The impending disconnection of Unstructured Supplementary Service Data (USSD) of nine commercial banks may not happen as the affected banks have now begun moves to settle their debt before the January 27th deadline.
Sources within the telecom operators confirmed to Nairametrics that some of the banks had started paying part of their debt while those that are yet to start are calling for negotiation contrary to their defiant stand before the sanction was announced.
This is even as the operators blamed the telecom regulator for dragging its feet in taking action which led to the accumulation of the debt to about N160 billion until late last year when some of the banks started paying.
The USSD banking is an SMS-based mobile banking service that allows users to interact with their bank directly from their mobile phones.
Millions of Nigerian bank customers use the USSD codes to access financial services like transfers, bill payments, and airtime recharges on daily basis.
Moves to save revenue, retain customers
Aside from the threat of disconnection from the networks, the Nigerian Communications Commission (NCC) in a public notice issued last week said it would also withdraw the shortcodes allocated to the nine affected banks after January 27th.
According to a top official of one of the telecom companies, who would not want to be named because he was not authorized to speak, these sanctions, which could have a far-reaching impact on the banks’ revenue and their customer base, have prompted them to start making moves to resolve the issue.
“Some of them have started paying in bits because they know this could impact their revenue. Those who have refused to listen to us before are now calling for negotiation.
“This is what they could have done long before now but because there was no regulatory pronouncement, they never took it seriously,” the source said.
Telecom regulator blamed
Confirming the latest moves from the banks, another key stakeholder in the telecom industry, who would not want to be named said the USSD debt issue dragged to this point because the telecom regulator was showing ‘too much patriotism’.
“The issue we have is too much patriotism by the regulator. If we had been allowed to take the necessary actions, the issue would not have gotten to this point. The banks would have started paying long ago.
“It is the same problem we are having with tariff increases. We have been talking about the need to increase tariffs for years but because the regulator does not want to ruffle feathers, tariff remains unchanged for over 11 years until it’s becoming a threat to the sustainability of the industry,” he said.
- He noted that other banks not included by the regulator have started paying their debt since last year after a joint resolution of the NCC and the Central Bank of Nigeria (CBN) gave them until December 31, 2024.
- According to him, the nine banks listed by the NCC were those that failed to comply with the resolution of the NCC and CBN, adding that their moves to settle the debt were because their revenue was threatened.
Regulatory efforts
Both the NCC and the CBN had in December last year issued a joint circular to the MNOs and the banks on guidelines to resolve the debt issue.
The circular dated December 20, 2024, signed by the Ag Director of the Payments System Management Department at the CBN, Oladimeji Taiwo, and the Head of Legal and Regulatory Services at the NCC, Chizua Whyte, outlined specific measures for debt settlement.
According to the circular, DMBs are mandated to settle 85% of all outstanding invoices issued after the implementation of Application Programming Interfaces (APIs) by December 31, 2024.
- Furthermore, all future invoices must also be settled at 85% within one month of issuance.
- Banks are required to pay 60% of invoices predating the API implementation as full and final settlement.
- Payment plans, whether lump sum or installments, must be finalized between DMBs and MNOs by January 2, 2025.
- Where installment payments are proposed, such plans must consist of equal monthly payments, with all payments completed by July 2, 2025.
What you should know
MNOs and DMBs have had protracted disagreements concerning the appropriate USSD pricing model for financial transactions, transparency of charges, mode of collection, and liability for payment of the outstanding and continuous service fees.
- In March 2021, a per session price of N6.98 (including settling any outstanding fees) was agreed upon between the banks and telcos after an intervention by the CBN and NCC.
- However, the banks are alleged to have been deducting the N6.98 per session from their customers without remitting to the MNOs.
- In its latest move following the joint circular issued in December last year, the NCC said it had granted approval to the MNOs to disconnect nine banks if they fail to settle their debt by January 27.
The affected banks include Fidelity Bank, First City Monument Bank (FCMB), Jaiz Bank, Polaris Bank, Sterling Bank, United Bank for Africa (UBA), Unity Bank, Wema Bank, and Zenith Bank.
