Telcos may shut down bank USSD services from March 15

Effective March 15, Nigerians, who make use of the Unstructured Supplementary Service Data (USSD) shortcode for financial transactions, may experience difficulties in carrying out their transactions.

This is because the telecommunications operators have threatened to withdraw the USSD service from the banks following the insensitivity of the banks to pay the accumulated debt of N42 billion, which have accrued in the last eight months.

The telcos, under the aegis, Association of Licensed Telecommunications Operators of Nigeria (ALTON) claimed that since the USSD Pricing determination by the Nigerian Communications Commission (NCC) which resulted in a price review of USSD service by its members, banks are yet to pay them the accumulated USSD transactions costs.

According to ALTON, the NCC’s updated pricing methodology for USSD services for financial transactions in Nigeria explicitly restricts Mobile Network Operators (MNO’s) from charging the end-user for the services and mandates the banking sector to enter into negotiations to settle outstanding obligations and agree on individual pricing mechanisms to be applied going forwards.

ALTON, in a statement signed jointly by the Chairman and Head of Operations, Gbenga Adebayo, and Gbolahan Awonuga, respectively, on Friday, said the body is aware of the letter issued by the Minister of Communications and Digital Economy to the Central Bank of Nigeria, seeking a resolution to the on-going dispute between the banking sector (Financial Service Providers (FSPs)) and the telecoms sector over the appropriate methodology to use to charge for USSD services.

The body explained that “the background to this problem was that in order to accelerate the adoption of financial services on USSD, the Financial Service Providers (FSPs) partnered with our members to zero-rate the USSD access to end-users, while they bore the cost for the provision of service. Based on this arrangement, the banks took on the responsibility of billing customers and paid our members for use of the USSD infrastructure from the service fees deducted from the customer’s bank account.

“Following the issuance of the USSD Pricing determination by the Nigerian Communications Commission (NCC) which resulted in a price review of USSD service by our members, the banks decided that they would no longer pay for USSD service delivered to their customers and requested our members to charge customers directly for use of the USSD channel.

“This billing methodology where the Financial Service Providers (FSPs) customer is directly charged USSD access fees by our members irrespective of the service charges that the bank may subsequently apply to the customers’ bank account is called “End-User Billing” which the banks specifically demanded that all our members implement. The banks, however, provided no assurances to our members that such service fees charged to customers’ bank accounts for access to bank services through the USSD channel would be discontinued post-implementation of end-user billing by our members.

“The removal of these service fees by the Financial Service Providers (FSPs) would have meant that if bank customers were charged only the USSD costs communicated by our members per USSD session, bank customers will be paying far less than what they are currently being charged by the Financial Service Providers (FSPs) which in some instances are as high as N50. Additionally, the banks and telcos will be applauded for collaborating towards the financial inclusion objectives of the Federal Government.

“It has been more than eight months since the NCC issued an updated pricing methodology for USSD services for financial transactions in Nigeria. The methodology explicitly restricts Mobile Network Operators (MNO’s) from charging the end-user for the services and mandates the banking sector to enter into negotiations to settle outstanding obligations and agree individual pricing mechanisms to be applied going forwards.”

ALTON claimed that during this time, MNOs have continued to provide access to USSD infrastructure and members have continued to pay all bank charges and fees to access the banking industries assets and customers, “despite the fact that obligations due from banks to telecoms companies for USSD services has reached over NN42 billion.”