Breaking: Telcos withdraw USSD banking services over banks’ refusal to pay debt
Telecoms service providers responsible for the usage of Unstructured Supplementary Service Data (USSD) for banking services in Nigeria have resolved to stop offering the service to millions of Nigeria.
According to the Association of Licensed Telecommunications Operators of Nigeria (ALTON) the umbrella body of network operators, infrastructure companies and Value Added Services (VAS) providers said the decision has been trigger by huge indebtedness of banks to telcos and their refusal settle the debt.
In a press statement on Friday signed by Engr. Gbenga Adebayo, ALTON chairman and Gbolahan Awonuga, head of operations of the body, ALTON sounded tough on the matter stating that its 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.
Full statement below:
We are the Association of Licensed Telecommunications Operators of Nigeria (ALTON) the umbrella body of Licensed Telecommunications Service Providers (Network Operators, Infrastructure Companies and Value Added Services Providers.)
- ALTON is 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.
- 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.
- It has been more than eight (8) months since the Nigerian Communications Commission (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.
- During this time, Mobile Network Operators (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 Forty-Two Billion (N42B) Naira.
- 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 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, 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 debtorFinancial 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.
While the withdrawal of USSD service is in place, we encourage our subscribers to kindly explore alternative channels with their Banks.
We: ASSOCIATION OF LICENSED TELECOMMUNICATIONS OPERATORS OF NIGERIA (ALTON)
Signed: Engr. Gbenga Adebayo, Chairman
Gbolahan Awonuga, Head of Operations