Four Nigerian Banks Risk Losing USSD Access After Debt Settlement Deadline

2025-01-28

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In a recent development that could disrupt banking services for millions of Nigerians, four major banks are at risk of losing access to USSD (Unstructured Supplementary Service Data) services. This comes after the Nigerian Communications Commission (NCC) set a deadline for these banks to clear outstanding debts owed to telecom operators for USSD services. As the deadline looms, the consequences for the affected banks could be severe, particularly for customers who rely heavily on USSD for financial transactions, especially in rural areas where internet access is limited.

Summary:

– Four Nigerian banks risk losing USSD access after the deadline to settle outstanding debts to telecom operators expires.
– The NCC has authorized telecom operators to disconnect USSD services for banks that have not cleared their debts.
– USSD services are vital for banking transactions in rural Nigeria, where internet access is scarce.
– The affected banks include Fidelity Bank, FCMB, Jaiz Bank, Polaris Bank, Sterling Bank, UBA, Unity Bank, Wema Bank, and Zenith Bank.
– As of January 27, only five banks had made partial payments, and the rest are expected to resolve the matter.
– The NCC had initially warned banks on January 15, and disconnection notices followed for those who had failed to settle debts accumulated since 2019.
– The debts were accumulated after banks failed to remit payments for the use of telecom USSD codes for banking services.
– The total debt owed by banks to telecom operators was over N200 billion in 2024, later reduced to N160 billion after some banks made payments.
– The next issue to be addressed is the billing time for USSD services, with ongoing disagreements over the 10-second charge rule.

What Undercode Say:

The controversy surrounding the USSD debt is more than just a simple financial dispute—it has major implications for the banking and telecommunications sectors in Nigeria. The debts accumulated over years have highlighted a significant gap in how banks and telecom companies interact with each other and their customers. At the heart of this issue is a complex web of financial obligations and customer expectations, particularly in rural Nigeria, where internet-enabled devices are scarce. USSD services, which rely on basic mobile phones, have been the bridge for many people to access financial services, ranging from checking account balances to transferring money.

The USSD code payments for these services are critical, as telecom operators depend on them to maintain the infrastructure that supports these services. The delay in payment, which started in 2019, led to mounting debts, ultimately reaching over N200 billion by 2024. This accumulation of debt paints a larger picture of the financial challenges that both the banking and telecom industries face in Nigeria.

However, the situation is not entirely one-sided. While the telecom operators have a legitimate claim to the unpaid bills, the banks argue that the 10-second billing time rule for USSD transactions is unfair and unreasonable. This has become a point of contention, with some banks pointing to the difficulty in predicting the exact duration of a transaction. If implemented, the rule could make USSD services more expensive and less accessible for many customers.

Furthermore, the issue brings to light the ongoing struggle between the Central Bank of Nigeria (CBN), the Nigerian Communications Commission (NCC), and banks over the regulation of financial services in the country. The CBN and NCC’s move to enforce a 10-second USSD billing rule underscores the ongoing regulatory tension that has existed between the banking and telecom sectors for years. The difficulty in resolving this dispute suggests that the regulatory framework for USSD services in Nigeria is far from perfect and could lead to more challenges for both service providers and customers.

From an analytical perspective, these ongoing disagreements and financial disputes between banks and telecom operators point to a larger systemic issue within Nigeria’s financial and telecom regulatory environment. While the banks’ reluctance to pay their debts is concerning, it is also indicative of deeper challenges, such as inefficiency in payment processes and a lack of robust contractual agreements between telecom operators and banks. This system has been left unchecked for far too long, resulting in a massive debt burden and, eventually, a potential disruption of services.

The reality is that the future of USSD services is uncertain if these issues are not resolved. For customers, especially in rural areas where access to smartphones and mobile data is limited, the potential disconnection of USSD services represents a loss of access to essential banking services. These services have long been seen as an affordable and accessible alternative to traditional banking, and their removal could leave many Nigerians vulnerable and financially excluded.

For the telecom operators, the decision to cut off service to banks is a tough but necessary one. The companies have been facing financial strain of their own, with insufficient revenue to reinvest in their infrastructure and improve service quality. The hope is that this move will compel the banks to clear their debts, allowing the telecom sector to recover and continue providing essential services.

Ultimately, the resolution of this issue will require both sectors to come to a compromise. The banks must clear their debts, while the telecom operators should work with the banks to ensure a fair and transparent billing system that does not hinder customer access to financial services. Additionally, regulatory bodies like the NCC and CBN will need to facilitate constructive dialogue between the parties to prevent future disputes and ensure that both financial inclusion and telecom infrastructure are prioritized. Only through collaboration and transparency can Nigeria move forward without losing access to these essential services.