Nigerian mobile network providers will stop their Unstructured Supplementary Service Data (USSD) to banks until the financial service providers clear a total of N120 billion ($259 million) debt they accumulated in about nine years.
The USSD is used by the banks to offer various services, ranging from money transfer to airtime purchase, to their customers – but has been a bone of contention between the telcos and the banks.
Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, told Bloomberg in a telephone interview on Monday that some banks will be disconnected as early as today (Monday).
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The USSD has become key to Nigeria’s cashless policy since it was adopted, with a large section of the country relying on it to execute various transactions via mobile phones. The banks identified the USSD channel as a cost-efficient way of delivering financial services to their customers. Services provided by the banks constitute a minimum of 90% of the total traffic on the USSD channels, according to ALTON.
But as the number of users increase, the loggerhead between the telcos and the banks increase. The dispute had hung on payment of arrears and pricing model that the service providers failed to agree on. In 2020, the telcos moved to implement a N4.00 per 20-second session access to USSD services charge, escalating the dispute.
The association claimed that the banks paid its members as low as 0.85k per 20 second session to as high as N2 per 20 second session depending on the transaction volumes generated by the banks. But the banks in turn charged their customers for the same services between the range of N10-N50 depending on the bank and the service accessed by their customers.
The Central Bank of Nigeria and the Nigerian Communication Commission waded in as the dispute reached a boiling point, with the telcos threatening to withdraw the USSD services, alleging that the banks are ripping them off.
An agreement for a flat fee of N6.98 per transaction was brokered by the regulators, with a directive from the Minister of Communication and Digital Economy, Dr. Isa Pantami, that the telcos suspend their plan to charge subscribers since the banks are deducting the charges from customers accounts.
The telcos agreed to comply with the directive on one condition – the banks must pay their outstanding debt and must agree to remit subsequent charges in due time.
Adebayo said late last year that the arrears have risen from N42 billion to N80 billion, with the banks showing no readiness to pay. He indicated that the telcos’ decision to withdraw the USSD services is borne of frustration.
“We have engaged them severally but they refuse to do anything,” Adebayo told Bloomberg. “If we withdraw the service and they feel the impact, maybe they will come to find a way to resolve it.”