The Nigerian Communications Commission (NCC) is set to publicly announce the names of 18 banks this week that have failed to clear their outstanding debts for using Mobile Network Operators’ Unstructured Supplementary Service Data (USSD) platforms.
These banks owe a staggering total of N200 billion, prompting the telecom regulator to consider stringent measures, including the suspension of USSD services for non-compliant institutions. Sources indicate that only four banks have adhered to a joint payment directive issued by the Central Bank of Nigeria (CBN) and the NCC in December 2023. This directive mandated that 60% of pre-API (Application Programming Interfaces) invoices must be paid by January 2, 2025, yet many banks have not met their financial commitments.
Pre-API invoices represent unpaid USSD service charges accrued before the rollout of Application Programming Interfaces in February 2022. Earlier methods of managing USSD transactions led to disputes over billing between banks and telecom operators.
The anticipated service suspension, effective in two weeks, poses a significant risk to Nigerians relying on USSD for banking, particularly those without internet access. The NCC will provide guidance to affected subscribers on how to transition to alternative banks to ensure continuous access to banking services.
This initiative is part of the NCC’s ongoing efforts to address the persistent debt crisis between banks and telecom companies, a long-standing issue in the industry. Telecom operators have voiced their concerns regarding the sustainability of USSD services amid the mounting unpaid debts, warning of potential service withdrawal.
Sources reveal that while banks have been slow to prioritize repayments, MNOs have hesitated to act on their suspension threats due to the service’s vital role in the economy. Electronic payment statistics from the CBN indicate that between January and June 2024, USSD transactions totaled 252.06 million, amounting to N2.19 trillion, marking a notable increase compared to the N4.84 trillion transacted across 630.6 million transactions in all of 2023.
Originally designed by telecom companies for airtime provision, USSD has found broad application in banking because it functions without an internet connection. In November, the Chairman of the Association of Licensed Telecom Operators of Nigeria reported gradual progress in debt repayment, particularly from smaller banks, while tier-one lenders, responsible for the majority of the debt, have yet to take substantial steps toward repayment.
The ongoing situation underscores a critical need for regulatory intervention from the CBN and NCC to resolve these financial disputes. Concerns continue to be raised about the inadequate payments banks owe for services like USSD, with experts emphasizing that banks must compensate telecom providers since they generate significant revenue through these services. The looming threat of service suspension remains a precarious concern for banking operations nationwide.
