The dispute over the N42 billion owed telecommunications operators in the country by money deposit banks took a new dimension at the weekend as the banks claimed they are not indebted to the telcos for using Unstructured Supplementary Service Data (USSD) platforms to provide payment services.

Banks collect the money for the service on behalf of the telcos, which are the owners of the infrastructure.

Telcos believe the banks are bent on bullying them to maximize their revenues while the banks on the other hand say there is no such thing as an obligation due to the operators.

Investigations showed that the telcos never stopped the service despite mounting debt, but the minute the banks went into a dispute with telcos on commission payment, the banks pulled the plug with total disregard for customers.

Context

The telcos and banks were in March caught in a web of claims and counter charges as the telcos under the aegis of Association of Licensed Telecommunications Operators of Nigeria (ALTON) demanded N42 billion the banks owed them.

ALTON threatened to withdraw USSD services to financial service providers due to huge indebtedness to telecom network operators.

The telcos explained that the service withdrawal had become necessary due to the lack of agreement on a payment structure with the banks that did not involve the end-user being asked to pay.

Intervention

As the dispute lingered, the Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC) waded in and issued a joint statement on the March, 16, 2021.

The statement signed by Osita Nwanisobi, head, Corporate Communications, CBN and Dr. Ikechukwu Adinde, director, Public Affairs, NCC, read:

Joint Statement by Central Bank of Nigeria & Nigerian Communications Commission on Pricing of Unstructured Supplementary Service Data (USSD) Services

Mobile Network Operators (MNOs) and Deposit Money Banks (DMBs) have had protracted disagreements concerning the appropriate USSD pricing model for financial transactions. This resulted in the accumulation of outstanding fees for USSD services rendered leading to threat of service withdrawal by the MNOs.

USSD is a critical channel for delivering financial services, particularly for the underserved and/or financially excluded. To resolve the lingering dispute and ensure uninterrupted services to customers on this channel, the Honourable Minister for Communications and Digital Economy on March 15, 2021 chaired a meeting of key stakeholders to discuss an amicable resolution in the interest of the general public.

Represented at the meeting were the various MNOs, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Association of Telecommunications Companies of Nigeria (ATCON), DMBs (represented by the Chairman, Body of Bank CEOs) and the sector regulators – Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC).

We are pleased to announce that after comprehensive deliberations on the key issues, a resolution framework acceptable to all parties was agreed thus:

1. Effective March 16, 2021, USSD services for financial transactions conducted at DMBs and all CBN – licensed institutions will be charged at a flat fee of N6.98k per transaction. This replaces the current per session billing structure, ensuring a much cheaper average cost for customers to enhance financial inclusion. This approach is transparent and will ensure the amount remains the same, regardless of the number of sessions per transaction.
2. To promote transparency in its administration, the new USSD charges will be collected on behalf of MNOs directly from customers’ bank accounts. Banks shall not impose additional charges on customers for use of the USSD channel.
3. A settlement plan for outstanding payments incurred for USSD services, previously rendered by the MNOs, is being worked out by all parties in a bid to ensure that the matter is fully resolved.
4. MNOs and DMBs shall discuss and agree on the operational modalities for the implementation of the new USSD pricing framework, including sharing of Application Programme Interface (APIs) to enable seamless, direct and transparent customer billing.
5. DMBs and MNOs are committed to engaging further on strategies to lower cost and enhance access to financial services.
6. With the above resolutions, the impending suspension of DMBs from the USSD channel is hereby vacated. Therefore, DMBs shall no longer be disconnected from the USSD channel.

The general public is reminded that the USSD channel is optional, as several alternative channels such as mobile apps, internet banking and ATMs may be used for financial transactions.

The CBN and NCC shall continue to engage relevant operators and stakeholders to promote cheaper, seamless access to mobile and financial services for all Nigerians.

Twist

But at the weekend, Nigerian banks claimed they are not indebted to the telcos for using the Unstructured Supplementary Service Data shortcode service to provide payment services.

“There is no such thing as an obligation due from banks to telcos,” Herbert Wigwe, chief executive officer of Access Bank Plc, said on an investor call in Lagos, according to Bloomberg.

“We chose not to make a public statement out of it because it is not appropriate for us to be found fighting with telcos in public,” he said Thursday.

Wigwe is the head of a team of bank CEOs that has been in discussion with MTN Nigeria to resolve a dispute that led some banks to cut off the company from their banking platforms last week.

Implications

The banks’ reluctance to pay the N42billion debt has far reaching effects on both the telcos and subscribers.

Already, the telcos have lost some ₦30 billion as a result of inactive SIM cards occasioned by the NIN-SIM registration.

And according to figures by the NCC, telecom subscribers in the country dropped by 11.84 million in four months.

The unpredictable nature of business in Nigeria is the reason why the telecommunication sector is struggling to attract new investments’.

From the monetary authorities playing god with foreign exchange to multiple taxes to epileptic power supply, the industry is swimming in challenges.

In trying to control both the demand and supply of dollars, the CBN plays god in forex market, and scares off investors. Telcos rely on forex to import equipment for expansion.

Telcos are still seen as cash cows and are subjected to all kinds of taxes, leveis and fees by all tiers of governments.

Because of Nigeria’s notorious unreliable power supply, operators are forced to provide their own electricity to power their facilities.

For now, telcos in Nigeria are clutching expensive bags of operating expenses and subscribers are bearing the burden.

Unfair Practices

The banks intended to hurt the telcos by pulling the plug on the USSD service but ended up hurting customers to secure their profit.

The silence of Federal Competition and Consumer Protection Commission (FCCPC) is worrying.

The action the banks took is collusion of the highest order and goes to the root of competition and anti-trust.

And it is worrying that ministry of Communications and Digital Economy, the NCC and CBN have not spoken out against the lingering settlement that further impoverishes consumers.