Telecom operators in Nigeria on Friday announced that they will stop the use of Unstructured Supplementary Service Data (USSD) shortcode service by banks and other financial institutions in the country by Monday.
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.
According to them the Minister of Communications and Digital Economy Dr Isa Ali Ibrahim Pantami gave them the permission to withdraw their services from the banks.
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.
“We deeply regret that we have reached a point where the withdrawal of these services has become unavoidable, however, we remain committed to working closely with the relevant Ministries and regulators to resolve this issue as quickly as possible. To minimise the disruption to customers, and with the concurrence of the Honourable Minster of Communications and Digital Economy and the Nigerian Communications Commission, on the huge debt to the Network operators; Mobile Network Operators will disconnect debtor Financial Service Providers (FSPs) from USSD services, until the huge debt is paid.
“Therefore, our members are initiating a phased process of withdrawal of USSD services, starting with the most significant debtors within the Financial Service Providers (FSPs) effective Monday, March 15, 2021”, ALTON said in the statement signed by its chairman Engr Gbenga Adebayo.
Though the telcos said they were 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, it could no longer bear the brunt of the debt.
It said: “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.”
ALTON said it NCC had issued an updated pricing methodology for USSD services for financial transactions in Nigeria and explicitly restricted Mobile Network Operators (MNO’s) from charging the end user for the services.
Rather, it said, the NCC had eight months ago mandated the banking sector to enter into negotiations to settle outstanding obligations and agree individual pricing mechanisms to be applied going forwards.
“During this time, the operators have continued to provide access to USSD infrastructure and our members have continued to pay all bank charges and fees to access the banking industries assets and customers,” it said.