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Banks and Telcos Reach Agreement on USSD Debt Dispute

The long-standing feud between banks and telecommunications companies (telcos) over the payment of Unstructured Supplementary Service Data (USSD) charges has finally been resolved, according to the Nigerian Communications Commission (NCC).

What is USSD and why is it important?

USSD is a communication protocol that allows users to access various services through short codes, such as checking account balance, transferring money, paying bills, and subscribing to data plans. USSD is widely used in Nigeria as it does not require internet connection or smartphone, and it is fast and convenient.

USSD is also a key driver of the country’s digital financial inclusion strategy, which aims to increase the number of people who have access to formal financial services. According to the NCC, the digital financial inclusion index or penetration is currently about 70 percent because it is telco driven.

What was the cause of the dispute?

The dispute arose from the disagreement over who should bear the cost of providing USSD services to bank customers. The NCC had issued a direction in 2019 that stipulated that USSD services should be billed as a corporate service, meaning that the banks should pay the telcos for using their infrastructure to render the service to their customers.

Banks and Telcos Reach Agreement on USSD Debt Dispute

However, the banks allegedly reneged on this agreement and refused to pay the telcos for the service, despite charging their customers for it. The debt accumulated over time and reached a staggering amount of over N120 billion, according to the Association of Licensed Telecommunications Operators of Nigeria (ALTON).

The telcos threatened to withdraw their USSD services to the banks, which would have disrupted millions of transactions and affected millions of customers. The NCC intervened several times to mediate between the parties, but no lasting solution was reached until recently.

How was the dispute resolved?

The resolution was achieved at a meeting between the acting Governor of the Central Bank of Nigeria (CBN), Fola Shonubi, the NCC, the telcos and the banks. The meeting was facilitated by the Executive Vice Chairman of the NCC, Prof Umar Danbatta, who expressed delight at the wisdom of Shonubi to revisit the issue and provide hope of a possible resolution.

Danbatta said that Shonubi acknowledged that without the USSD service, there would be no digital financial inclusion and that the service was being provided to the banks, not to their customers. He also said that Shonubi agreed that the banks should pay for the accumulated debt and continue to pay for the service going forward, under the corporate billing term.

Danbatta said that both parties are now on a roundtable, working on how to implement the resolution based on a new guideline provided by the NCC and CBN. He said that he hoped that the interests shown by both parties are genuine enough to produce a peaceful outcome.

He also commended the telcos for their patience and professionalism in handling the matter, and urged them to continue to provide quality service to Nigerians.

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