The row between Nigerian banks and telcos over who must still pay a $103m Unstructured Supplementary Service Files (USSD) debt can also merely enter a recent round.
In June 2020, the cost of USSD transactions in Nigeria turned into ₦390 billion ($1 billion). Most of these transactions had been from banks, with Warranty Have confidence Bank (GTB) reporting ₦3.89 trillion in transaction cost for 2020.
Whereas USSD is extreme for banks to offer a vary of banking products and services to their clients, it is a long way powered by telcos. USSD is a protocol that enables your SIM to consult with the bank’s pc methods via text message. So deem of it admire prompt messaging in valid time.
Because SMS costs money and hundreds and hundreds of transactions happen via USSD, the inquire of who must still pay has been on the center of a dispute between banks and telcos relationship again to 2019.
The $103 million albatross
In December 2019, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) threatened to conclude down USSD platforms in Nigeria over a $103m debt. In line with ALTON, for 2 years, neither the banks nor clients paid for the usage of USSD.
After two long years of negotiations, the cost for USSD turned into pegged at N6.98 per transaction with Nigeria’s Central Bank and the Communications Commission passing on the expenses to customers.
An announcement from the CBN and NCC said, “To advertise transparency, the original USSD expenses will seemingly be serene on behalf of MNOs (telcos) straight from clients’ bank accounts. Banks shall no longer impose extra expenses on clients for the spend of USSD channels.”
This observation is extreme because at one time, the telcos requested the banks, who had been offering the service straight to clients, to pay for it.
But the Central Bank governor, Godwin Emefiele turned into against that option. He said, “The banks will no longer enable this to happen, they’re the folk that give this industrial to the telecom firms.”
“I truly dangle told the banks that they need to transfer their industrial, transfer their traffic to a telecom company that’s prepared to offer it (USSD platform products and services) on the bottom which that you might per chance factor in if no longer zero mark. And that’s where we stand, and we must produce it.’’
An unstoppable force meets an immovable object
On an investor name final week, Herbert Wigwe, the CEO of Entry Bank toed the line of the CBN governor, insisting that the banks dangle no responsibility to telcos. In line with him, “There isn’t the form of factor as an responsibility due from banks to telcos.”
“We chose to no longer attach a public observation out of it because it is no longer appropriate for us to be learned combating with telcos in public.”
He also added, “It is appropriate that they continue to offer this service but this service has nothing to create with the banks.”
The distance of the banks is that clients must still pay for USSD transactions; however the valid difficulty is that for 2 years, ALTON claims the banks charged their clients a rate and did no longer remit to telcos.
For Gbenga Adebayo, the chairman of ALTON, it is a long way a valid difficulty. He told Guardian newspaper,
“Who create they inquire to pay and what had been the deductions made out of their clients for USSD products and services (which you and I had been debited for)? What’s the deduction supposed for?
It’s a debt and the banks need to pay the operators. It’s a valid responsibility. It turned into ₦42 billion in January, and the amount kept rising, but by the time parties met, it had risen to ₦45 billion.”
Nonetheless, he added that the terms of the settlement are still being discussed and an agreement will seemingly be reached. Yet, despite the truth that a settlement is determined upon this will even merely recommend that Nigerian banks and telcos can also merely commerce their terms of engagement in direction of every diversified.
CBN’s intervention spares the banks blushes as soon as more
Closing weekend, MTN subscribers in Nigeria couldn’t purchase airtime top-up thru their bank app or USSD channel. This turned into in step with MTN’s solution to cut the commission it pays on airtime bought thru bank channels from 4.5% to 2.5%.
Whereas the mountainous banks kicked against it, challenger banks admire Kuda Bank kept their channels originate to MTN subscribers, showing how competition can also merely force the hand of the mountainous banks.
The CBN stepped in over as soon as more to shield the curiosity of the mountainous banks. It ended with MTN reversing the reduce in its commission.
The irony of the CBN’s action shouldn’t be lost on somebody. Whereas the CBN says that banks must still witness for much less pricey picks to telcos to energy their USSD banking, it is a long way forcing the telcos to take care of costs that are counseled to the banks.