USSD Debts: Why NCC Approved Disconnection of Banks
-
Loading... - Emeka Nnamdi
- 16 Jan 2025
- 50 Views
- 0 Like
- 0 Comment
The Nigerian Communications Commission (NCC) has agreed to the request of mobile network operators (MNOs) to suspend services for debtor money deposit banks (DMBs) following unsuccessful attempts to resolve a conflict over fees associated with Unstructured Supplementary Service Data (USSD) sessions. This decision comes after ongoing disputes regarding the payments that DMBs owe to MNOs for the USSD services utilized by their customers.
Unstructured Supplementary Service Data (USSD) is a protocol used in the Global System for Mobile Communications (GSM) to send text messages. It operates similarly to Short Message Service (SMS) but is distinct in its use of codes composed of characters available on mobile phones. USSD short codes are particularly favored by banking customers as they allow for electronic transactions without the need for a smartphone, making banking services more accessible.
According to documents reviewed by our correspondent, the current debt owed by DMBs to MNOs has exceeded N160 billion as of November 2024. This debt has been accumulating since September 2019, raising concerns among regulators about the potential for further escalation.
In response to the growing debt, the NCC and 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. The circular aimed to facilitate a resolution, but despite these efforts, a significant portion of the debt remained unpaid.
A meeting held on September 3, 2024, between the CBN, NCC, banks, and MNOs established a resolution to reconcile all outstanding invoices by October 3, 2024, and to finalize any payment agreements by November 4, 2024. However, as the deadline approached, it became clear that the situation had not improved.
In light of the continued non-payment, the NCC and CBN intervened again, issuing a second joint circular on December 20, 2024, directing the DMBs to pay the outstanding amounts. This decisive action reflects the regulators' commitment to ensuring that the financial obligations between banks and mobile network operators are met, thereby maintaining the integrity of the USSD service.
The NCC's approval to disconnect banks that owe significant debts underscores the urgency of resolving the financial disputes between DMBs and MNOs. As the reliance on USSD services continues to grow, it is crucial for all parties involved to address these financial obligations to ensure the continued availability and reliability of banking services for customers across Nigeria. The situation highlights the need for effective communication and collaboration between the telecommunications and banking sectors to prevent further disruptions in service.
