Mobile money: A look at the technology behind TuYu transactions

Mobile money technology is not nearly as difficult to understand as most people think it is. Yes, there is a fair amount of programming and hardware that need to come together to make each mobile money transaction happen, however, having a clear understanding of how a mobile money transaction takes place is possible.

Mobile money is becoming a real contender to paying with hard cash as more mobile phone users choose the convenience, security and innovation of mobile money and digital wallet technology.

As a business owner, having an idea of how mobile money moves from your customer’s digital wallet to your bank account will help you feel more confident about the future of your business–especially if you’re considering offering mobile money as a payment option to your customers.

How mobile money moves

Mobile money moves very much like a motorcyclist traveling from one place to another. For a motorcyclist to get from point A to point B, he will need a motorcycle. There are also the prerequisites of a driver’s license, a helmet and protective gear, fuel to make the motorbike move, and a key to start the engine.

Like our motorcyclist example, mobile money requires a vehicle of sorts. In this case, mobile money relies on a channel or redemption method. At TuYu, we use two types of redemption methods, Unstructured Supplementary Service Data (USSD), and mobile applications on both the Android and Apple iOS platforms.

How USSD works

USSD is a protocol or set of programming rules that Global System Communication or GSM mobile phones use to communicate with a service provider’s back-end application. Invented by Bo A. V. Astrom and Bjorn A. Svennesson  in 1994, USSD messages provide real-time communication and the transfer for data in both directions with messages being limited to 182 alphanumeric characters.

To begin a USSD session, a customer dials a service provider-specific USSD number. For example, TuYu mobile wallet users dial *120*7533# to initiate a USSD session. The customer is then presented with a menu list of options and can respond to the service provider with the corresponding menu item number to complete a transaction. While USSD seems like an old technology, it’s very reliable and secure.

At TuYu, we provide USSD as an option for customers without smartphones to enable them to transact using their mobile money at over 70,000+ till lanes across South Africa.

How the TuYu Mobile Rewards Application works

The TuYu mobile application is a lightweight program installed on a smartphone. It enables a customer to securely communicate with our servers for the authorization of a mobile transaction. Our applications enable real-time communication between a user’s smartphone and our servers.

Unlike USSD, our applications are a little more sophisticated and are based on programming languages such as Java for Android phones, and Objective C for Apple iPhones.

To spend mobile money using the TuYu mobile application, the customer will need to open the application and use the “Swipe” feature presented in the app to pay the retailer. Once the customer uses the swipe feature, the app presents two redemption protocols that can be used.

Fueling our mobile money transaction

Our redemption method acts as the motorcycle for mobile money. But, mobile money, like our motorcyclist, needs a key to start the transaction–making our mobile money move from point A to point B. That’s where our redemption protocols come into play.

TuYu uses two  redemption protocols, namely, one-time pins in the form of a wiCode or QR codes which is simply an OTP in QR format.

Each redemption protocol allows the the transaction to be authorized by checking the user’s balance against the basket amount or purchase. Once the transaction is authorized, it will close off the transaction successfully at the point of sale. The user’s balance is updated at the same time.

How One-time pins work

While establishing exactly when one-time pins (OTPs) came to be is a challenge, due to there being very little information about the origin of the technology, our estimation is that the technology has been available for quite a few years. Some of the earliest uses we recall come from the banking industry and date back to the late 1990s and early 2000s.

OTPs are randomly generated pins that are valid for a limited amount of time and can be used only once. In the case of a TuYu mobile money transaction, we allow a one-time pin to be valid for 15 minutes, after which our platform generates another unique code for the customer’s transaction. Both our USSD and applications use OTPs as a means of completing transactions.  

How QR codes work

Quick Response Codes or QR codes are two-dimensional barcodes which can store data in the form of patterns. Invented in 1994, QR code patterns are formed with the use of small black squares.

TuYu mobile apps generate a unique QR code (which is the same OTP, only in QR format) for every customer transaction. Each unique QR code is scanned by an imaging device that decodes the pattern and completes the transaction. The OTP or wiCode is used whenever a retailer does not have scanning devices installed.

Bringing it all together

Let’s recap what we’ve learned:

Mobile money needs a vehicle to move from one point to another. The vehicles that TuYu uses are referred as a redemption channels. TuYu uses USSD and the TuYu mobile application as redemption channels.

When a customer is ready to pay for a product with mobile money, the customer has the option of using our USSD service or the TuYu mobile app.

To initiate a USSD session, the customer dials a unique 7-digit number to initiate the session, using a one-time password to complete the transaction and pay the retailer

If the customer chooses to pay for goods using the TuYu mobile app, the transaction can be completed using an OTP or QR code.

TuYu settles payment with the retailers directly, once the transaction is complete.

Conclusion

The inner workings of digital wallet technology and how mobile money moves is based on several elements. Like a motorcyclist traveling from one place to another, mobile money transactions involve similar requirements to be successful.

Take some time to bask in your new-found knowledge. You now have a basic understanding of mobile money technology and how the TuYu wallet works.

Not accepting mobile money yet? Want to?

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