Majority of mobile users make mobile payments through various mobile shopping websites at the time of making mobile purchase. Mobile internet connectivity is required for making mobile payments through such mobile shopping websites. However, there is a technology called USSD that allows mobile users to perform mobile payment or mobile banking transactions even if they don't have mobile internet connectivity.

Unstructured Supplementary Service Data (USSD) is a technology provided by GSM/UMTS networks to their mobile subscribers. This is a communication technology, similar to SMS technology, through which mobile users can send short alphanumeric messages to GSM network operators in order to make mobile payments. Unlike SMS, USSD is a two-way communication system where a real-time communication channel is established between the mobile user and the GSM network provider. SMS, which is a one-way communication system, works in store-and-forward mode where no real time communication channel is established and data can be sent in one direction at a time. Also, in SMS, the message can be sent to a mobile device and stored in SMSC server for several days even if the user is not online. The SMS is delivered once the user becomes active or is online. USSD, on the other hand works in real time mode and creates a live session between the mobile user and the GSM network in order to exchange payment instructions in an interactive manner. In a single USSD session, both user as well as network provider can communicate and exchange several messages for a specific period of time.

In bank-centric mobile payment, the user initiates the payment by typing an alphanumeric USSD message (say *120SBI#) and press ENTER from the keypad. The USSD message is passed through the network to the USSD gateway which will recognize the message and forward it to respective bank. The bank on receiving the USSD message will respond by sending a text based menu to the user in the form of a USSD message. The user selects a particular option from the menu (say account transfer or sending balance statement) and the bank performs the desired task and the session is completed. Examples of USSD based mobile banking transactions are Airtel Money (in India) and Mobipay (in Spain). In GSM networks USSD facility is already built-in and needs no further pre-configuration in SIM cards or handsets.

In operator-centric mobile payments, the user types the payment request in the form of USSD message which is received by GSM network operator and is processed in Mobile Switching Centre (MSC). Such USSD base mobile payment systems are widely used to refill user’s money balance on phone and also to query about the available balance. USSD can also be used for location based content delivery service as well as pre-paid call-back service. The amount utilized in such mobile payment transactions will be added to the monthly mobile bill of the subscriber and thus it bypasses banks and other financial institutes altogether.

In either of the above two methods, users do not need to have any mobile internet connectivity as the necessary connectivity for transferring the USSD (payment) instructions are provided by the GSM/UMTS mobile network itself. Thus the users save considerably in terms of monthly mobile internet billing and at the same time can enjoy the mobile payment facility using USSD technology.

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