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Telcos to disconnect banks over N250b USSD debts

Some banks risk disconnection by telecom operators over their failure to comply with a directive of the Nigerian Communications Commission (NCC) to repay the N250 billion Unstructured Supplementary Service Data (USSD) debts.

It was learnt that the telcos have gotten the regulator’s nod to disconnect the affected Deposit Money Banks (DMBs).

According to sources, the suspension of the USSD service is expected to last for two weeks to enable their customers migrate from their non-compliant status to the banks that are complying.

Last year, the NCC and the Central Bank of Nigeria (CBN) issued some circulars, directing the banks to offset their debts.

The most recent circular directed all banks to pay ₦212.5 billion – 85per cent of a ₦250 billion debt – as stipulated in a December 20 memo.

But as at January 1, only four banks had complied with the directive, while 18 others refused to pay, giving various excuses why they were not supposed to pay the debt.

The Nation learnt yesterday that only four of the owing banks have made substantial payments, while 18 banks have not responded adequately.

Sources said the subscribers have two weeks to prepare for the suspension of services.

The sources, who were emphatic, said the NCC has already approved the suspension, stressing that if nothing happens after the suspension on the part of the banks, they will be disconnected finally from the platform.

A source said that the NCC would soon publish the list of banks that are still indebted to the telcos, since very few banks have complied with the payment directives as at December 31 last year, despite the efforts by NCC to make  the banks settle the outstanding debts by the end of last year.

The source said that the suspension would last for only two weeks to notify bank customers who still use the USSD code for financial transactions.

According to him, after the two weeks, telcos will completely withdraw the USSD service from errant banks.

It was a tough decision to suspend and later withdraw the USSD service from banks that failed to clear their USSD debt.

But the measure became necessary to enable bank customers switch their services to other banks that have complied with the payment directive, since the outright service withdrawal will only affect debtor banks.

The operators, it was learnt, had written off 40 per cent of the accumulated USSD debts, leaving the banks to pay 60 per cent.

But the banks remain adamant, a situation that may have prompted NCC to give approval for the suspension and withdrawal of the USSD service.

The memo on repayment plans came after years of delays and disputes over USSD payments, which have led to the growing debt.

Despite regulatory interventions requiring banks to collect and remit the USSD fees since 2021, many banks have resisted. They argue that the charges are unfair and that USSD technology is outdated.

Former CBN Governor Godwin Emefiele had described the cost incurred by telcos in putting the requisite infrastructure on which the transactions ride as “sunk cost”.

CEO of GTCO, Segun Agbaje, said all that was needed to be done was get the price of data reduced, arguing that USSD technology had become futile.

Agbaje had said: “If you want to charge ₦20 for the service, go ahead. But collect it yourself. Don’t come to us.”

Similar concerns were raised by the late Group Executive of Access Bank, Herbert Wigwe, who questioned how telcos determine the fees.

He argued that USSD is an outdated technology that will soon become obsolete.

These sentiments, widely shared among bank execs, have contributed to the growth of the USSD debt despite previous regulatory efforts. As of November 2024, telecom operators claim banks owe ₦250 billion for USSD services.

MTN Nigeria CEO, Karl Toriola, said the telcos would have no option but to seek the approval of the NCC to disconnect the banks from the platform.

Chairman, Association of Licensed Telecom Companies of Nigeria (ALTON), Gbenga Adebayo, said the huge debt has a significant impact on the finances of the carriers. While he said not all the banks CEO’s were recalcitrant, adding that smaller banks were paying indicating that the big lenders such as GTBank, Access Bank and others were deliberately refusing to pay the USSD debt.

The December 20 directive seeks to expedite debt settlement and enforce strict payment timelines. Under the new rules, banks must pay 85 per cent of new invoices within one month of receipt.

Additionally, by January 2, banks and telecom operators must agree on a payment plan to settle 60 per cent of all outstanding invoices before using any telco’s USSD platform.

Failure to comply with the directive will lead to sanctions, including fines, operational restrictions, or other regulatory actions designed to enforce compliance.

There are also incentives for banks to pay on time. If banks meet specified payment milestones, the NCC will begin the transition to End-user Billing (EUB), where customers – rather than the banks – would directly pay for USSD services.

EUB is considered the long-term solution to the payment dispute, but it would only be available to compliant parties.

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