Friday, April 30, 2010

Mobile Banking and SMS

SMS is the communication service component of the GSM mobile communication system which
allows exchange of text messages between mobile phone devices. SMS has been adopted by
the CDMA system as well. We can send up to 160 characters (including spaces) to and from a
mobile handset. SMS can be used for peer-to-peer as well as broadcast kind of messaging. [1]
SMS or text messaging is very popular in developing countries of South-East Asia and is also
gaining popularity in the USA. SMS provides the end consumer with a low cost way of using the
mobile VAS services. Anyone even without a data plan is able to send and receive SMS. Hence
many of the content providers are providing mobile VAS through SMS or SMS based platforms.
SMS is definitely a great medium to provide Banking services. There can actually be two way
communications between the end consumer and the banks. We can classify the communication
into two types PUSH and PULL. PULL kind of communication is done when the end consumer
request for his balance by sending a SMS onto a shortcode provided and the content provider
sends him the required information. PUSH kind of communication is done when the Banks want
to intimate the consumer on some activity on this account. There can be an alert sent as an
SMS with the required information. SMS based platforms like STK/UTK also enable both kind of
communication. The only concern is of security when offering a financial service over SMS. This
can be addressed using some extra authentication using PIN and so on.
To provide SMS based services one needs to know about some components or technologies or

SMSC is a acronym for Short Message Service Center. A SMSC is responsible for handling the
SMS operations of a wireless network. When a user sends a text message (SMS message) to
another user, the message gets stored in the SMSC which delivers it to the destination user
when they are available. This is a store and forward option. [2]
The Short Message Peer-to-Peer (SMPP) protocol is a telecommunications industry protocol for
exchanging SMS messages between SMS peer entities such as short message service
centers and/or External Short Messaging Entities. It is often used to allow third parties
(e.g. value-added service providers like news organizations) to submit messages, often in bulk.
[3] In simple terms SMPP is the language that a SMSC speaks.
Short codes (also known as short numbers) are special telephone numbers, significantly
shorter than full telephone numbers, which can be used to address SMS and MMS messages
from mobile phones or fixed phones. There are two types of short codes: dialing and
messaging. Short codes are designed to be easier to read and remember than normal
telephone numbers. Short codes are widely used for value-added services such as television
voting, ordering ringtones, charity donations and mobile services. [4]
SMS gateway is a device or service offering SMS transit, transforming messages
to mobile network traffic from other media, or vice versa, allowing transmission or receipt
of SMS messages with or without the use of a mobile phone. Typical use of a gateway would be
to forward simple SMS to a mobile phone recipient. [5]
Some SMS gateway providers can be classified as SMS aggregators or SS7 providers. The
aggregator model is based on multiple agreements with mobile carriers to exchange 2-way SMS
traffic into and out of the operator's Short Message Service Centre (SMSC) Aggregators lack
direct access into the SS7 protocol, which is the protocol where the SMS messages are
exchanged. These providers have no visibility and control over the message delivery, being
unable to offer delivery guarantees. SMS messages are delivered in the operator's SMSC, but
not the subscriber's handset. [5]
The Gateway connects directly to a Mobile Operator's SMSC via the Internet or direct leased
line connections. It converts the message format into a format understood by the SMSC,
typically this is the SMPP protocol. Direct to SMSC Gateways are used by SMS Aggregators to
provide SMS services to their clients. Typically Direct to SMSC Gateways are used for high
volume messaging and require a contract directly with the Mobile Operator. [5]
For the service to be carrier agnostic it has to use a SMS Aggregator. The other way can be to
have a SMS Gateway at the content provider’s end which connects to SMSCs of different
Kannel is a freely available and an Open source SMS Gateway. [7]
SIM Application Toolkit (commonly referred to as STK) is a standard of the GSM system
which enables the SIM to initiate actions which can be used for various value-added services.
The SIM Application Toolkit consists of a set of commands programmed into the SIM card which
define how the SIM should interact directly with the outside world and initiates commands
independently of the handset and the network. This enables the SIM to build up an interactive
exchange between a network application and the end user and access or control access to the
network. The SIM also gives commands to the handset, such as display menu and ask for user
input. STK has been deployed by many mobile operators around the world for many
applications, often where a menu-based approach is required, such as Mobile Banking and
content browsing] Designed as a single application environment, STK can be started at the
initial power up of the SIM card and is especially suited to low level applications with simple
user interfaces. [6]
Some manufacturers claim that STK enables higher levels of security through identity
verification and encryption, which are necessary for secure electronic commerce. This provided
high level of security than the SMS Client since the SMS here is encrypted.
A menu for STK based application is pre-burnt on the SIM or it is possible today to change STK
Menu for WIB or S@T based applications quickly Over The Air via SMS bearer, without the user
having to return the SIM or even take it to the operator's business center. It is also be possible
to change the menu of WIG-based STK applications. One of the limitations can be that there is
no multimedia support (only basic pictures).
UTK which stands for UIM Toolkit is the counter part of the STK for the CDMA networks.
There is something called a DP (Delivery Platform) with the operator end which enables STK or
UTK kind of applications. Some of popular vendors of such platforms are SmartTrust [8] and
Gemalto [9].

[1] SMS From Wikipedia, the free encyclopedia.
[2] SMSC From Wikipedia, the free encyclopedia.
[3] SMPP From Wikipedia, the free encyclopedia.
[4] Shortcodes From Wikipedia, the free encyclopedia.
[5] SMS Gateway, From Wikipedia, the free encyclopedia.
[6] SIM Application Toolkit, From Wikipedia, the free encyclopedia.
[7] Kannel, An Open Source SMS Gateway
[8] SmartTrust
[9] Gemalto