any device.
The benefits of a USSD gateway are not limited to just the telecommunications industry. Instead, it’s an all-round solution that caters to various industries, such as business and marketing, retail, FinTech, and more. Here are some prime examples of how USSD can be implemented in these industries
- Business and Marketing
A USSD gateway can be used to launch and run multiple marketing campaigns and activities, such as competitions, and sending out vouchers and coupons. By ensuring that it is easier for customers to participate in these activities and redeem vouchers, brands can maintain customer loyalty, gaining further exposure as customers recommend products to their friends and family.
In order to boost customer satisfaction, businesses can employ the use of a USSD gateway to send out surveys or questionnaires to past and current customers. By doing so, businesses are able to improve their products and services based on customer feedback using a cost-effective strategy.
The FinTech industry stands to gain a great deal from a USSD gateway as it works on any mobile device without incurring exorbitant costs. For instance, customers of a mobile financial service provider can inquire about financial services anytime and anywhere—even without an internet connection—bolstering the adoption of mobile money.
Grow Your Business with NT Signaling Solution
Neural Technologies offers a sophisticated Signaling solution that can be rapidly deployed, no special hardware, and boasts a low system footprint—with USSD gateway as one of its solutions enabled by this opportunity.
The USSD gateway solution is free for subscribers to use—even when roaming—doesn’t require an Internet connection or data to work, is highly interactive and customizable with faster, real-time responses than SMS, and compatible with any mobile network provider on any device.
Additionally, our Signaling solution also offers SMS gateway and SMS manager solutions that provide real-time status reporting, enhanced data security, and are reliable and cost-effective alternatives to the USSD gateway solution.