Telecommunication firms in Nigeria have declared that they will not be forgiving the N120 billion debt owed to them by banks for Unstructured Supplementary Service Data (USSD) services. The firms have insisted that banks must settle the debt and have warned that disconnection will be the consequence if every effort at resolution is exhausted.
Gbenga Adebayo, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria, made this disclosure. According to him, the banks have yet to respond positively to the telcos’ demands, thereby risking the continued usage of USSD for financial services.
The issue escalated recently when banks received a disconnection notice after the Nigerian Communication Commission granted regulatory approval to disconnect banks from USSD access.
Adebayo, in an interview with The PUNCH, stated, “There has been no progress and we are going to go ahead. As I said to you the last time, the parties are now following the terms of the agreement between them.”
He further explained that individual operators have different models of agreement with different banks, and each will enforce disconnection according to their respective agreements. Adebayo emphasized that the debts must be paid in full and that the telecoms industry will insist on payment or disconnect services.
Adebayo argued that the banks have a moral obligation to pay the debt since they have been collecting payment from their customers for the USSD service. “The banks have the moral obligation to pay. You can see what is happening, that people are being held to account. Because these are services that are rendered and paid for,” he stated.
He also highlighted the fact that banks deduct money from users’ accounts for the USSD service but fail to remit the due amounts to the operators. Adebayo emphasized, “They are taking money from the bank account of users already. They have the moral burden to pay the debt, and it is not going away.”
The process of disconnection is currently ongoing, and the telecoms industry intends to take action when it reaches the end of the bridge. This debt dispute between banks and telcos over USSD services has been ongoing since 2019. Initially, telcos claimed that banks owed them N32 billion, but the amount has now increased to N120 billion.
USSD is a vital financial infrastructure for many Nigerians, especially considering that only about 44 percent of the population owns smartphones, according to the Alliance for Affordable Internet. In 2020, a staggering 762.19 million transactions were conducted using USSD, as reported by the Nigeria Inter-Bank Settlement System Plc.
The future of USSD remains uncertain, particularly in light of the statement made by the Chief Executive Officer of Guaranty Trust Holding Company, who referred to USSD as a “clumsy technology” and advocated for reducing the cost of data to promote financial inclusion.
In conclusion, as the telecom firms stand firm on their demands for debt payment, tensions between telcos and banks continue to rise. The potential disconnection of USSD services could have significant implications for both the financial industry and the Nigerian population reliant on this essential service.