… Claims Irreconcilable Differences Over N42B Debt As Reasons
Bank customers who use the Unstructured Supplementary Service Data (USSD) or popularly known as Short Codes in accessing financial services, may have to seek alternative means as telecommunication service providers have threatened to withdraw the USSD service provision to financial institutions.
This warning came from the Association of Licensed Telecommunications Operators of Nigeria (ALTON) the umbrella body of Licensed Telecommunications Service Providers, including Network Operators, Infrastructure Companies and Value Added Services Providers.
In a statement jointly signed by the Chairman, Engr. Gbenga Adebayo and the Head of Operations, Mr. Gbolahan Awonuga, ALTON stated that it is aware that the Minister of Communications and Digital Economy, Dr. Isa Ali Pantami had issued a letter to the Central Bank of Nigeria (CBN) seeking a resolution to the on-going dispute between the Financial Service Providers (FSPs)in the banking sector, and the telecoms service providers over the appropriate methodology to use to charge for USSD services.
ALTON warns that this imbroglio if not resolved, operators of telecom services will start a phased withdrawal of services from the financial institutions.
If the threat is carried out, this will mean that all services that require use of USSD by bank customers will be suspended, and customers mandated to use other channels to transact financial service needs with their banks.
According to ALTON, its members have resorted to this unfortunate stance following deadlock in bids to reconcile the issue of charges and payments methodology.
The Association explains: “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.”
The statement further explains that the billing methodology where the FSPs customer is directly charged USSD access fees by telecom service providers, irrespective of the service charges that the banks may subsequently apply to the customers’ bank account, is called “End-User Billing”. The banks, is stated, specifically demanded that all telcos implement this methodology. “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.”
ALTON noted that 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 telecom service providers 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 regretted that eight (8) months after the NCC issued an updated pricing methodology for USSD services for financial transactions in Nigeria, which 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, the banks have thwarted efforts to reconcile this difference.
It noted that despite the fact that banks owe over N42 billion obligations to MNOs for USSD services, telecoms companies have continued to provide access to USSD infrastructure and its members have continued to pay all Bank charges and fees to access the Banking industries assets and customers,
“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.”
While encouraging bank customers to avail themselves of the use of other alternative channels with their Banks, ALTON said its members are initiating a phased process of withdrawal of USSD services, starting with the most significant debtors within the FSPs effective Monday March 15, 2021.
“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,” the statement concluded.