The debt owed mobile network operators (MNOs) by deposit money banks (DMBs) over the use of the Unstructured Supplementary Service Data (USSD) has soared to N150 billion according to findings over the weekend
There, however, appears to be light at the dark end of the tunnel as the new leadership at the Central Bank of Nigeria (CBN) is making dispassionate efforts to resolve the impasse.
Over the last one decade, the USSD– a technology dating back to the 1980s, has gained traction by customers without smartphones to access digital banking services. By just dialing a code, holders of feature phones carry out functions such as cash transfers, checking account balances and generating bank statements.
According to the leadership of MNOs, the debt has continued to rise because some of the banks, especially the big ones are not paying and aren’t willing to pay.
“I can tell you that debt has moved up to above N150 billion. We have the technology at our backend to track each transaction from point of origination to service delivery. So we are keeping the record of the debt. It is so sad that a debt as huge as this that could seriously impact the health of the industry is allowed to hang.
“The good news, however, is that the new leadership at the CBN is addressing the issue with sincerity now and hopefully we would see improvement in terms of payment. The previous leadership at the CBN had a lackadaisical attitude to the issue which emboldened the banks. The cash we are asking them to remit has been deducted by them from the bank customers,” he said on condition of anonymity.
The dispute between the telcos and the banks began in 2019 when the former threatened to shut the latter’s access to USSD platforms. They argued that banks should foot the bill for USSD sessions. The former CBN governor had argued that the MNOs were no longer investing a dime on USSD infrastructure because the initial cost was described as “sunk cost”.
After the intervention of the Nigerian Communications Commission (NCC), CBN and the Federal Ministry of Communications and Digital Economy, there were protracted negotiations after which the banks agreed that they would pay and N6.98 to be remitted to telcos from customers’ bank accounts.
The dispute revolves around the technical definition of a transaction. The banks argue that fees are only charged after a banking transaction has been carried out, but many customers end their session before one has taken place.
The telcos argued that banks should charge customers as soon the relevant code had been successfully dialed.
The banks are still refusing to pay, leaving the telcos burdened with a significant amount of accounts receivable related to USSD session fees, Chairman of Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo said.
Group CEO, GTCo, Segun Agbaje had faulted the USSD technology which he said was old. Instead of USSD, he said data prices should go down so that people could do internet banking.
He added that the company’s USSD value dipped by 22 per cent. The reason for this poor performance, according to him, is that “the N6.98 charge is a punitive cost and most people do not want to pay that just to use the USSD. That’s why it has stopped growing.”
Adebayo, in a telephone interview, said the impact of the debt burden is huge because of the calibre of banks owing.
