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2018-08-08 20:40:44Finance and Accounting: Cash FlowEnglishA move towards cashless economy has required entrepreneurs to offer cash free payment options more than ever. This artice explains what is... Is USSD

What Is USSD

2 min read

Since the 2016 banknote demonetization, India has been steadily moving toward a cashless economy. As a small business owner, this means that you need to offer cash-free payment options. If your customers don’t have smart phones or data plans, however, an internet-based mobile wallet system might not be a useful solution. Which is where unstructured supplementary services data can help.

What Is USSD?

USSD, which is also called *99#, is a phone-based payment service. It does not require a smart phone or mobile internet access.

Using an interface built by National Unified USSD Platform, this system connects your phone operator and your bank. Instead of using the internet to communicate, USSD uses standard GSM network channels. Since these channels are accessible from any device, your customers can use USSD on a basic phone, feature phone, or smartphone.

The USSD service allows your customers to perform a variety of banking transactions right from their phones, including:

  • Money transfers
  • Balance inquiries
  • Mini statements

Benefits of USSD for Businesses

For business owners, the USSD money-transfer feature has big benefits. When a customer wants to pay you, they can simply transfer the sale amount directly into your bank account. No cash or mobile internet needed. If you operate in a rural area or a place without mobile data coverage, these convenient mobile payments make it easier for customers to buy from your company. This can result in increased sales and improved cash flow.

USSD isn’t just for customers without data plans.  It’s also a great alternative for times when mobile internet isn’t available. As a bonus, it’s available in 12 different languages, including Hindi, Tamil, and Bengali. So it’s easy to use for people across the country. As of July 2018, USSD is supported by most leading banks in India.

How Does USSD Work?

In order to use USSD and the *99# service, your customers only need to have a bank account that’s linked to a mobile phone and a mobile PIN. Activating USSD takes just a couple of minutes, so it’s easy to do in-store.

As a business, you need to have an account number or a mobile money identification number. To transfer money using USSD, your customers can simply dial “*99#” and enter the first three letters of their bank’s name. Then, they can choose option three and enter your MMID or account number. After they fill in the amount of money and confirm the transaction, the money is automatically deposited into your bank account.

USSD Costs and Limits

When one of your customers uses the USSD platform, they are charged ₹0.5 per transaction. Customers may transfer as much as ₹5,000 per day, up to ₹50,000 per year using the system. The costs of using USSD may vary by bank, so it’s a good idea to check with your financial institution in advance.

As the concept of a cashless India becomes more popular, the USSD and the *99# service is a great way to serve more people. With the service, you can offer mobile banking options to customers who may not have access to typical digital payment systems.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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