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Major Overhaul in Nigeria’s USSD Billing System as Telcos and Banks Plan to Shift Burden to End Users
Nigeria’s telecom and financial sectors are on the verge of a significant transformation in how Unstructured Supplementary Service Data (USSD) services are billed. After years of unresolved debt issues amounting to over ₦200 billion, stakeholders are now aligning on a new model that directly deducts USSD charges from users’ airtime. This marks a shift from the previous setup, where banks paid telcos and then billed users from their accounts.
For years, a tug-of-war between banks and telecom operators over USSD fees created a massive pile-up of unpaid dues, threatening service continuity and frustrating users. Now, a new approach — end-user billing — seeks to eliminate those issues by placing the payment responsibility directly on the subscribers. But this pivot comes with new technical, regulatory, and ethical questions.
Key Points Behind the USSD Charges Shake-Up
New Billing System Coming: Nigerian telecom users will soon be directly charged for USSD services via their airtime.
Banks and Telcos in Final Talks: Negotiations between deposit money banks (DMBs) and telecom operators are in advanced stages.
End-User Billing Introduced: This system shifts the billing responsibility from banks to customers.
Reason for the Shift: The move comes after a prolonged ₦200 billion USSD debt stalemate between banks and telecom operators.
Current Process: Presently, banks deduct from users’ accounts while telcos wait for reimbursement.
New Process: Charges will be automatically deducted from airtime, preventing unpaid USSD debts.
ALTON Speaks: Gbenga Adebayo of the Association of Licensed Telecom Operators of Nigeria confirmed ongoing discussions to protect subscribers and stabilize the ecosystem.
Transition in Progress: The migration process will require both technical upgrades and policy alignment.
Revenue Dispute: Banks had earlier rejected a ₦4.50 per 20-second charge proposed by telcos, citing cost implications.
Telcos Pushed for Corporate Billing: Operators favored charging banks directly, believing it to be more structured.
Proposal Rejected in 2019: The Body of Banks’ Chief Executive Officers had formally pushed for end-user billing, but it was turned down.
Debt Recovery Ongoing: Efforts are still underway to recover the ₦200 billion already owed by banks to telecoms.
Transparency Demanded: Operators call for clear systems to avoid accidental or wrongful deductions.
Service Continuity a Priority: Any system shift must not interrupt customer access to mobile services.
Potential Impact on Users: Direct billing may discourage USSD usage, especially among low-income users.
System Upgrades Needed: Telecoms must implement new tech to handle real-time deductions and prevent fraud.
Double Charges Risk: There are concerns about customers being charged by both telcos and banks.
Regulatory Oversight Required: The Nigerian Communications Commission (NCC) and Central Bank of Nigeria (CBN) may need to step in.
Consumer Protection Critical: Any rollout must include a mechanism for user complaints and refunds.
Digital Banking Could Be Affected: A dip in USSD usage might hinder access to mobile banking in rural areas.
Education Campaigns Advised: Users will need guidance on how the new system works.
Implementation Timeline Unclear: While talks are progressing, no fixed date has been set.
Public Feedback May Influence Rollout: Government and stakeholders are expected to weigh in.
Could Reduce Fraud?: With tighter controls, the shift may also help reduce fraudulent transactions.
Wider Trend: Nigeria is not alone — several African nations are also reviewing their USSD billing strategies.
Telcos Seek Revenue Stability: The move ensures they get paid without relying on bank remittances.
Banks Want Cost Reduction: Removing their liability could improve bottom lines for banks.
Users Could Be Overburdened: Direct airtime deductions might hurt consumers already dealing with inflation.
Final Agreements Pending: No final implementation decision has been announced yet.
What Undercode Say:
The shift from bank-led USSD billing to a direct airtime deduction model signals more than just a policy change — it reveals deeper tensions between technology access, financial inclusion, and institutional power in Nigeria. While banks and telecoms squabble over revenue, the average Nigerian is left wondering whether convenience will give way to cost.
Let’s examine the implications from several angles:
1. Consumer Burden and Accessibility:
USSD services are critical to banking access for rural and unbanked populations. By moving charges to airtime — especially without subsidies or usage caps — the poorest users may be priced out. In a country where millions rely on ₦100 airtime daily, a ₦4.50 fee every 20 seconds could be a barrier.
- A Win for Telcos, a Relief for Banks:
Telecoms have long complained about non-payment from banks, leading to strained cash flows and stunted infrastructure investments. This move guarantees direct revenue, while banks offload responsibility, focusing solely on account management and service delivery.
3. Potential Regulatory Bottlenecks:
Any billing system transition on this scale requires close regulatory oversight. Without intervention from the NCC and CBN, there is a risk of duplicate charges, systemic inefficiencies, or user exploitation. This calls for urgent regulatory frameworks, possibly a consumer watchdog unit.
4. Transparency and Dispute Mechanisms:
ALTON’s mention of the need for transparency is critical. Will users get itemized USSD billing details? Can they opt-out of charges or receive refunds for failed transactions? Without solid dispute systems, trust will erode quickly.
5. Technical Implementation and System Load:
Migrating to an end-user billing system demands significant backend overhauls. Telcos must invest in robust billing APIs that track time-based charges accurately. Errors or delays in deductions could spark public backlash and legal action.
6. Long-Term Impact on Financial Inclusion:
Ironically, a policy aimed at stabilizing revenue could undermine Nigeria’s financial inclusion goals. USSD services have been instrumental in bringing millions into the formal banking system. If access becomes expensive, those users might revert to cash-only systems.
7. Possible Shift to Alternative Platforms:
Users may pivot toward data-based banking apps, assuming they have smartphones and data access — which isn’t the case for many Nigerians. Hence, this move might widen the digital divide.
8. Business Model Reassessment:
Telcos and banks must explore hybrid models that include bundled USSD charges or promotional periods. Charging per session may be outdated in a world where seamless microservices dominate.
9. Need for Mass Communication:
This shift demands robust communication strategies. Millions must be educated about the new model, how it affects them, and where they can seek redress.
10. A Test for Nigeria’s Digital Economy Readiness:
Ultimately, this transition will reveal how prepared Nigeria’s digital infrastructure and governance models are for complex, interconnected financial services.
Fact Checker Results:
The ₦200 billion USSD debt has been publicly confirmed by ALTON and multiple industry sources.
End-user billing was indeed proposed as early as 2019 by Nigerian banks.
There is no final implementation date yet, but discussions are actively ongoing.
Prediction:
If the end-user billing model is implemented without safeguards or subsidies, Nigeria could see a significant decline in USSD-based financial transactions over the next 12 months. While telcos will benefit from direct payments, digital financial inclusion may take a hit unless mitigated by policy, consumer education, or tiered pricing models. Expect regulatory adjustments and public backlash if early deductions are mishandled.
References:
Reported By: www.legit.ng
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