Telcos Stop USSD Services To Banks Over N42b Debt

Telecom operators in Nigeria on Friday announced that they will
stop the use of Unstructured Supplementary Service Data (USSD) by
banks and other financial institutions in the country by
Monday.

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

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) which announced the stoppage in a
statement on Friday said the Minister of Communications and Digital
Economy Dr Isa Ali Ibrahim Pantami gave them the permission to
withdraw their services from the banks.

“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 debtor
Financial 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”, ALTON said in the statement signed by its
chairman Engr Gbenga Adebayo.

Though the telcos said they were 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, it could no longer bear the brunt of the
debt.

It said: “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.”

ALTON said it NCC had issued an updated pricing methodology for
USSD services for financial transactions in Nigeria and explicitly
restricted Mobile Network Operators (MNO’s) from charging the end
user for the services.

Rather, it said, the NCC had eight months ago mandated the
banking sector to enter into negotiations to settle outstanding
obligations and agree individual pricing mechanisms to be applied
going forwards.

“During this time, the operators 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,” it said.

Telecom operators in Nigeria on Friday announced that they will
stop the use of Unstructured Supplementary Service Data (USSD) by
banks and other financial institutions in the country by
Monday.

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

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) which announced the stoppage in a
statement on Friday said the Minister of Communications and Digital
Economy Dr Isa Ali Ibrahim Pantami gave them the permission to
withdraw their services from the banks.

“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 debtor
Financial 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”, ALTON said in the statement signed by its
chairman Engr Gbenga Adebayo.

Though the telcos said they were 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, it could no longer bear the brunt of the
debt.

It said: “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.”

ALTON said it NCC had issued an updated pricing methodology for
USSD services for financial transactions in Nigeria and explicitly
restricted Mobile Network Operators (MNO’s) from charging the end
user for the services.

Rather, it said, the NCC had eight months ago mandated the
banking sector to enter into negotiations to settle outstanding
obligations and agree individual pricing mechanisms to be applied
going forwards.

“During this time, the operators 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,” it said.