Danger: Waiting for disconnection from bank USSD services, what you need to know
By Emmanuel Sixtus
If there is something that keeps Nigeria on the edge and threatens to make it a banana republic, it’s the flagrant and condensed lack of commitment to pacts and obligations. The country is now accustomed to debts, with cooperation organisations and government institutions included.
In a major intensification of a long-running financial dispute, Nigerian telecommunications firms have delivered an ultimatum to the country’s banking sector, warning of legal action if an outstanding N120 billion debt linked to Unstructured Supplementary Service Data (USSD) services is not settled.
Telecom providers, including prominent players like MTN, Airtel, and Glo, have voiced mounting frustration over the banks’ failure to pay for USSD services—a crucial tool for millions of Nigerians using mobile banking. The debt, which has accumulated over time, is tied to the charges customers incur when using USSD services for checking balances, transferring funds, and making payments via their mobile phones.
Despite previous efforts to resolve the issue through negotiations and regulatory interventions, including those by the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN), the matter remains unresolved. Telecom companies now suggest they may be forced to take extreme measures, which could involve cutting off USSD services to the banks or pursuing legal recourse in court.
Legal action is often not considered because of the delay and the technicalities that are abused by parties in the court of law. Outright disconnection from services may not be the wise decision due to the impact on the economy of the country, leaving banks with fewer options.
The telecom companies are using delay tactics, coupled with threats, to force the banking sector to meet its obligations to the companies that had allowed it to run on its services despite not promptly remitting what is due.
Background of the Dispute
USSD services have become vital for many Nigerians, particularly those in rural or underserved areas, providing real-time banking without the need for internet access. However, the pricing structure for USSD services has been a point of contention. Banks initially paid telecom providers a lump sum for these services but have increasingly shifted the financial burden onto the telecom firms, leading to the current debt crisis.
In 2021, the NCC stepped in, establishing a flat fee system for USSD transactions. Nonetheless, the banks have allegedly failed to pay the agreed-upon fees to telecom companies, worsening the debt situation. Telecom operators argue that the banks have not fulfilled their financial obligations, resulting in a cumulative debt of N120 billion.
The banking sector is also pushing for a narrative where they want telecom companies to make up for the charges they collect from their subscribers, but to date, the matter remains complicated with the NCC unable to effectively implement its decision taken in 2021.
Telecom Operators’ Position
Telecom companies contend that the financial costs of delivering USSD services, which require substantial infrastructure investments, cannot be sustained without proper compensation. The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has criticised the banks’ reluctance to clear their debts, cautioning that if the issue persists, service interruptions are inevitable.
“We’ve been patient, but the banks must honour their agreements. We can no longer provide services for free,” an ALTON spokesperson said. He also hinted that telecom providers might have no option but to suspend USSD services, a move that could disrupt Nigeria’s financial system and impact millions of users.
Potential Consequences
The country is struggling with too many problems, ranging from economy to security, and adding the disconnection threats would significantly be bigger than expected. The country is not ready for further problems and cannot afford a disruption to its financial system.
If telecom firms follow through with their threat, it could lead to widespread disruption in Nigeria’s banking sector. Millions of Nigerians rely on USSD services for everyday banking, and any suspension of these services would disproportionately affect rural and low-income communities without access to smartphones or internet services.
Moreover, the move could attract regulatory scrutiny, with both the NCC and CBN potentially stepping in to mediate the situation once more. A drawn-out legal conflict could further damage relations between these two critical sectors, with far-reaching implications for Nigeria’s digital financial inclusion efforts.
Calls for a Resolution
Industry experts and financial analysts are calling for a swift resolution to the standoff, noting that the USSD platform is essential for Nigeria’s push toward a cashless economy.
They argue that a collaborative approach is needed to prevent the situation from escalating further. “We need a solution that benefits both industries,” one financial analyst said. “Failure to resolve this issue will hurt not just the banks and telecom firms but also the ordinary Nigerians who depend on these services every day.”
As tensions rise, attention is focused on both telecom operators and the banking sector to find a lasting solution before the conflict leads to widespread service disruptions or prolonged legal battles.
If it is allowed, the administration of President Bola Amed Tinubu would be blamed for his inability to influence or manage the country and would increase the criticisms directed at him.
