Banks N42bn debt: FG stops telcom firms from withdrawing USSD services
…Expert warns of looming economy crisis
By Kayode Tokede
The Federal Government on Sunday directed telecommunication companies to suspend the planned withdrawal of banks’ Unstructured Supplementary Service Data (USSD) services.
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) said telecommunication firms will withdraw the USSD services to banks with effect from March 15 due to N42billion debt.
This is coming after telecom operators decided to suspend USSD services over a N42 billion debt owed by banks with effect from Monday.
This directive is contained in a press statement titled, ‘Impending Suspension of USSD Banking Services Put on Hold’, which was signed by the Technical Assistant on Information Technology to the Minister of Communications and Digital Economy, Femi Adeluyi, on Saturday, March 13, 2021.
The statement says that the Minister is intervening to ensure an amicable resolution of the dispute, adding that he has called for a meeting of all stakeholders.
The statement reads, ‘‘The Honourable Minister of Communications and Digital Economy, Dr Isa Ali Ibrahim Pantami, has directed that the impending suspension of the USSD services by the Mobile Network Operators (MNOs) be put on hold.
‘’The suspension which was to take effect on Monday, 15th of March, was due to the lingering debt owed MNOs by commercial banks for the provision of USSD banking services.’
“In a bid to ensure amicable resolution of the impasse, Dr Pantami has called for a meeting of all stakeholders, including Governor of the Central Bank of Nigeria, the Executive Vice Chairman of the NCC (Nigerian Communications Commission), the MNOs (Mobile Network Operators), and the financial institutions.
‘‘The meeting is scheduled to hold on Monday, 15th of March, 2021. The outcome of the meeting will determine the next step regarding the status of the USSD financial services.”
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Danbatta, had in a report disclosed that Banks owe the sum of N42billion for services provided by the mobile network operators through the USSD.
According to Danbatta, indebtedness of the banks to mobile network operators had been an issue over time, but stressed that the NCC was working hard to address the concern.
He said: “The issue of the USSD has become an issue between the telcos and the banks. The telecommunication companies provide the infrastructure which the banks leverage on to provide banking services of all kinds.
“Therefore it is expected that for this service someone should pay. No service is free. The investment in infrastructure that is driving the USSD service is a huge investment that the telcos made.
Despite the glaring indebtedness of Financial Service Providers to telecoms, the EVC said: “The telecommunications companies cannot unilaterally withdraw this service because it will be seen as a subversive act, undermining the digital inclusion strategy of the present government.
In response to that ALTON said they are 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.
ALTON continues, “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.
”It has been more than eight months since the Nigerian Communications Commission (NCC) issued an updated pricing methodology for USSD services for financial transactions in Nigeria. The methodology explicitly restricts Mobile Network Operators (MNO’s) from charging the end user for the services and mandates the banking sector to enter into negotiations to settle outstanding obligations and agree individual pricing mechanisms to be applied going forwards.
“During this time, Mobile Network Operators (MNO’s) 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, despite the fact that obligations due from banks to telecoms companies for USSD services has reached over N42billion.
“ALTON members have continued to provide these services because our primary concern is that the millions of Nigerian customers who access financial services through our USSD infrastructure every day should be able to continue conducting their transactions.
“This was given greater importance when customers’ became further reliant on these services due to COVID movement restrictions. Unfortunately, as it has been impossible to agree on a structure for these payments with the banks that do not involve the end-user being asked to pay, the government has been forced to intervene to ensure that a sustainable cost-sharing solution is agreed, that does not disadvantage the consumer in the long-term.
“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.
“While the withdrawal of USSD service is in place, we encourage our subscribers to kindly explore alternative channels with their Banks”, the statement concludes.
Meanwhile, the President, Bank Customers Association of Nigeria (BCAN), Dr Uju Ogubunka urged that the telcos to talk to the regulators of the banks and see how they can dialogue about it before thinking of disconnecting the services.
“Afterall, banks are being owed too, since the banks are under the control of some regulatory agencies, they should try to talk to them, make their problems known and see if it can be negotiated and then if it fails, they can now take other actions they may want to take.
“Besides there are options of actions they can take to settle the issue between them. Because if the banks are owing them, it is not the customers that are owing them but whatever they do will affect the customers, because the banks are not using those services for their own sake, but are using it to deliver service to several millions of bank customers in the financial system.
“Apart from meeting with the regulators such as the CBN, NDIC, among others, is that they can as well sue the banks. If somebody owes you and it is not paying you can approach the court, rather than disconnecting USSD services rendering to the banks to service millions of bank customers. Because when you disconnect banks apparently u are disconnecting everyone in the banking system that are using the services”, he said.
In fact, they should not take the economy backwards now, because once they do that, what they are saying is that we should go back to recession, and several people are going to suffer for it, whether we like it or not. I think the amicable solution should be subbed for and if it breaks down they can do what they like.
Speaking on the impact of the USSD service withdrawal on the economy, he said: “If you are talking about service delivery contribution to the economy, you will see that discontinuation of the USSD service to the banks will affect not just the banks but many other entities who are benefitting from the service in the system.”
He added that such development will affect the digital inclusion strategy of the present government, the financial inclusion the drive of the central bank and some people may lose their jobs as a result of this if their businesses are dependent on the services.
“I would, rather, suggest other options as I mentioned earlier that they should talk to the regulators of the banks, finding out ways they can resolve the issue and secondly, sue them if they fail to pay”, he said.
