The Nigerian Communications Commission (NCC) acquiesced to the demand of mobile network operators (MNOs) to suspend debtor money deposit banks (DMBs) such as Zenith Bank, UBA, FCMB and six others, after attempts at a peaceful resolution of the conflict over cash to be paid for USSD sessions fell through.
USSD or Unstructured Supplementary Service Data is a Global System for Mobile Communications (GSM) protocol that is used to send text messages. It is similar to Short Message Service (SMS). It uses codes made up of the characters that are available on a mobile phone. USSD short codes are used by the DMB customers to conduct banking services and are preferred by some banking customers because they can be used to carry out electronic transactions without the necessity of a smartphone.
Already, the regulator has published the list of the lenders in some national dailies. Aside Zenith Bank, UBA and FCMB, others are Fidelity Bank, Jaiz Bank, Polaris Bank, Sterling Bnk, Unity Bank, and Wema Bank.
According to a document seen by our correspondent, yesterday, the current amount of the debt is over N160 billion based on data as at November 2024.
The document traced the genesis of the debt to September 2019 when it started accumulating.
Worried that the debt will keep piling up, NCC and the regulator of the financial sector, the Central Bank of Nigeria (CBN) issued a joint circular on July 27, 2023 following a stalemate on the payment of the accumulated debt between the DMBs and MNOs.
“Despite the circular, a significant amount of the debt remained unpaid. Subsequently, at a meeting that was held between the CBN, NCC, banks and MNOs on September 3, 2024, resolution was established to reconcile all outstanding invoices not later than October 3, 2024 and to conclude any payment agreements by November 4, 2024.
“Despite this resolution, the NCC and CBN had to intervene once more and issued a second joint circular on December 20, 2024 to further direct the DMBs to pay the outstanding amounts,” the document explained.
Specifically, the second NCC – CBN Joint Directive mandated DMBs to pay 60per cent of all outstanding invoices issued before the implementation of Application Programming Interfaces (APIs) in February 2022. This payment will serve as a full and final settlement for these older debts.
“Payments for these legacy debts were allowed to be in equal installments, but all agreements must be finalized by January 2, 2025, with full payment completed by July 2, 2025.
“DMBs must settle 85 per cent of all invoices incurred after the API rollout by December 31, 2024. Additionally, the same percentage of any future invoices must be cleared within one month of issuance.
“The regulators also proposed transitioning to an End-User Billing (EUB) model. This shift would place the cost of USSD services directly on customers, removing banks from the billing process. However, only DMBs that meet payment obligations to all MNOs will be eligible to transition to this model,” the document said about the resolution of the second joint statement.
The API is an interface that was agreed to and developed by both the banks and telcos to provide the Banks greater visibility so that they are in control of who accesses their USSD codes.
As a control measure, any USSD transaction from a customer must be explicitly approved by the banks before they can be consummated.
“The API was introduced around late to 2021 to early 2022 on the insistence of the banks due to complaints about the lack of visibility over USSD transactions.
“Unfortunately, despite the introduction of this measure, the USSD debts continued to accrue, leading to the issuance of the first joint circular and the events that followed.
“The DMBs were given until December 31, 2024 to pay the outstanding “Post API” debts to the MNOs; the DMBs were also given the opportunity to agree payment plans with the MNOs for “legacy debts” by January 2, 2024. These payments were required to be in equal installments and must be paid off on or before July 2, 2025
The second NCC – CBN Joint Circular however gave concessions to the DMBs which included wavering 15 per cent of all Post-API debts. Therefore DMBs were expected to pay only 85 per cent of the invoices issued within this period.
Also, 40 per cent of all legacy debts were waived. Therefore, DMBs were expected to pay only 60per cent of the invoices issued within this period.
“In addition, DMBs were granted an extended period of up to 6 months for repayment of legacy debts.
“Only nine out of the 18 banks indebted to the telcos as at the date of the circular, have paid off over 90per cent of their Post API debts in line with the directives issued in the second NCC-CBN Joint Circular,” the document explained.
