Four major banks are on the brink of having their Unstructured Supplementary Service Data (USSD) services cut off today due to unpaid debts to telecom operators.

Despite a January 15, 2025, warning from the Nigerian Communications Commission (NCC), which granted operators the green light to disconnect the banks over outstanding payments, these financial giants have yet to meet their obligations, risking widespread disruption to mobile banking services that millions of Nigerians rely on daily.

As of the close of work on Friday, January 24, the four banks had yet to make substantial commitments towards repaying the debt. Nine banks were flagged when the Commission issued the January 15 notice. However, it was reliably learnt from an NCC source that four banks still have outstanding payments.

This was confirmed by the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, who noted that while some banks had responded since the notice was issued, several banks have yet to comply.

However, the NCC source and Adebayo could not confirm the amount received as of the weekend, as funds are still being processed and collated. Information also revealed that some of the owing banks have shifted their stance and are now negotiating, unlike before when they were defiant in the face of the impending sanctions.

While the NCC’s intervention may have caused some Deposit Money Banks (DMBs) to reconsider their positions, a document from the Commission showed that the USSD debt stood at N160 billion as of November 2024.

USSD banking is an SMS-based mobile banking service that allows users to interact directly with their bank via mobile phones. It enables transactions such as money transfers, bill payments, and airtime purchases without requiring internet access. This service is particularly valuable for users without smartphones or internet connections and is seen as a crucial tool for deepening financial inclusion, especially in remote areas.

The imminent suspension of the USSD service is expected to significantly disrupt the banking community. In addition to the threat of disconnection, the NCC issued a public notice last week stating that it would withdraw the shortcodes allocated to the nine affected banks after January 27.

In December 2024, the NCC and the Central Bank of Nigeria (CBN) issued a joint circular to Mobile Network Operators (MNOs) and banks outlining guidelines to resolve the debt issue.

The circular, dated December 20, 2024, and signed by Oladimeji Taiwo, Ag Director of the Payments System Management Department at the CBN, and Chizua Whyte, Head of Legal and Regulatory Services at the NCC, outlined specific measures for debt settlement.

According to the circular, DMBs must settle 85 per cent of all outstanding invoices issued after implementing Application Programming Interfaces (APIs) by December 31, 2024. Furthermore, all future invoices must be settled at 85 per cent within one month of issuance.

For invoices predating the API implementation, banks must pay 60 per cent as full and final settlement. Payment plans, whether in a lump sum or instalments, must be finalised between DMBs and MNOs by January 2, 2025. If instalments are proposed, these plans must consist of equal monthly payments, with all payments completed by July 2, 2025.

It should be noted that MNOs and DMBs have been at odds over the appropriate USSD pricing model for financial transactions, the transparency of charges, the mode of collection, and liability for the outstanding and ongoing service fees.

In March 2021, the banks and telecom companies agreed upon a per-session price of N6.98 (which included settling any outstanding fees) after the CBN and NCC intervened. However, the banks have allegedly been deducting the N6.98 per session from their customers without remitting the payment to the MNOs.

Following the joint circular issued in December, the NCC approved MNOs to disconnect nine banks if they failed to settle their debt by January 27. The affected banks include Fidelity Bank, First City Monument Bank (FCMB), Jaiz Bank, Polaris Bank, Sterling Bank, United Bank for Africa (UBA), Unity Bank, Wema Bank, and Zenith Bank. (Excerpted from a Guardian report)