In a move that could significantly disrupt financial transactions for millions of Nigerians, telecommunication companies are poised to temporarily suspend Unstructured Supplementary Service Data (USSD) access for 18 banks. This drastic measure stems from the banks’ failure to settle a mounting debt exceeding N200 billion owed to telcos for USSD services.
USSD services play a critical role in promoting financial inclusion in Nigeria, particularly for the unbanked and underbanked populations. These services enable users to access basic banking services such as account balances, transfers, and airtime top-ups via their mobile phones, even without internet connectivity.
The value of transactions underscores its significance. In the first half of 2024, transactions reached N2.19 trillion, translating to approximately N12 billion in daily transactions. However, this represents a significant decline from N4.84 trillion in the same period of 2023, indicating a shift towards internet banking services for some users.
USSD Debt: A Long-Standing Dispute
The dispute between banks and telcos over USSD charges has been ongoing since 2019. Telcos argue that they should be compensated for providing the infrastructure and services that enable banks to offer USSD banking services. However, banks contend that they should not bear the full cost of these services.
This disagreement has resulted in a significant debt accumulation, hindering investments in USSD infrastructure and potentially impacting the quality of service.
Regulatory Intervention and Enforcement
The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) have issued directives to resolve the impasse. These directives outlined payment timelines and penalties for non-compliance. However, only four banks have adhered to these directives, leaving 18 banks facing potential USSD service disruptions.
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USSD Impact on Customers
The impending suspension of the services for these 18 banks will undoubtedly have a significant impact on their customers. Millions of Nigerians rely on USSD for essential financial transactions, and the disruption could severely hinder access to banking services, particularly for those in rural areas with limited internet connectivity.
If You Ask Me
The ongoing dispute between banks and telcos highlights the need for a collaborative and sustainable solution. It is crucial for both parties to engage in constructive dialogue and find a mutually agreeable resolution that ensures the continued provision of essential USSD services while ensuring fair compensation for telcos.
The future of USSD services in Nigeria hinges on the resolution of this debt dispute. A swift and amicable resolution is essential to avoid further disruptions to financial inclusion efforts and to ensure the continued availability of this vital service for millions of Nigerians.
