USSD codes may become inactive in 14 days over banks’ N250b debts

Indications emerged, yesterday, that telecommunications operators will suspend the operation of the unstructured supplementary service data (USSD) offering in two weeks over non-remittance by deposit money banks (DMBs) of the charges, which have accumulated to N250 billion in debts.

Going by this new development, USSD transactions value, which the Central Bank of Nigeria (CBN) puts at N2.19 trillion, from 252.06 million transactions recorded in the first half of last year, may be threatened.

The data translates to N12 billion daily transactions. The suspension also portends danger for Nigeria’s financial inclusion campaign.

Whereas USSD was originally targeted at rural communities where Internet penetration is low or non-existent and feature phone users, the recent decline in digital banking service may have increased the USSD adoption rate among the general banking public.

But barring any last-minute truce, the suspension of the USSD service is expected in two weeks due largely to the failure of the banks to comply with the December 20, 2024, joint directive of the CBN and the Nigerian Communications Commission (NCC), which required the financial institution to make part payment of the debt by December 31, 2024.

According to the apex bank, payment agreements—whether as lump sums or instalments—must be finalised by January 2, 2025, with full settlement due by July 2, 2025.

The Guardian gathered yesterday that only four of the indebted banks have made substantial payments, while 18 are yet to respond appropriately.

Sources within the telecoms space said the two weeks announced is to prepare subscribers for the eventuality of the suspension of the important service.

The sources said the NCC has already approved the suspension, stressing that if the defaulting banks make no serious commitment after the suspension, the USSD service would be outrightly deactivated.

While details of the payment by the four banks have not been disclosed yet, The Guardian gathered that the NCC, which will withdraw the shortcodes from the telecoms operators in the coming weeks, is likely going to issue a notice today (Tuesday) on the status of the debts and banks.

With the debt crisis going into the sixth year, the USSD allows bank customers to transfer money digitally on their phones without requiring Internet access. It is an SMS-enabled mobile banking service where a USSD short code enables transactions such as transfers, bill payments and airtime purchases. The service is particularly valuable for users without smartphones or internet connections.

The imminent suspension is expected to disrupt the banking community significantly.

Checks by The Guardian showed that as of July 2024, the number of active bank accounts in Nigeria was 231.1 million, a significant increase from the 2022 total of 151 million active accounts.

Of these 231.1 million active accounts, a large percentage of users are linked to USSD platform and use one service or the other.

An unconfirmed report claimed that there are some 70 million USSD users in Nigeria, with many based in rural areas, who make use of feature phones only to carry out financial transactions.

First Bank of Nigeria Limited, for instance, has over 9.5 million Nigerians on its *894# USSD banking service. Other banks have close to 10 million users on their services.

Statista puts mobile phone ownership at 93 per cent of the Nigerian population. It suggests that 51 per cent of phone owners use basic phones.

Another survey released before the National Identification Number (NIN)- SIM linkage audit, which reduced the number of phone users from 220 to 153 million, puts the number of feature phone users at 88 million.

The CBN said the total value of USSD transactions was N2.19 trillion between January and June 2024. The number is a 54.75 per cent decline from N4.84 trillion during the same period in 2023, a trend that has not been sufficiently rationalised.

Transaction volumes also dropped to 252.06 million from 630.6 million in the period.

While banks own customer accounts, mobile network operators (MNOs) own the networks that facilitate USSD transactions.

Disagreements over payment terms have strained the relationship between the banking and telecommunication operators, prompting multiple interventions by the regulators.

Banks currently charge N6.98 per every USSD transaction and are expected to remit the same to telcos. Whereas there is nothing in the books to specify when the deductions should be remitted, it is assumed that the money should get to telcos timely.

In 2021 when Nigeria celebrated 20 years of GSM services, the then Group Managing Director of Zenith Bank Plc, Ebenezer Onyeagwu, said: “The introduction of USSD changed everything. Without telecoms infrastructure, there is no USSD code.”

Sadly, the sentiment is not universally shared as the CEO of GTCO, Segun Agbaje, would later state: “If you want to charge N20 for the service, go ahead. But collect it yourself. Don’t come to us.”

According to industry sources, the non-payment of this debt—pegged by telcos at N250 billion—has slowed investments in USSD infrastructure, including the expansion of telephone services.

A joint memo by the CBN and the Nigerian Communications Commission (NCC) issued on December 20, 2024, outlined measures to resolve the impasse and enforce payment timelines.
The circular, which the banks have reneged on, outlined several resolutions including that 60 per cent of all pre-API invoices must be paid as full and final settlement by January 2, 2025.

Payment plans may be lump sums or monthly instalments to be completed by July 2, 2025, the memo said.

DMBs are expected to pay 85 per cent of outstanding invoices issued after the February 2022 implementation of APIs by December 31, 2024.

“Future invoices must be settled within one month of issuance,” it stated.
The document also informed that the NCC would initiate processes to revert to EUB for MNOs and DMBs fully compliant with the directives.

“Non-compliance will attract sanctions under the respective regulatory powers of the CBN and NCC,” the joint directive read.

Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, confirmed that the USSD debt dispute dates to 2019.

He highlighted that disagreements arose over who should bear the costs of USSD services for financial transactions.

“In October 2019, banks proposed that telcos adopt end-user billing, but telcos opposed this, citing potential double billing and regulatory constraints. By August 2020, USSD debts owed to telcos had grown to N17 billion and have since ballooned to N250 billion by December 2024”, he added.