USSD debt: Banks move to avoid disconnection as January 27 deadline approaches 

Sources within the telecom operators confirmed to Naijaonpoint that some of the banks had started paying part of their debt while those that are yet to start are calling for negotiation contrary to their defiant stand before the sanction was announced.

This is even as the operators blamed the telecom regulator for dragging its feet in taking action which led to the accumulation of the debt to about N160 billion until late last year when some of the banks started paying.

The USSD banking is an SMS-based mobile banking service that allows users to interact with their bank directly from their mobile phones.

Millions of Nigerian bank customers use the USSD codes to access financial services like transfers, bill payments, and airtime recharges on daily basis.

Aside from the threat of disconnection from the networks, the Nigerian Communications Commission (NCC) in a public notice issued last week said it would also withdraw the shortcodes allocated to the nine affected banks after January 27th.

According to a top official of one of the telecom companies, who would not want to be named because he was not authorized to speak, these sanctions, which could have a far-reaching impact on the banks’ revenue and their customer base, have prompted them to start making moves to resolve the issue.

“Some of them have started paying in bits because they know this could impact their revenue. Those who have refused to listen to us before are now calling for negotiation.    

“This is what they could have done long before now but because there was no regulatory pronouncement, they never took it seriously,” the source said.  

Confirming the latest moves from the banks, another key stakeholder in the telecom industry, who would not want to be named said the USSD debt issue dragged to this point because the telecom regulator was showing ‘too much patriotism’.

“The issue we have is too much patriotism by the regulator. If we had been allowed to take the necessary actions, the issue would not have gotten to this point. The banks would have started paying long ago. 

“It is the same problem we are having with tariff increases. We have been talking about the need to increase tariffs for years but because the regulator does not want to ruffle feathers, tariff remains unchanged for over 11 years until it’s becoming a threat to the sustainability of the industry,” he said. 

Both the NCC and the CBN had in December last year issued a joint circular to the MNOs and the banks on guidelines to resolve the debt issue.

The circular dated December 20, 2024, signed by the Ag Director of the Payments System Management Department at the CBN, Oladimeji Taiwo, and the Head of Legal and Regulatory Services at the NCC, Chizua Whyte, outlined specific measures for debt settlement.

According to the circular, DMBs are mandated to settle 85% of all outstanding invoices issued after the implementation of Application Programming Interfaces (APIs) by December 31, 2024.

MNOs and DMBs have had protracted disagreements concerning the appropriate USSD pricing model for financial transactions, transparency of charges, mode of collection, and liability for payment of the outstanding and continuous service fees.

MNOs and DMBs have had protracted disagreements concerning the appropriate USSD pricing model for financial transactions, transparency of charges, mode of collection, and liability for payment of the outstanding and continuous service fees.

The affected banks include Fidelity Bank, First City Monument Bank (FCMB), Jaiz Bank, Polaris Bank, Sterling Bank, United Bank for Africa (UBA), Unity Bank, Wema Bank, and Zenith Bank.