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Telcos withdraw shortcodes for bank transfers from Monday

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An unresolved squabble between banks and Mobile Network Operators (MNOs) over accumulated service debt may cause consumers to stop enjoying the use of Unstructured Supplementary Service Data (USSD) codes otherwise known as shortcodes from Monday, 15th March.

In a press statement issued by the MNOs under the umbrella of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), dated 11th March 2021, they said they have “reached a point where the withdrawal of these services has become unavoidable.”

The MNOs assured that “we remain committed to working closely with the relevant Ministries and regulators to resolve this issue as quickly as possible.”

From various communications between the Minister of Communications, the Nigerian Communications Commission, and the MNOs, it is gathered in a directive from the NCC dated 23rd July 2019, amended on 24th July 2020, that there was to be a revised charging system in which corporate users instead of end-users would be charged for the use of USSDs for money-transfers .

The banks in response to this change, in a communication by Bank CEOs under the aegis of Body of Banks’ Chief Executive Officers, complained:

“The demand forces us to a level where we will pay N4.5 per USSD session of 20 seconds, amounting for around 450% increase in tariff. Many transactions extend to two or three sessions. This is a cost that will destroy the financial inclusion strides made by banks where we have included almost 20m more citizens in the financial system by building services that run on USSD. Our partnership sprit and recognition of USSD as a critical national asset to drive financial inclusion has served all stakeholders well, especially those previously excluded Nigerians.”

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They proposed “an orderly implementation end-user billing for bank customers, aligning with the standard practice for USSD billing.”

“Customers using non-bank services already pay for USSD sessions. It forces cost transparency between the Telecoms Company and customer, and will ensure the customer demands a reliable service that works when they need it at a price they can afford. ln the Reverse Corporate Billing situation we are unable to attain competitiveness nor transparency.” They argued.

The MNOs, on the other hand, said there were no guarantees from the banks that they would not charge end users further for the use of USSDs for bank transfers.

As a result, the MNOs said they had to hold back on applying such a charge to avoid double and over-billing end-users.

The result of this uncertainty is that over eight months after the charging directive was issued, a service debt of N42 billion has been accumulated, resulting in a new directive by the NCC to MNOs to withdraw USSD services until the problem is resolved.

The Minister of Communications and Digital Economy, Dr. Isa Patami, in a letter to the Central Bank Governor, Mr. Godwin Emefiele, dated 4th March 2021, pointed to the NCC directive saying, “These stipulations were issued in good faith, borne out of multi-stakeholder engagement with the objective of ensuring service continuity, protect consumers, provide an empirical basis for ‘pricing and generally guarantee the interests of all parties in the use of USSD services.”

“I am constrained to direct the NCC to ensure immediate compliance with the terms of the Determination, failing which
MNOs will be directed to discontinue the rendering of USSD services to commercial banks with effect from 9th March, 2021.

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Following up on the Minister’s letter to the CBN Governor, the NCC wrote to the MNOs:

“Based on the Hon. Minister’s directive and in order to ensure minimal disruption, we hereby request that you furnish us with a detailed plan as to how you intend to implement the directive if we do not have positive feedback from the Financial Services Providers (FSPs}, or Central Bank at the expiration of the deadline on 9″‘ March, 2021. A phased disconnection of huge debtors should be adopted to avoid a total collapse of the service and ensure minimal customer backlash.”

The MNOs said in their statement:

“It has been more than eight months since the Nigerian Communications Commission (NCC) issued an updated pricing methodology for USSD services for financial transactions in Nigeria. The methodology explicitly restricts Mobile Network Operators (MNOs) from charging the end user for the services and mandates the banking sector to enter into negotiations to settle outstanding obligations and agree individual pricing mechanisms to be applied going forwards.”

“During this time, Mobile Network Operators (MNO’s) have continued to provide access to USSD infrastructure despite the fact that obligations due from banks to telecoms companies for USSD services has reached over Forty Two Billion (N42B) Naira.”

Owing to the situation, ALTON announced:

“Therefore, our members are initiating a phased process of withdrawal of USSD services, starting with the most significant debtors within the Financial Service Providers (FSPs) effective Monday March 15, 2021.”

The latest development is that Minister of Communications and Digital Economy, Dr. Isa Patami, will meet with all stakeholders to the matter on Monday.

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