CBN’s ₦6.98 USSD price is a step abet for financial inclusion

In October 2019, MTN Nigeria presented that it would begin up charging a ₦4 price every time possibilities employ Unstructured Supplementary Carrier Knowledge (USSD) to murder bank transactions.

It was as soon as one other chapter in a prolonged drawn out squabble between banks and telcos over who ought to pay for USSD. Within the foundation the thought was as soon as for banks to pay those charges which telcos narrate are spherical ₦12 for one session after which remit it in bulk to the telcos. The banks balked at that thought and asked telcos to price possibilities straight.

Within the raze, Nigeria’s Communication Price stepped in with a designate dedication template. This is important for a few reasons; USSD is a provider that costs money and someone has to pay for it. The NCC optimistic that a conventional USSD session lasts 20 seconds and area a designate cap of ₦4.98 for every session.

But, when MTN despatched out its notification announcing that it would price possibilities for USSD transactions, the NCC claimed it had no longer been notified and suspended those charges. It area the scene for 2 years of disagreements sooner than the day gone by’s respectable resolution to peg costs at ₦6.98 for USSD. 

In line with the assertion from NCC and CBN, “this replaces the unique per session billing structure, guaranteeing a magnificent more cost-effective common price for possibilities to toughen financial inclusion. This potential is transparent and may be obvious the amount remains the identical, regardless of the assorted of classes per transaction.”

The prolonged road to contemporary charges 

In December 2019, the Association of Licensed Telecommunications of Nigeria (ALTON) threatened to shut down USSD platforms in Nigeria. The threat came after lingering uncertainty as to who ought to pay for USSD. 

USSD works with a Man Machine Interface (MMI) code
USSD works with a Man Machine Interface (MMI) code

Telcos had consistently insisted on charging the banks however the Central Bank Governor, Godwin Emefiele kicked against it, citing that it would elevate costs for banks.  At the time, Emefiele acknowledged of the probability of asking banks to pay for USSD charges,  “the banks will no longer permit this to happen, they are the of us who give this industry to the telecom corporations.”

“I include told the banks that they need to pass their industry, pass their internet site visitors to a telecom company that’s ready to produce it at the lowest imaginable, if no longer zero price. And that’s where we stand, and we must attain it.’’

Emefiele’s area that telcos ought to price nothing if imaginable for his or her provider is at odds with the fact that banks price possibilities for the banking products and companies. If banks price for banking products and companies, then telcos ought to additionally be ready to price the banks for USSD classes. 

Within the discontinue, the teach has been resolved at the expense of the customer and all individuals who makes employ of USSD will now pay a ₦6.98 price per transaction. The necessary distinction in the contemporary price is that possibilities could maybe no longer be billed per session, which is a more cost-effective final result than what MTN presented in 2019.  The contemporary price could maybe also honest include implications for Nigeria’s financial inclusion pressure. 

USSD and financial inclusion 

USSD has contributed immensely to financial inclusion in Nigeria. In a rustic where 6 out of every 10 telephones are feature telephones and where 3G connectivity only overtook 2G in 2020, USSD is a sport changer. 

It lets in customers to murder financial transactions without bank apps which on the total need the internet. In all likelihood the ideal testament to its affect is the ₦390 billion in transaction price carried out with USSD in June 2020 alone. 

It is why there are now issues that the contemporary charges could maybe also affect financial inclusion. One banker who spoke to TechCabal anonymously acknowledged, “there are two classes of customers for USSD, the excessive-discontinue and the low-discontinue customers. High-discontinue customers murder transfers and excessive price transactions while the low-discontinue customers majorly utilize airtime.”

“If I’m paying N6.98 every time I’m shopping airtime as a low discontinue person, it’ll be a huge deal on legend of I maybe are looking out to recall ₦100-₦1000 and it’ll ruin my legend steadiness so it’ll decrease my frequency. It’s the identical behavior for third employ of 1 other bank’s ATM which is when charges begin up to kick in.” 

One other product supervisor at one other Nigerian bank who additionally spoke anonymously acknowledged that the contemporary charges will discourage some of us from the employ of it. “There may be a dip in usage and adoption of alternative channels and it’ll affect financial inclusion in some technique as neatly.” 

Within the discontinue, the ideal indicator of whether the contemporary charges could maybe include any affect on USSD usage would be the account from the Nigeria Inter-Bank Settlement Machine Plc (NIBSS).

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