Big trouble, as more Nigerians sink deeper into poverty
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lTelcos may withdraw service links over N17b debt

lCashless society, NCC/ CBN’s MoU to suffer

By Prince Osuagwu, Hi-Tech Editor

Nigeria’s electronic payment industry appears threatened by the on-going inter-industry disagreement between  banks and  telecommunication companies over transaction charges.
Estimated 40 million users of Unstructured Supplementary Service Data, USSD, commonly known as bank transfers would be effected by a disruption that might follow a breakdown in user interface if the telecom operators (telcos) in Nigeria carry out their threat to withdraw USSD service links.
Also, banking industry reports indicated that transactions worth about N230 billion monthly would be truncated.
Vanguard learnt that while telcos claim that banks are owing them outstanding charges in respect of  USSD transactions carried on their networks amounting to N17 billion, banks insist that telcos should earn their money from individual users of the networks in the transactions.
But the Federal Government has frustrated moves by the telcos to pass the charges to subscribers, a situation which may have forced the telcos to consider suspending the links.

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This is coming against the backdrop of increasing reliance on electronic transfers by bank customers following Coronavirus-induced restrictions on physical presence at banking facilities.
By March 2020, the Nigerian Interbank Settlement Scheme, NIBBS, had reported that total value of transactions performed using mobile networks increased by 14.5 per cent with a value of N169.8 billion, from N148.3 billion in February.
The figure is expected to have gone up further in the past four months as restrictions are maintained across banks’ premises.
NIBSS in its recent report says that the 9,519.214 volume of mobile inter-scheme transactions in May 2020 alone, generated about N230.27 billion.
A possible disruption in USSD platforms is also expected to undermine the cashless economy policy initiated to get all Nigerians reduce cash-based transactions.
Although the USSD controversy between telcos and banks had begun to fester since the advent of the USSD about five years ago, it became a public issue when on 20th October 2019, MTN subscribers received a message that read: “Yello, as requested by your bank, from October 21, we will start charging you directly for USSD access to banking services. Please contact your bank for more info”.
Shortly after, another message was sent to draw the attention of Nigerians to the N4.00 charge on every 20-second session access to USSD banking services.
These messages generated outcry from subscribers who have enjoyed the convenience of transferring money to  by just inputting a short code.
Almost all the banks in Nigeria are on USSD. For instance, Access (Diamond)  Bank makes use of   *901#, EcoBank uses *326#, Fidelity  Bank  — *770#, First  Bank – *894#, First City Monument  Bank  (FCMB) uses *389*214#, GT Bank is *737#, Heritage  Bank  is *322*00#, JAIZ Bank is *389*301#, Keystone Bank – *7111# , Polaris Bank, *833#, Stanbic IBTC Bank  *909#, Sterling Bank —  *822#, United Bank for Africa (UBA)  —  *919#, Union Bank  —  *826#, Unity Bank  — *7799#, Wema Bank  —  *945# and Zenith Bank  —  *966#, among others.
The outcry, prompted the Minister of Communications, Dr Isa Pantami, to release a statement that the government was not aware of the N4.00 USSD charge by MTN and would direct the Nigerian Communications Commission NCC, to investigate it.
Following the statement, umbrella body of telecom operators, the Association of Licensed Telecom Operators in Nigeria, ALTON fired a letter of complaint to the minister explaining what prompted its members to embark on the end user USSD charge.
Part of the letter, obtained by  Vanguard, read: “As key enablers of driving the full digitalization of the economy, it is important that we refer the Honourable Minister to the recent public outcry with respect to the proposed introduction of USSD charges for financial services delivered through the Unstructured Supplementary Service Data (USSD) channel which has unfortunately pitched our members against the financial services sector.
“Given our members’ commitment to being transparent in all dealings with their customers, we wish to provide clarity on the issues surrounding USSD access and the associated charges as follows:
“Prior to 2014, the USSD channel was only used for balance enquiries and direct airtime refills on the networks of telecommunication service providers. This was subsequently followed by indirect airtime refills by Banks who increasingly became a medium through which telecommunication consumers recharged their lines.
“USSD services are delivered over the Stand-Alone Dedicated Control Channel (SDCCH) which is also the channel our members use for voice call-set up, SMS set-up and delivery. This channel is used for the exchange of signaling messages between the mobile device and the network base station, and congestion on this channel is measured on a monthly basis by the NCC.
“As telecommunication services and infrastructure became more accessible in the country, the Banks identified the USSD channel as a cost efficient way of delivering financial services to their customers. The Banks subsequently applied for and were granted USSD short codes to deliver financial services to Bank customers by the NCC.
“At the nascent stage of USSD development for the financial services sector, the billing mode adopted by our members was to charge the telecommunications service consumer directly, which is referred to as end-user billing. Following complaints by our customers with regard to disappearing/illegal airtime deductions, there was a consensus with the Banks to implement corporate billing where the Banks absorbed the costs associated with deploying USSD platform for financial services.
