Nine commercial banks’ Unstructured Supplementary Service Data (USSD) may not be disconnected as planned because the impacted banks have started taking steps to pay off their debt before the deadline of January 27.
In contrast to their belligerent stance, before the punishment was announced, sources within the telecom operators told Nairametrics that some banks have begun making partial payments on their debt, while those that have not yet begun are requesting negotiations.
Even as some banks began making payments late last year, the operators faulted the telecom regulator for taking too long to act, causing the debt to balloon to around N160 billion.
Users can communicate with their bank directly from their phones with USSD banking, an SMS-based mobile banking service.
Millions of Nigerian bank clients use USSD codes every day to access financial services such as transfers, bill payments, and airtime recharges.
Actions To Save Money And Keep Clients
In addition to the possibility of network disconnection, the Nigerian Communications Commission (NCC) said last week that it will remove the shortcodes assigned to the nine impacted banks after January 27.
These penalties, which might significantly affect the bank’s earnings and clientele, have forced them to begin taking action to address the problem, according to a senior official of one of the telecom firms who wished to remain anonymous due to his lack of speaking authorization.
“Some of them have started paying in bits because they know this could impact their revenue. Those who previously refused to listen to us are now calling for negotiations.
“This is what they could have done long before now but because there was no regulatory pronouncement, they never took it seriously,” a source confirmed.
Telecom Regulator Blamed
Another important telecom sector stakeholder, who wished to remain anonymous, confirmed the banks’ new actions and claimed that the USSD debt issue had progressed to this stage due to the telecom regulator’s “too much patriotism.”
“The problem is that the regulator exhibits excessive patriotism. If we had been allowed to take the appropriate actions, the problem would not have escalated to this stage. The banks would have started paying long ago.
“We are experiencing the same issue with tariff rises. We have been discussing the necessity of raising tariffs for years, but the regulator has kept them the same for more than 11 years until they endangered the industry’s viability because they don’t want to upset anyone,” he added.
He pointed out that other banks that were left out of the regulator’s purview have begun making debt payments since last year, when the NCC and the Central Bank of Nigeria (CBN) reached a joint resolution extending their deadline to December 31, 2024.
He claimed that the nine banks on the NCC’s list were those that had disregarded the NCC and CBN’s resolution and that their actions to pay off the debt were motivated by a threat to their revenue.
Regulatory Actions
The CBN and the NCC sent banks and MNOs a joint circular on instructions for resolving the debt issue in December last year.
The circular dated December 20, 2024, which was signed by Chizua Whyte, Head of Legal and Regulatory Services at the NCC, and Oladimeji Taiwo, Ag Director of the Payments System Management Department at the CBN, specified specific steps for debt settlement.
The circular states that by December 31, 2024, DMBs must pay 85% of all unpaid invoices issued after adopting Application Programming Interfaces (APIs).
- Additionally, all subsequent invoices must be paid at 85% within a month of the initial invoice’s issuance.
- Sixty percent of invoices issued before the API was implemented must be paid in full and final settlement by banks.
- DMBs and MNOs must finalise payment plans, whether lump sums or payments, by January 2, 2025.
- If installment plans are suggested, they must consist of equal monthly installments, with all payments due by July 2, 2025.
What To Note
The proper USSD pricing model for financial transactions, charge transparency, collection methods, and obligation to pay outstanding and ongoing service fees have all been the subject of lengthy disputes between MNOs and DMBs.
- After the CBN and NCC intervened, the banks and telcos agreed to a pricing of N6.98 per session in March 2021, which included paying any unpaid fees.
- Nonetheless, it is alleged that the banks took N6.98 out of their client’s accounts each session without sending the money to the MNOs.
- In a recent action in response to the joint circular published in December of last year, the NCC announced that it had authorized the MNOs to cut off nine banks if they did not pay their debts by January 27.
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 are impacted financial institutions.