Millions of Nigerians may face disruptions to mobile banking services as telecommunications operators, including MTN and Airtel, prepare to disconnect banks from Unstructured Supplementary Service Data (USSD) services over unpaid debts. The disconnection, which could take effect by the close of business today, follows a directive from the Nigerian Communications Commission (NCC), the nation’s telecom regulator.
The looming shutdown underscores a deepening dispute between banks and telcos, with the latter claiming significant outstanding debts for USSD services, a critical tool for mobile banking transactions.
The NCC’s Directive and Banks’ Debt Crisis
On January 15, 2025, the NCC issued a directive requiring nine banks to settle their USSD debts by January 27, 2025, or face disconnection. The regulator’s move comes after years of unresolved disputes over payment terms, with telcos alleging that banks owe billions for the use of USSD infrastructure.
USSD services, originally developed for basic telecom functions like airtime purchases, have become a cornerstone of mobile banking in Nigeria. They allow users to perform banking transactions such as transfers, bill payments, and account inquiries without internet access, making them vital for millions of Nigerians, particularly those in rural and underserved areas.
However, some banks have been accused of failing to settle debts owed to telcos despite regulatory interventions. The Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, confirmed that while some banks have complied with the NCC’s directive, others remain non-compliant.
“A number of them are complying in line with the regulatory intervention made by the CBN and NCC. We still have a few hard debtors who haven’t complied, but when the time comes, according to the protocol of that circular, we are going to disconnect,” Adebayo said.
Telcos and Banks at an Impasse
The President of the Association of Telecoms Companies of Nigeria (ATCON), Tony Emoekpere, acknowledged the ongoing issues but declined to provide specific details.
“There were about nine indebted banks, but I don’t have the details now on how many of them have settled. We would have to wait and get updates from the operators,” Emoekpere noted.
In December 2024, the NCC and the Central Bank of Nigeria (CBN) set a deadline for banks to settle 85% of their outstanding debts by December 31, 2024. Despite this deadline, several banks reportedly failed to comply, prompting the current ultimatum.
The NCC’s release of the names of the nine indebted banks marks a rare escalation, signaling the gravity of the situation. While some financial institutions have made payments, a lack of universal compliance threatens to disrupt the mobile banking ecosystem.
Declining USSD Transactions and Their Impact
Data from the CBN highlights the growing importance of USSD services in Nigeria’s financial landscape. Between January and June 2024, 252.06 million USSD transactions valued at ₦2.19 trillion were recorded. While significant, these figures represent a sharp decline from the 630.6 million transactions worth ₦4.84 trillion conducted via USSD in the same period the previous year.
The decline reflects growing tensions between telcos and banks, as unresolved financial disputes have stifled the growth of USSD services. For telcos, the cost of maintaining USSD infrastructure without adequate compensation has become unsustainable.
USSD: A Lifeline for Financial Inclusion
USSD services have played a critical role in advancing financial inclusion in Nigeria. By offering banking solutions without the need for smartphones or internet connectivity, USSD has empowered millions of Nigerians to access financial services. This is particularly important in rural areas where internet penetration is low, and traditional banking infrastructure is limited.
Despite its importance, the lack of a clear framework for USSD service fees has led to recurring conflicts between telcos and banks. Telcos argue that banks have failed to honor payment agreements, while banks claim that regulatory directives have complicated the settlement process.
Potential Fallout and What Lies Ahead
If the disconnection proceeds, millions of Nigerians could face disruptions in their ability to access mobile banking services. This would not only inconvenience customers but also harm businesses that rely on USSD for transactions.
The standoff underscores the need for a sustainable resolution to the USSD payment crisis. Industry stakeholders, including the CBN, NCC, banks, and telcos, must work together to establish clear payment terms and ensure that critical financial services remain accessible to all Nigerians.
Conclusion
As the deadline looms, the fate of USSD services in Nigeria hangs in the balance. While some banks have made efforts to comply with the NCC’s directive, the failure of others to settle their debts threatens to disrupt a vital component of Nigeria’s financial ecosystem.
For now, all eyes are on the banks and telcos to see if a last-minute resolution can be reached. In the meantime, millions of Nigerians are left waiting, hoping that the services they rely on daily won’t be taken away.