“We must state that the rates paid by the Banks to our members following the change to corporate billing, averaged as low as 0.85k per 20 second session to as high as N2 per  20 second session depending on the transaction volumes generated by the Banks. The Banks however in turn charged their customers for these same services between the range of N10–N50 depending on the Bank and the service accessed by their customers.
“Consequently, rather than open new banking locations and deploying more ATMs, the Banks increasingly used the USSD platform to provide a bouquet of services not initially contemplated by our members, which included account balance enquiries, funds transfers, account opening for tier one customers and other services unique to each bank’s portfolio of services. The Banks also used this channel to grow significant revenues running into Billions of Naira in view of the large disparity between the cost charged by our members and the charge imposed by the banks on their customers.
“These new services continued to place a strain on our members’ network resources which resulted in our continued and further investments to ensure that the SDCCH channel was dimensioned to handle the increased traffic as a result of the new banking services being deployed on it. Services provided by the Banks constitute a minimum of 90% of the total traffic on the USSD channels of our members”.
ALTON also added that its members had sought NCC’s intervention as the USSD rates were largely unregulated at the time, and cost study instituted at the instance of the Commission and undertaken by Price WaterHouse Coopers (UK), fixed the cost and price floor of a 20 second USSD session at N1.63k while the price cap was set at N4.89k per 20 second session respectively.
Apparently having studied the issue, Pantami recently directed that the telcos should stop forthwith, from deducting money from subscribers who use mobile transfer platform since the banks also do so. He argued that the business should attract a corporate end billing system and not end user billing system because USSD transaction was between the banks and telcos.
Consequently, the telcos said they have agreed to comply with the directive. However, they insisted that the banks must be made to not only settle the outstanding N17 billion debt which accrued since 2019 but agree to consistently pay as and when due, otherwise, they would be forced to withdraw the support link to the services.
Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Danbatta recently, confirmed that commercial banks in the country owe telecommunications companies over N17 billion on deductions made from subscribers’ bank transfers since 2019.
He however, said the commission is putting heads together with Pantami and other stakeholders in the banking sector to ensure a quick settlement of the debt.
Vanguard gathered, as at the time of this report, the issue is far from resolved, and telecom operators are no longer comfortable.
Speaking on behalf of the telcos, Chairman of Association of Licensed Telecom operators in Nigeria, ALTON, Engr Gbenga Adebayo, said while the telcos see the reviewed Determination on Unstructured Supplementary Service Data (USSD) Pricing as a welcome development, it would also be pertinent for all stakeholders to impress it on banks the responsibility to pay the debt and agree to pay as when due.
He said: “We had expressed our concern about end-user billing; which is a situation where operators will deduct the cost of USSD service from subscribers’ data and the banks will still deduct a charge from the user bank account for the same service; we believe the directive will now provide an opportunity to remedy the situation and bring a closure to this issue.
“We are pleased about the reversal of previous determination by the NCC which will now provide us an opportunity to come up with a fair payment method for the USSD channels and we look forward to robust engagement with all the stakeholders. We had said it would amount to double charging and the fairness is for the Banks to pay the operators for using their USSD channels for providing the services to their customers, as the banks charge their customers a premium for this service.
On the accumulated debt, Adebayo said: “It is a service that we have provided and the banks have charged the user account so it’s only fair for them to pay us what they owe us. They have to pay. It’s monies that they have received and they must pay the providers of the USSD link which are the operators.
“We thank the Minister of Communications and Digital Economy as well as the NCC for giving due consideration to this issue and we look forward to a way forward with all the critical stakeholders,” he added.
Vanguard’s efforts to get a response from the Committee of Bank Chief Executives, at whose instance the USSD business with telcos is done, proved abortive.
An industry analyst, Akin Akinbo says the issue has become so critical for the two regulators, the Nigerian Communications Commission, NCC and Central Bank of Nigeria, CBN to resolve urgently.
He said: “Recall that in 2018, the two signed a Memorandum of Understanding on payment systems in Nigeria. The MoU borders on very crucial areas of collaboration between them with respect to financial inclusion strategy, already being driven by the CBN.
“At the signing ceremony, Prof. Umar Danbatta spoke on the Commission’s critical review of the existing framework for the regulation of mobile payments in Nigeria, within the membership of a Committee comprising of the CBN, NCC, NDIC and the NIBSS.
“Emefiele on his part also spoke on the critical importance of telecoms on the Nigerian economy and also congratulated the Commission on its efforts towards protecting the interest of telecom consumers and service providers.
“The two regulatory bodies re-assured each other that they will continue to partner and collaborate on shared terms for the actualization of their mutual mandates and enhancement of human lives.
“So, if this USSD lingering issue is allowed to continue, it could put a strain on that agreement and the Nigerian people and the entire economy will suffer greatly as a result” he added.

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