Subscribers’ transactions under threat as N120bn USSD debt tears telcos, banks apart

Barring last-minute settlement between telecom operators and banks, bank customers may be unable to make financial transactions a…

Barring last-minute settlement between telecom operators and banks, bank customers may be unable to make financial transactions as the two institutions continue to argue over a backlog of debt owed telecom companies.

The telcos have threatened to disconnect bank customers from accessing the USSD because of a N120 billion debt they are owed by the latter.

Most bank customers now use online banking transactions that depend on the Unstructured Supplementary Service Data (USSD) platform to function. USSD is provided by the telecom operators in the country.

Already, the Association of Licensed Telecoms Operators of Nigeria (ALTON) has asked its members to give individual debtor banks an ultimatum, which expired on Friday, May 26.

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Though the ultimatum was at the preference of the affected mobile network operator (MNOs), Daily Trust learnt that individual telecoms operators have written to the affected Deposit Money Banks (DMBs) giving them an ultimatum to make payment or get disconnected from May 31.

ALTON’s Head of Operations, Gbolahan Awonuga said: “If the DMBs fail to honour this ultimatum, the disconnection begins in earnest.”

According to him, the operators have the support of the Nigerian Communications Commission (NCC) and the Ministry of Communications and Digital Economy to disconnect the banks.

However, an aide to the outgoing Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, said his principal had waded into the crisis and contacted the CBN on a possible resolution.

This much was confirmed by the CBN Acting Director of Corporate Communication, Dr Abdulmumin Isa, who said, “The CBN is very much aware of the protracted dispute between the banks and telcos and has been engaging all stakeholders to ensure an amicable resolution.”

According to him, the direct intervention of the CBN in March 2021 resulted in per session billing of N6.98 billion (including settling any outstanding fees) between the banks and telcos.

He added that the issue between the banks and telecom operators was due to a technical crisis, which led to the accumulation of a huge debt.

As at the last two interventions by the NCC, CBN and the minister of communications, between 2020 and 2022, the debt profiles were between N42 billion and N80 billion

He said: “Indeed, it was due to the direct intervention of the CBN (or CBN governor) in March 2021 that a per session price of N6.98 (including settling any outstanding fees) was agreed upon between the banks and telcos.

“As far as we are aware, since 2021, DMBs have continued to collect the USSD fees and remit the same on behalf of the telcos based on that agreement.

“We understand the latest dispute concerns technical issues regarding the definition of a successful transaction from a bank and telco perspective.

“USSD fees are charged by DMBs using an automated system which bills the customer for a successful transaction only after a banking service is consumed. For the telcos, a successful transaction happens once the customer has dialed the USSD short-code which may not lead to the consummation of a banking service. Whilst such truncated transactions are not registered on the DMBs collection platform and thus not billed to bank customers, telcos expect the DMBs to charge customers once the short-code is dialed, whether or not a financial transaction is consummated.”

Dr Isa explained that at a recent meeting of the DMBs and telco’s representatives chaired by the CBN governor to resolve the issue, he acknowledged the telcos’ right to collect all legitimately earned fees due to them and to recover their cost.

He said; ‘Following discussion, the direct billing model was proposed as a lasting solution to the issue. This would enable telcos full visibility of USSD transactions and allow them to charge their customers directly.

“The feasibility of the model is still being worked out by the relevant stakeholders.

“USSD is a critical channel leveraged on  primarily by the financially excluded,  vulnerable and critical mass. The CBN remains committed to ensuring that the areas of contention related to the collection of telco charges for USSD are resolved in the interest of the financial system and overall economy.”

Similarly, the CBN governor, Godwin Emefiele, stressed the need to deepen the payment system infrastructure while addressing the issue between banks and telecom operators.

Speaking recently during the launch of the financial literacy e-learning platform, called ‘SabiMoni’, Emefiele said, “We will find that deepening the payment system infrastructure needed to be taken seriously and that is the reason you would have seen that between 2014 and even till now, everything had been done to deepen our payment infrastructure through various mechanisms.

“At some point, we also said we will bring the telcos into it and then there was a tug-of-war between the banks about how they should share the income and of course, you have heard the story about USSD, on which we are making a deliberate effort.”

He added that the apex bank would help to resolve the crisis because if it is not resolved, people will suffer.

“I am very certain that we are going to get to the end of it because if we do not resolve the problem, the people who will suffer when this kind of disagreement goes on will be those who are the users of the banking sector,” the CBN governor said.

According to Emefiele, the USSD has been very useful as a part of the mechanism for financial inclusion, noting that it will not allow the services to be disrupted over the sharing of the income between banks and telecommunication companies.

Earlier in 2020, the federal government’s drive to get more than half of Nigeria’s population to have bank accounts or at least contribute to financial flow through mobile banking was threatened by disagreement between banks and telecommunications companies over Unstructured Supplementary Service Data (USSD) debt.

Also, in March 2021, telecom operators in the country announced that they would stop the use of the Unstructured Supplementary Service Data (USSD) by banks and other financial institutions in the country.

This was due to an unresolved dispute over a N42 billion debt allegedly owed the telcos.

A telecom right activist, Deolu Ogunbanjo, said Nigerian telecoms subscribers should sue the banks if they couldn’t use the USSD for their banking transactions by May ending.

Ogunbanjo, who is the president of the Association of Telecom Subscribers of Nigeria (NATCOMS), said the telcos wouldn’t be doing anything wrong if they eventually disconnect the banks by the end of May.

He, however, advised the telcos to use other effective ways to fight the banks rather than that which affects subscribers.