Telecoms operators withdraw USSD service from banks over N42b debt
Telecommunications operators have withdrawn the Unstructured Supplementary Service Data (USSD) shortcode service banks and other financial service operators leverage on their platforms to service the banking community.
The operators under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) claimed that the banks owed them over N42 billion in debts for the past eight months.
The telcos 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 were yet to pay them the accumulated USSD transactions cost.
The implication of this is that from March 15, the date to commence the service withdrawal, customers would have huge challenges in carrying out financial transactions via the USSD platforms.
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, said the body was aware of the letter issued by the Minister of Communications and Digital Economy to the Central Bank of Nigeria (CBN), seeking a resolution of the ongoing dispute between the banking sector (Financial Service Providers (FSPs) and the telecoms sector over the appropriate methodology to charge for USSD services.
The body explained: “The background to this problem was that in order to accelerate the adoption of financial services on USSD, the 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 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 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 continued to provide access to USSD infrastructure even as its members 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.”
“ALTON members have continued to provide these services because our primary concern is that the millions of Nigerian customers who access financial services through our USSD infrastructure every day should be able to continue conducting their transactions. This was given greater importance when customers became further reliant on these services due to COVID-19 movement restrictions. Unfortunately, as it has been impossible to agree on a structure for these payments with the banks that do not involve the end-user being asked to pay, the government has been forced to intervene to ensure that a sustainable cost-sharing solution is agreed, that does not disadvantage the consumer in the long-term,” ATLON stated.
The body regretted that it has reached a point where the withdrawal of these services has become unavoidable, adding that it would remain committed to working closely with the relevant Ministries and regulators to resolve this issue as quickly as possible.
“Therefore, our members are initiating a phased process of withdrawal of USSD services, starting with the most significant debtors within the FSPs effective Monday, March 15, 2021. While the withdrawal of USSD service is in place, we encourage our subscribers to kindly explore alternative channels with their banks,” ALTON stressed.