USSD CHARGES: BANKS & TELCOS' BACK AND FORTH AND NCC'S DIRECTIVE

On Sunday, 19^th of October 2019, MTN sent a message to its subscribers informing them that from the 21^st of October, it would start charging the sum of N4 per every 20 seconds spent using the Unstructured Supplementary Services Data (USSD) platform. MTN concluded the message by directing its subscribers who wanted to know more about the charge to contact their bankers.

The following Tuesday, the Body of Bank CEOs published an advertorial in several newspapers denying that they asked MTN to charge any fee and that it was within the purview of telcos to decide whether to charge and what to charge for USSD transactions. It would seem going by the advertorial of the Body of Bank CEOs (BOBCEOs), other MNOs (Mobile Network Operators) namely Airtel, Globacom and 9Mobile had been secretly charging some fees (not sure how much) for a while without alerting the subscribers to it. So, I guess when some of us complain that our phone credits sometimes disappear without us making calls, we now have a reasonable idea where the credit has been going.

What is also apparent is the fact that the issue of who should (continue to) bear the burden of the customers’ use of the USSD platform has been on for quite a while. For instance, the NCC (Nigerian Communications Commission) on 23^rd of July this year, signed a Pricing Plan for the USSD platform and the Plan which came into effect on 1^st September 2019, recommended the price of N1.63K per USSD session and determined a session to be 20 seconds. The Plan also capped the price per USSD session at N4.89K.

What is however quite instructive is the fact that in Paragraph 27 of the Plan, the NCC stated that the motivation for the commissioning of a study to determine the right price for the USSD access was the allegation of excessive charges by financial institutions against telecommunications operators. In paragraphs 28, 29, 32 and 37 of the Pricing Plan, NCC mentioned repeatedly the complaints of the MNOs about the arbitrary and high charges of the Digital Financial Services Providers (DFIs) really, namely Banks and proposed engagements with the CBN towards a possible revenue sharing model which will not defeat the financial inclusion goal of the Federal Government.

What the NCC’s Pricing Plan, the BOBCEOs’ advertorial (which many have called a denial of MTN’s claim that the new cost emanates from the banks but which I see more as an admission of the claims sought to be denied) and the (leaked) memo to ALTON, tell me are the following:

§  Customers’ use of the USSD platform had always attracted charges

§  The USSD charges were previously borne by the Banks and other Financial institutions

§  At some point, the Banks complained about excessive charges by the Telecommunications companies (telcos) for their customers’ access to the USSD platform,

§  The telcos/MNOs believe the Banks are making too much money from USSD transactions and their arbitrary charges are defeating the financial inclusion goal of the Federal government,

§  The Banks told the MNOs/Telcos to commence operation of end-user billing much like they bill for calls and SMSs for USSD transactions.

§  The Telcos/MNOs complained about being placed in a disadvantaged position with regards to remuneration for USSD transactions to NCC and NCC commissioned a study on appropriate pricing for USSD transactions, hence the Pricing Plan signed in July 2019.

§  The Pricing Plan which came into effect on 1^st September 2019 determined a USSD session to be 20 seconds and put the price between N1.63k and maximum of N4.89k.

§  NCC mulled the idea of engaging CBN on a revenue sharing model which will be affordable to the customers and further financial inclusion.

§  Other Telcos apart from MTN seem to have commenced the implementation of the end-user billing proposed by the Banks without the subscribers’ knowledge (if Bullet No 2 of the BOBCEOs’ advertorial is believed).

While it is not clear whether NCC actually engaged the Banks and the CBN as proposed in their Pricing Plan, it is however obvious from the above that the feigned ignorance of the CBN, the Banks and the Ministry of Communications and Digital Economy are just that; feigned.

In the Nigerian government’s usual gra-gra style, the Ministry of Communication has ordered a halt to the charging of fees by the Telcos for USSD transactions. The questions to be answered then are:

·       who pays for USSD transactions during this period?

·       Who is supposed to pay? What exactly is the N50 charged by Banks for electronic funds transfer for?

·       Were the Banks previously paying for the USSD transactions out of the N50?

·       Do the CBN and the Banks truly believe that additional charge raised by the telcos for USSD transactions will promote financial inclusion and help the cashless policy?  

In the revised Guidelines to Charges By Banks and Other Financial Institutions, Section 10.2 allows the Banks to charge N50 for transfer of funds below and above N10,000. Section 10.12 however allows for cost recovery where USSD transactions are concerned. The questions again are: who is entitled to recover the cost of the transaction? And from whom?

There is obviously no doubt that since the infrastructure of the Telcos are used in carrying out USSD transactions, they are entitled to be paid for it. The Banks who were paying however also had valid point in complaining about being charged for failed or extended transaction time as a result of network issues of the Telcos. It is thus my firm belief that for this issue to be resolved in a way that will further financial inclusion, both the Banks and the Telcos must explore the revenue sharing model proposed by the Telcos. No additional financial burden should be placed on the customer if truly, the CBN is serious about financial inclusion and the cashless policy.