The Nigerian Banks’ Trust Challenge on USSD Charges

The recent introduction of charges on Unstructured Supplementary Service Data (USSD) transactions came with more than controversy. It may have exposed the lies and conspiracies beneath the exploitative charges that Nigerian bank customers have had to deal with all the time.

When MTN sent notification to its subscribers about the commencement of charges on USSD based transactions, the Nigerian public did not receive the message with open arms. Therefore, the Ministry of Communication and Digital Economy has to wade into the controversy that ensued, ordering MTN to halt the proposed charges.

Upon consideration of the matter by the Ministry of Communication, Dr. Isa Pantimi, the Minister, ordered its immediate suspension.

“After receiving briefing about the proposed USSD charges, I realized there was no justification for the new tariff and consequently, I directed its immediate suspension. Any telecom operator that violates this directive would be sanctioned appropriately.” He said.

The Central Bank of Nigeria (CBN), also registered its opposition to the development. At the just concluded World Bank/IMF Annual Meetings, in Washington on Sunday, the CBN Governor, Godwin Emefiele told the press:

“MTN is the only company that is yet to implement end-user billing which is the standard practice for customer initiated transactions. This is despite the fact that the banks, working with CBN, have engaged MTN over a period of more than one year to try to bring down the cost of USSD to aid financial inclusion.” He said.

When asked if the Apex Bank approved of the charges as announced by MTN, Emefiele said:

“About five, four months ago, I held a meeting with some telecom companies as well as the leading banks in Nigeria at Central Bank Lagos. At that time we came to a conclusion that the use of USSD is a sunk cost. What we mean by a sunk cost is that it is not an additional cost on the infrastructure of the telecom company.

“But the telecom companies disagreed with us, they said it is an additional investment on infrastructure and for that reason they needed to impose it. I have told the banks that we will not allow this to happen. The banks are the people who give this business to telecom companies and I leave the banks and the telecom companies to engage.

“I have told the banks that they have to move their business, move their traffic to a telecom company that is ready to provide it at the lowest cost possible, if not at zero cost. And that is where we stand, and we must achieve it.” He concluded.

As admitted by the CBN Governor, it is the business of the banks and telcos to settle the bill emanating from the USSD transactions. The telcos feel it is becoming a heavy burden to bear running it at zero or low cost, so they wanted the banks to upset the cost. The banks as usual don’t want to take responsibility for any or additional transactional costs, so they directed the network operators to start charging subscribers for transactions. This they did without the approval of regulators, mainly, the Central Bank and the Ministry of Communication and Digital Economy.

It was based on their agreement with the banks that MTN issued the notice of tariff to its subscribers. But that didn’t go well with the subscribers as it generated a lot of noise which caught the attention of the regulators who vehemently opposed the development. In a nutshell, the plan backfired and everyone has herself to defend.

In a moment of twist, the body of bank CEOs issued a statement on Monday, denying any knowledge of the development, alleging that MTN acted on its own. The Group stated:

“The banks did not ask MTN to start charging customers as contained in the text message. The decision on whether, and what amount, to charge customers for assessing USSD is entirely that of the telco company. In the same way a customer is billed for calls, SMS and data.”

They went further to say that charges for financial transactions remain unchanged, and they have no plans to change them.

“That the banks are determined to pursue the National Financial Inclusion Strategy of the government and will continue to advocate that telcos identify wholeheartedly with this laudable initiative and implement transparent and low pricing model in the use of USSD access codes.” The statement said.

By this statement, the banks exempted themselves from any blame and made telcos scapegoats who will face the backlash from the people or likely the wielding axe of regulators.

In a bid to set matters straight, MTN issued a statement titled: Clarification on media reports regarding implementation of Unstructured Supplementary Service Data (USSD) end user billing by MTN Nigeria Communication PLC.

“We at MTN Nigeria Communication plc (MTN Nigeria) approach everyday with one primary objective – finding ways to make our customers lives a little easier; which is why we will focus on what really matters, our customer. They are the reason we made transparency and simplicity central to the recent drawn out engagements with the banks over USSD charges and how they should be applied.

“Following consultation with industry stakeholders, customer feedback and media reports related to the message notifying our customers of upcoming changes in our charging mode for access to banking services via USSD channel, we wish to confirm that the new charging model has not gone into effect.

“The situation has made it necessary to restate that MTN Nigeria, in line with our company policy will always be transparent in our dealings with customers, the industry and relevant regulatory bodies. The SMS notification to our customers is reflective of this commitment and was sent after formal requests received from individual banks as well as the Body of Banks CEOs to implement end-user billing – a billing methodology where the customer is directly charged USSD access fees irrespective of the service charges that the bank may subsequently apply to their bank account.

“It should be noted that the banks had been up-till now been on a corporate billing plan – where a corporate client, the provider of the service that is accessed through the USSD channel (in this case the bank) pays the access fees at a wholesale price.

“We believe the costs associated with USSD banking services should be charged to the consumer only once – as with other USSD services we provide, which we believe has been adequately provisioned for within existing CBN guidelines. It is in fact, in line with National Financial Inclusion Strategy of the Federal Government that we resisted the calls for end-user billing. We relented only after exhausting avenues of engagement with the banks in pursuit of a model that enabled a single charge. We believe separate charges by the banks and telecoms companies are an unnecessary burden on the consumer especially the target group that the National Financial Inclusion Strategy is aimed at.

“With this in mind, it is imperative for all parties to approach the table and engage constructively toward a solution, putting the consumer at the fore of all decisions. The banks have been and still are our esteemed customers and valued partners. We look forward to collaborating with them and other stakeholders and will be glad to implement the decisions approved by the regulators.”

This statement explains two things:

1. The banks, in attempt to avoid any financial responsibility emanating from USSD transactions asked the telcos to charge consumers directly, and reneged when it became a problem.
2. The problem is far from being over. In a situation where the banks are dodging a possible hammer from regulators and at the same time don’t want to foot the USSD charges bill, it’s either the telcos withdraw their services or the banks find a secret way to deduct the charges from depositors accounts.