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Banks risk disconnection from USSD services over unpaid N42 billion debt to telcos

Kehinde Sallah by Kehinde Sallah
March 12, 2021
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Telcos to withdraw USSD services from debtor banks from March 15

Telecommunication companies under the aegis of the Association of Licensed Telecoms Companies of Nigeria (ALTON) have threatened to disconnect some banks from using the Unstructured Supplementary Service Data (USSD) services over N42 billion debt.

The members of ALTON plans to initiate a phased process of withdrawal of USSD services, starting with the most significant debtors within the FSPs effective Monday, March 15, 2021.

The Chairman of ALTON, Gbenga Adebayo stated that the association is aware of the letter issued by the Minister of Communications and Digital Economy to the Central Bank of Nigeria (CBN), seeking a resolution to the on-going dispute between the banks Financial Service Providers (FSPs) and the telecoms sector over the appropriate methodology to use to charge for USSD services.

He recalled that, in order to accelerate the adoption of financial services on USSD, the FSPs partnered with his 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 but 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.”

Adebayo explained that the billing methodology where the FSPs customer is directly charged USSD access fees by his 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 ALTON  boss continued, “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 banks 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.”

READ ALSO: 7 guides to understanding CBN’S new directive on bank charges

However, he said It has been more than eight months since the Nigerian Communications Commission (NCC) issued an updated pricing methodology for USSD services for financial transactions in Nigeria. The methodology explicitly restricts 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.

“During this time, MNO’s 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, despite the fact that obligations due from banks to telecoms companies for USSD services has reached over N42 billion “, he said

Adebayo noted that ALTON  members have continued to provide these services because their 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 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. We deeply regret that we have reached a point where the withdrawal of these services has become unavoidable”, ALTON  boss said.

He added that ALTON remains committed to working closely with the relevant Ministries and regulators to resolve this issue as quickly as possible. “To minimize the disruption to customers, and with the concurrence of the  Minister of Communications and Digital Economy and the Nigerian Communications Commission, on the huge debt to the MNOs, we will disconnect debtor  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 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”, he said.

Tags: BanksUSSD debt

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