What is USSD and How Does IT Differ From SMS?

USSD (Unstructured Supplementary Service Data) is a GSM (Global System for Mobile Communications) protocol employed by mobile phone users to send text messages to their service providers. It consists of codes composed of the characters available on the keyboard of a mobile phone. The maximum length of a USSD code is 182 characters. It can be used for location-based content services, wireless application protocol browsing, menu-based information services, mobile money services, and prepaid callback services. Yet, many confuse them with SMS. In this article, we will discuss USSD in detail and clarify how USSD is different from SMS.

How Does USSD Work?

USSD begins with a query from a cell/mobile phone user. Once the user submits the request, the USSD gateway platform routes it to the user's USSD application, which responds to the query. This process is then repeated backwards, which means that the response returns to the USSD gateway, which shows the text of that response on the display of the user's mobile phone. The responses are sent in a readable format and have a limit of 182 alphanumeric characters. The user dials a specific short code of five numbers to send and receive data.

However, USSD applications operate on the network, not on a user's device. As a result, users who have less storage space on their phone benefit from the fact that they do not have to install it on their phone. As soon as USSD apps are deployed to a network, all subscribers have instant access to them.

Applications of USSD

There are numerous applications of USSD. Some of them are mentioned below:

• Mobile banking: Unlike smartphone apps that require an internet connection and advanced features, USSD-based banking runs on any type of mobile phone, even basic feature phones.
• Network setup and service requests: USSD enables device configuration on the mobile network. It also provides users with service menus for actions such as purchasing airtime, checking account balances, or managing other requests.
• Customer information updates: USSD can connect with enterprise resource planning (ERP) and customer relationship management (CRM) platforms to retrieve updated customer data. This helps businesses improve data accuracy and customer service.
• Marketing surveys: Companies can use USSD to launch mobile marketing campaigns. For instance, they can send short surveys to the customers, and when they answer them, companies get real-time insights.
• Callback requests: Service providers such as insurers or financial institutions can leverage USSD to assess customer interest by allowing users to request a callback after giving an offer.
• Order confirmations: Food delivery services can utilize a USSD server for two-way communication to help customers place orders and receive instant updates when their food is out for delivery.
• Coupons and vouchers: Retailers can share promotions through USSD, in the form of special deals, coupons, and vouchers, directly to customers’ phones.

Differences Between USSD and SMS

When it comes to mobile communication, USSD and SMS often get lumped together. Both are text-based, both work without internet, and both reach even the most basic GSM phones. But the way they function and how businesses are billed for them makes them completely different entities.

1. Session vs. Message

In USSD, when you dial a short code, you start a live session with the network. It’s responsive and menu-driven and continues dialogue until the session ends. SMS, on the other hand, is a one-way message that can be held in a queue until delivered. No need for a live session.

2. Time Limits and Drop-offs

USSD sessions are timed. They usually last between 90 and 180 seconds, based on the operator’s configuration. That means if you’re running a USSD survey or mobile banking transaction, the time is running out. For instance, a five-question multiple-choice survey can typically fit within 180 seconds. If not, the session will end—whether the user has finished or not. SMS has no such timeout. But ironically, that freedom sometimes backfires—users may forget to respond, causing drop-offs.

3. Character Restrictions

USSD screens only allow 140 characters, in which only one question and about six response options can fit. It keeps things simple and structured. In contrast, SMS allows 160 characters per message, slightly more than USSD, to send long concatenated messages if needed. This makes SMS more suitable for detailed alerts or promotional campaigns, while USSD stands out in short, decision-based interactions.

4. Costs and Fees

In USSD, every session has a cost structure.

• Aggregator fees: Every time a user dials in, a session starts. Even if it lasts only 19 seconds, it’s billed the same as 35 seconds. Aggregators charge per initiation, on top of network costs.

• Network fees: Typically around ZAR 0.2 per 20 seconds, though rates vary by mobile network operator (MNO). For a standard five-question USSD survey, the cost usually comes to around $0.30 per user.

SMS, meanwhile, is billed per message. Costs vary by region, but businesses generally pay per SMS sent (and sometimes received). For bulk campaigns like OTPs or marketing, SMS pricing can be negotiated based on volume.

5. Data Capture and Input

On USSD, input needs to be fast and simple, usually selecting from numbered options. Typing free text is possible but can be frustrating on basic keypads, so best practices limit free-form answers to one per session. SMS, however, allows more flexible input. Users can reply in full sentences or codes, but this back-and-forth can cause delays if the network is slow.

6. Reliability and Reach

USSD is real-time and doesn’t depend on message delivery delays—but once the session ends, there’s no record. SMS leaves a trail, which is useful for OTPs, reminders, and confirmations. Both work without internet, which makes them effective tools in regions where smartphones aren’t used much.

Key Insights

USSD is a live session, and SMS is a retrievable message. Both have their strengths. In addition, USSD is great for instant, interactive exchanges, and SMS is exceptional for delivering and retaining data. Together, they make mobile communication accessible where internet access is limited. Many businesses rely on these solutions to engage customers, run transactions, and deliver frequent updates. ComCode Technologies, a leading telecom software solutions and consultancy provider, develops standout systems that help service providers harness both USSD and SMS in their network.