USSD Code racing against time

The action (like sending money) is completed, and you get a confirmation message.
Everything happens in real time. But you must act fast as the session closes in about 20 to 30 seconds.
It started back in the late ‘90s when mobile networks needed a way to communicate with phones without using the internet. USSD was their answer.

But Africa took it further. While wealthier countries moved to mobile banking apps, Uganda and other developing nations turned USSD into a financial lifeline. Why? It works without an internet connection.

According to recent data from DataReportal, a global data hub, as of January 2024, Uganda's Internet penetration rate stood at 27 percent, with approximately 13.3 million Internet users in the country, indicating that around 73 percent of the population remains offline.

This demonstrates that with just a basic phone, a farmer in Gulu can receive payments, a boda boda rider can send money home, and a trader in Owino Market can pay suppliers—all through USSD.

Drawbacks
But USSD has its limitations:
There are security risks – USSD messages are not encrypted, making it easier for fraudsters to intercept transactions.
These codes are slow and frustrating – mistype one digit, and you have to start over.
They suffer from fading relevance.  With more people using smartphones, apps are replacing USSD for faster and safer transactions.

The future
Imagine if every taxi passenger had to type a USSD code before paying. It would slow things down! But with technologies like Near Field Communication (NFC), payments are instant.
NFC uses radio waves to let devices talk when they are close—usually within 4cm. It is the same tech as contactless credit cards. Your phone has an NFC chip that sends encrypted data to a payment terminal, which then verifies and processes the transaction instantly.

It is like whispering a secret to a friend—you must be close. Once they hear it, they act on it immediately.
Most people in Kenya are doing this, while using facial recognition and fingerprint scanning for even safer transactions, mostly with Mpesa, a telecom service provider—no need to dial codes.

What about Uganda? Here, USSD is still a big part of mobile money, but the technology people argue that the country needs to start exploring faster, safer, and more convenient ways to pay.
But are we ready?

Joseph Lutwama, director programmes at FSD Uganda, a non-profit focused on financial inclusion, stresses that digital payment systems should feel as familiar and trustworthy as cash.

“For many Ugandans, cash is king,” he says. “When they think money, they picture a Shs50,000 note. Digital payments need to feel the same.”
In the real world, money is something you can touch, hand over, and see. But online, it is just numbers, which makes it harder to trust.
The problem? Transactions are instant with cash, but online, they are bogged down with extra steps such as PIN codes, extra charges and security checks, making some people hesitant.
Lutwama points out that this trust gap is why financial technology needs to evolve—making digital payments as seamless as handing over cash.

New technology such as biometrics and NFC can change the game, he notes, making payments quicker, safer, and easier.
“You can’t steal my fingerprint and use it without me noticing. But with a stolen PIN or credit card, you would never know until it is too late.”

One thing is that NFC and biometrics, like fingerprint or facial recognition, remove the need for PINs or passwords. Just a tap or scan, and you are good to go.

This is how tech should work—making financial services simple and secure, and encouraging more people to use them.
In Uganda, fingerprint technology is already used for voter ID, SIM card replacement, and even loan applications, proving we are in the middle of a digital shift.

But the challenge is trust.
Henry Kimera, the team leader at Consumer Consent, a platform that receives feedback from consumers of financial services, says strong legal frameworks are key to building this trust and scaling financial inclusion.

“The biggest concern in digital finance? Fraud,” he notes. “But Uganda has the legal standards to address these issues. Now it is about making sure security, trust, and consumer rights align with financial growth.”
Companies like Xazu Technologies are leading the way. They have created NFC payment solutions for schools, making payments among students safer and faster, something that reduces theft.

Olga Kiconco, Xazu’s chief operations officer, explains that seamless integration between systems will revolutionise digital services. But for it to work, three things must be in place: governance, regulation, and smart design.
“Strong regulation builds trust, but innovation comes from design,” says Kiconco. 

“We are focusing on students, for example, a group often left out of the financial system. Most banks only allow those 18+ to open accounts, so we are working on a platform to help students get financially ready earlier.”

At the heart of it, it is all about solving real problems with well-designed, user-friendly technology, she says.
Take mobile money, for example. Before it came along, Ugandans had to rely on buses to send money across the country—slipping cash into envelopes and hoping drivers would deliver it safely but it was not the most reliable system.

That is where mobile money came in and gained dominance because it was convenient, secure, and backed by reliable telecom providers, making financial services accessible to everyone.
Yet, when transaction fees rise, some still turn to the old methods, proving that trust and cost remain the key factors in how people handle money.

“At Xazu, we apply the same principles,” says Kiconco. “While our service is for students, our real customers are the parents. Why? Because it’s their money being spent. So, how can parents trust their child’s school funds? With Xazu’s solution: smart NFC-enabled bracelets. Parents can track their child’s spending, whether it is for snacks or school supplies, while cutting down transaction times during breaks.”

Still, she notes, “Cybersecurity is a moving target. You are only as secure as you believe you are. Threats evolve constantly, so systems must evolve too. Xazu ensures this by having robust risk management and security protocols in place. If a student loses their bracelet? It is just like a lost bank card—it can be deactivated.”

“The future of digital finance isn’t just about tech—it’s about understanding what people need,”Kiconco explains.

Financial literacy
Lutwama agrees, adding financial literacy is not just about knowing mobile money exists. It is about understanding how to use it and this happens in stages:
Awareness – Knowing financial services exist.
Understanding – Knowing how they work and how they can help.
Access & Empowerment – Having the tools to engage.
Practice – Gaining confidence.
Habit & Mastery – Transactions becoming second nature.

He explains that real financial inclusion means guiding people through all five stages—using radio, community outreach, and hands-on learning.
“Those with money can be financially illiterate if they don’t know how to manage it,” he says.
But as digital finance grows, the question is: Should the innovators focus on late adopters or the next generation of tech-savvy consumers?

Kiconco highlights Xazu’s approach: rather than waiting for the unbanked to catch up, Xazu partnered with the Bank of Africa to proactively serve an underserved market.
“This forward-thinking is what the sector needs—bridging digital and financial literacy, while designing products for the future,” she says, adding that it is about creating customer-centric solutions, backed by strong technical capabilities.

What is the edge?
Uganda's youthful population is brimming with untapped potential, Lutwama, Kiconco and Kimera do agree.
But there is a catch. The opportunities for these young people to unleash their talents are not enough. This has widened the gap between a growing number of youth and the limited chances to develop and apply their skills, especially in technology.