After Months of Tussle, Banks Begin Charging N6.98 for USSD Transactions

What You Should Know as Tussle between Banks and Telcos over N42bn USSD Debt Drags on

After months of an unresolved tussle between Nigerian banks and telco service providers, customers will now have to pay a sum of N6.98 for every time they use an Unstructured Supplementary Service Data (USSD) service.

A number of banks have already sent an email to customers to indicate the start of the deduction regime in accordance with the new charges for customers announced by the Central Bank of Nigeria (CBN) 3 months ago. The apex bank initially indicated that the regime was going to start from March 16, 2021.

Recall that telcos had earlier threatened to disconnect USSD services after banks have refused to pay the accumulated USSD service costs totalling over N42 billion. The accumulated cost was based on a flat fee of N1.63 banks are to remit from the service charge collected on each USSD transaction.

But the new charge is a product of a mutual arrangement by the telcos and the banks at a meeting facilitated by the CBN and the telecommunications sector regulator the Nigerian Communications Commission (NCC).

The arrangement indicates that the new USSD charges will be collected on behalf of the telcos directly from customers’ bank accounts. And that the banks will not impose additional charges on customers for use of the USSD channel.

gtb 737
The *737# service is a USSD banking service offered by GTB

According to the statement signed by CBN’s Acting Director, Corporate Communications, Osita Nwanisobi and Director, Public Affairs, Nigerian Communications Commission (NCC), Ikechukwu Adinde in March, the new charges will replace the current per session billing structure, ensuring a much cheaper average cost for customers to enhance financial inclusion.

However, the service charge will not apply to all transactions. According a statement by one of the foremost banks to its customers, “airtime and data purchases via USSD are exempt from this charge on USSD platforms”.

Overall, the implication is that customers will have to pay more for USSD services only after a year after the NCC amended and pegged the pricing of USSD services to a flat rate of N1.63.

That resolution also mandated that telecom operators must not charge the consumers (end-user-billing) directly for the use of USSD channel for financial services. Instead, it stated that the cost of transaction should be between the MNOs and the entity to which the service is provided.

CBN Seeks Middle Ground Between Telcos and Banks, Proposes -Payment Service Banks

That meant that banks had to pay Telcos from the USSD service charges, a sum that was usually included in a service of an average of N50 by banks.

In all, this is not a good deal for banks who have been compelled to only charge the cost of the service. Before now, USSD charges constitute a significant portion of bank’s annual revenue. For instance, GTBank made about N1,737.4 billion from about 265.1 million USSD transactions in the first half of 2019 alone.

Although the estimated losses would be borne mostly by Telcos, Banks could also share in the loss in the new pricing model.


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