Due to a N160 billion debt, telecom companies would no longer service nine banks’ Unstructured Supplementary Service Data (USSD), which will be inaccessible to millions of banking customers.
If a portion of the debt is not paid off, these telcos will terminate these banks’ USSD access by Monday, January 27, 2025, per a directive from the Nigerian Communications Commission (NCC).
Fidelity Bank Plc (770), First City Monument Bank (329), Jaiz Bank Plc (773), Polaris Bank Limited (833), Sterling Bank Limited (822), United Bank for Africa Plc (919), Unity Bank Plc (7799), Wema Bank Plc (945), and Zenith Bank Plc (966) were among the banks and their USSD codes that the NCC listed in a notice on Wednesday.
The NCC stated, “The Commission wishes to notify consumers that, as part of its consumer protection mandate, they may not be able to access the USSD platform of the affected financial institutions as of January 27, 2025.”
For many Nigerians, particularly those who use feature phones in a nation where smartphone penetration was 26% in rural areas and 59% in urban areas, USSD remains an essential payment gateway.
Ebenezer Onyeagwu, the group managing director of Zenith Bank Plc, stated at the 2021 telecom industry’s 20th anniversary that “the introduction of USSD changed everything.” There is no USSD code without telecom infrastructure.
People who live in places without banks can open accounts and conduct transactions with USSD, increasing the nation’s financial inclusion rate, which is expected to reach 74% in 2023, according to EFInA.
Bolaji Akinboro, chairman of Voriancorelli, stated, “USSD is really important. It is a universal channel in the sense that you can access financial services no matter which phone you use.”
Since 2019, telcos have reported that financial transactions drive 90 percent of USSD traffic. Nine out of ten mobile money transactions in Sub-Saharan Africa still go over USSD, according to GSMA, the global association for telcos. In particular, USSD has been a helpful instrument in addressing the aftermath of the COVID-19 pandemic.
However, access for many people who rely on this service would be put at risk due to commercial banks’ inability to resolve a payment dispute with telcos since 2019. This action comes after a recent directive from the NCC and the Central Bank of Nigeria (CBN) requiring banks to settle a portion of the USSD debt due to telcos.
The CBN and NCC gave banks until December 31, 2024, to pay 85 percent of all outstanding invoices (from February 2022) in a memo dated December 20. The NCC claims that nine of the 18 banks that owed the telcos had paid off more than 90 percent of their debt. According to the report, the debt has decreased from more than N200 billion to N160 billion.
“The financial institutions cannot meet the Good Standing requirements for the renewal of the USSD codes assigned to them by the Commission because they are not adhering to the CBN-NCC joint circular,” stated.
However, several bank executives have contended that Internet banking is rapidly replacing USSD technology, which is becoming antiquated.
In 2023, Segun Agbaje, CEO of Guarantee Trust Holding Company Plc, remarked, “USSD is a clunky technology. It isn’t cutting edge. The best method to promote financial inclusion is to reduce the cost of data so that it becomes more affordable. Then we can use what is a superior technology.”
The CBN reports that USSD transactions totaled N2.19 trillion from January to June 2024, a 54.75 percent decrease from N4.84 trillion during the same period in 2023.
