Recall that it was earlier reported here on USAfricaonline.com the dispute between the USSD service provider (Telcos) and the Nigerian Banks over a non-settlement of about N120bn debts. Find more of the story here>>
The Unrestructured Supplementary Service Data (USSD), which service providers supply to bank customers, is currently the subject of a dispute between telecom companies and deposit money banks (DMBs). The Central Bank of Nigeria (CBN) announced that it has intervened in the dispute.
Nigerian telecom companies withdrew their services from banks on Friday (12 May 2023), making it harder for consumers to access the platform-reliant online banking activities. These are acts taken with mobile devices, such as sending money via shortcodes, checking account balances and bank information, and using other services that may or may not require data or the internet.
However, in a statement released yesterday, the CBN’s spokesperson, Dr. Isa Abdulmumin, said that the central bank was in control of the situation and that the disagreement was the result of technical concerns with how banks and telecommunications companies define a successful transaction.
“The CBN is very much aware of the protracted dispute between the banks and telcos and has been engaging all stakeholders to ensure an amicable resolution, He said.
“Indeed, it was due to the direct intervention of the CBN (or CBN Governor) in March 2021 that a per session price of N6.98 (including settling any outstanding fees) was agreed upon between the banks and telcos.
“As far as we are aware, since 2021, DMBs continue to collect the USSD fees and remit the same on behalf of the telcos based on that agreement.
“We understand the latest dispute concerns technical issues regarding the definition of a successful transaction from a bank and telco perspective.
The apex bank’s image maker explained that the USSD fees are charged by DMBs using an automated system which bills the customer for a successful transaction only after a banking service is consumed.
He explained further that for the telcos, a successful transaction happens once the customer has dialled the USSD short-code which may not lead to the consummation of a banking service.
“Whilst such truncated transactions are not registered on the DMBs collection platform and thus not billed to bank customers, telcos expect the DMBs to charge customers once the short-code is dialed, whether or not a financial transaction is consummated.,” he said.
He further by explaining the role of CBN on the matter by saying, “At a recent meeting of the DMBs & Telco representatives chaired by the Governor of the CBN to resolve the issue, he acknowledged the telcos right to collect all legitimately earned fees due to them and to recover their cost.
“Following the discussion, the direct billing model was proposed as a lasting solution to the issue. This would enable telcos full visibility of USSD transactions and allow them to charge their customers directly. The feasibility of the model is still being worked out by the relevant stakeholders.”
He characterized the USSD as a crucial channel that is primarily used by the economically disadvantaged, the vulnerable, and the critical mass, adding that the CBN is still committed to seeing to it that the disputes over the choice of telco fees for USSD are settled in the financial system’s and the nation’s overall economic interests.
However, the Nigerian Communications Commission (NCC) Director of Public Affairs, Mr. Reuben Muoka, responded to the development in an interview with THISDAY at the weekend, confirming that the commission had to give in to service providers’ complaints by allowing them to discontinue providing their services to banks.
Isa Pantami, the minister of communications and digital economy, reportedly convened a conference last Thursday between the telcos, the NCC, and all the banks in an effort to mediate a resolution, but the banks are rumored to have avoided the gathering.
The NCC director claimed that attempts to resolve the debt issue had been made as far back as 2021, but the banks had shown unwillingness to pay. He blamed this development on the absence of a formal agreement between the two parties, which precludes the telecom companies from suing the banks in court.
He questioned why banks would continue to collect money from USSD service users while refusing to settle their debts with service providers that have been paying for the infrastructure necessary for the service.
“It’s like the old days of NITEL when government agencies refused to pay after having enjoyed all the services. At the end of the day, NITEL would not have money to maintain their equipment and people will come back and say NITEL is inefficient,” Muoka said.
Muoka provided additional details on the development, saying that
“Banks were charging any amount for the USSD services. They were making money off subscribers. Some of them were charging excessively.
“So we did what we call price determination. When we determined the price for everything, that is, what it cost them to offer the service. That is part of our regulation.
“So after the regulation, it means the nature of banks’ charges for the service would change, but there were a few disagreements here and there. Then by 2021, there was a meeting held between the Central Bank of Nigeria, by that time they had attracted N40 billion, but they were not paying the operators at all.
“When they started that meeting they were still not paying, so it means that all the USSD services they rendered were not paid for and we all know that banks charge their customers for the service.
“After that meeting, there were other meetings with the Minister of Communication and Digital Economy and the chief executive of the NCC for them to respect the agreement on the services rendered by the telecom firms,” he explained.
According to Muoka, the NCC had previously considered the interests of the consumers but was forced to grant the request of the service providers on Friday because the debt was severely hampering their operations. Muoka claimed that telecom service providers could not have unilaterally discontinued their services without receiving approval from the NCC.
“The reason why we intervened was that we are worried that if the service operators removed services it may confuse the market.
“They cannot just go and disconnect without us allowing them because they believe it has to be resolved in the interest of the consumers but when it becomes unbearable like this one, there is nothing anybody can do because if they are owed this amount of money which they have refused to pay, you can imagine the impact of the debt of the service of telecom firms,” he said.
