USSD Debt Exceeds N120 Billion, And Banks Fail To Remit Funds
The Unstructured Supplementary Service Data (USSD) platform is experiencing a protracted crisis, and although talks between the banks and telecommunications operators are ongoing at the regulatory level to find a cooperative solution, the service providers claimed that the debts owed them by defaulting banks have reached N120 billion.
There were estimated to be N100 billion in indebtedness as of the first quarter of 2023. However, despite the fact that the amount still owing has increased by N20 billion, the Association of Licensed Telecoms Operators of Nigeria (ALTON) claimed that the banks are still withholding remittances.
The weekend before last, ALTON Chairman Gbenga Adebayo told The Guardian that the company’s debt had reached N120 billion. Adebayo, who verified that there had been regulatory-level conversation, stated: “Discussions are ongoing, and there has been very high-level regulatory intervention by the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC). While some banks are making payments, others appear to be holding off until the service is discontinued in an effort to test our persistence in getting them to do so.
“If this CBN/NCC intervention fails, we will withdraw USSD service from debtor banks at some points. The outstanding now is in the region of N120 billion and no sector can survive the magnitude of rising debt.”
“The banks have a moral obligation because these are services for which money has been deducted from their customers.” While the crisis is running for over five years now, the Ministry of Communications and Digital Economy, CBN and NCC had noted that from March 16, 2021, USSD services would be charged at a flat fee of N6.98k per transaction.”
According to the agreement, banks would not charge customers extra fees for using the USSD channel and would instead collect the new USSD fees directly from customers on behalf of mobile network operators (MNOs).
A typical USSD session, which lasted for 20 seconds, had a pricing cap set at $4.98 for each session prior to the N6.98k per transaction regime. When the N6.98k problem reached a breaking point, a joint statement from NCC and CBN read as follows: “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.”
While ePayment transactions reached N49.48 trillion in March, service quality difficulties in the area continue unabatedly and pose a threat to the sector’s successes.
The Guardian’s investigation revealed that customers are still dissatisfied with the bank apps and USSD platforms they use to access services, which they complained were frequently very slow and unresponsive.
Due to this problem, many clients now swarm the banking halls virtually every day to voice their objections. Kehinde Alesh, a Zenith Bank client, revealed that the bank’s app was unresponsive last week.
“For almost two days, we could not do anything via the banking app. We even learnt the app crashed. So, many transactions hanging! The Central Bank of Nigeria needs to do something about this issue,” he stated.
Ikechuckwu Ibeh, a UBA client who banked at the bank’s Cele branch, expressed regret: “When I got to the bank, there was no network. I dropped my transactions with one of the trusted staff; she called me back around 3pm that they are still having network glitches and had to cancel the transaction.”
“The banks need to invest more in infrastructure! The app is slow, USSD transactions are failing… you should have been at the bank to see the crowd. It is just annoying. The CBN should act fast before the sector collapses.”
In a recent interview, Gabriel Okeowo, Country Director of the BudgiT Foundation Nigeria, said that in addition to the need for the availability of the newly designed notes, banks’ IT infrastructures urgently needed to be updated in order to effectively implement the cashless policy.
“If what is in circulation right now are the old Naira notes, it then means even the new Naira notes are not available. Also, as we speak, the queues have not completely gone, electronic transactions still decline and money is not reversed within 24 hours in most cases.
“Furthermore, the Internet infrastructure is not advanced enough for effective electronic transactions. If all of these are not put in place, I see a possibility of the extension of the deadline for the use of old naira notes beyond December 31,” he concluded.