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Banks, Telcos Face-off and Growth Of Financial Inclusion in Nigeria

The recent face-off between Nigerian Banks and Telecommunication Companies on the use of the Unstructured Supplementary Service Data (USSD) is a pointer that regulators on both financial and telecom sectors have a lot of work to do.

The face-off which lasted for almost three days was a great setback to the quest to achieve the revised National Financial Inclusion Strategy which places implementation focus on women, youth, Micro Small, and Medium Enterprises (MSMEs), rural areas, and increase financial inclusion to 95% by 2024.

Although, commercial banks in the country have already reconnected MTN customers to the banking channels including the USSD and banking apps after a 48-hour blackout recently, analysts are of the view that there may be no end in sight until tougher measures are implored to seek redress.

Millions of telecommunication subscribers in Nigerians rely on USSD for banking transactions and payment of certain bills and they became further reliant on these services due to COVID-19 movement restrictions.

Chairman, Association of Telecommunications Companies of Nigeria (ATCON) Engr. Gbenga Adebayo and the Head of Operations, Gbolahan Awonuga had hinted that for more than eight months, the Nigerian Communications Commission (NCC) issued an updated pricing methodology for USSD services for financial transactions in Nigeria.

According to the duo, the methodology explicitly restricts Mobile Network Operators (MNO’s) from charging the end-user for the services and mandates the banking sector to enter into negotiations to settle outstanding obligations and agree on individual pricing mechanisms to be applied going forwards.

Following the threat from the telcos to withdraw their USSD services, the Central Bank of Nigeria, (CBN) and the Nigerian Communications Commission, (NCC) recently announced that USSD services for financial transactions will be charged at a flat-rate fee of N6.98 per transaction, to replace the current per session billing structure and ensure a cheaper average cost for customers to enhance financial inclusion.

The regulators also decided that the new USSD charges would be collected on behalf of MNOs directly from customers’ bank accounts, promoting transparency in its administration, while the banks shall not impose additional charges on customers for use of the USSD channel.

Although the regulators noted that a settlement plan for outstanding payments incurred for USSD services previously rendered by the MNOs was being worked out by all parties in a bid to ensure that the matter was fully resolved, the N42bn debt issue is yet to be resolved before the commercial banks in the country began disconnecting MTN customers to the banking channels.

The recent blockade occurred when MTN reduced the banks’ commission from an average of 3.5 percent to 2.5 percent. The banks had written MTN to revert to the old commission; otherwise, they would block MTN airtime in all their channels.

The banks, except Zenith Bank which was connected directly to MTN, subsequently blocked MTN from their banking channels, leaving millions of customers stranded as they were unable to transfer funds or recharge virtually.

Analysts opined that this development if not nipped in the bud by the CBN and NCC is capable of truncating their pledges to engage relevant operators and stakeholders to promote cheaper, seamless access to mobile and financial services for all Nigerians.

Isa Pantami, Minister of Communications and Digital Economy, and the governor of the Central Bank of Nigeria Godwin Emefiele deserved commendation for wading into the dispute.

However, in a letter dated April 3, signed by MTN CEO Karl Toriola and addressed to the chairman of the body of banks’ CEOs Herbert Wigwe, MTN stated:

“In an attempt to resolve the current USSD recharge impasse, given the intervention from our regulators, we hereby agree that the banks revert to the status quo of 4.5% commission.

“However, the banks and MTN Communications Nigeria Plc shall sit to agree on various options that will result in the reduction in the costs on 6th of April 2021.”

There appears to be no end in sight yet as the debt issue is still unresolved. An impeccable source had explained that before now, MTN was arguably the telco that gives commercial banks the lowest percentage from every recharge (3.5 percent). The review means that the banks and other partners will now get 2.5 percent.

According to the source, all the commercial banks held a meeting in which they decided to take MTN off their banking channels, adding that Zenith is the only bank that refrained from restricting MTN USSD services.

A telecommunication expert, who pleaded anonymity, asserted the banks’ discomfiture with MTN’s participation in the mobile money market as another nexus in the present faceoff.

He said MTN was one of the first to apply for a Payment Service Bank (PSB) licence since 2018 and the Central Bank of Nigeria (CBN) had only issued a Super Agent licence to the telco.

When it was time to issue the PSB, he said that the apex bank chose two telcos, Globacom and 9Mobile, without prior mobile money footprints.

He noted that it is high time for telcos to provide alternative ways to recharge their network lines without using banks’ codes in order to avert anything that will distort customers’ means of transactions should such a situation arise in the future.

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Meanwhile, when the drama lasted, customers using MTN were availed with 10 alternative ways to recharge their line without using banks’ codes.

They include MTN on Demand using 904#, Barter By Flutterwave, Jumia Pay (app); OPay (app); MTN Xtratime airtime loans (606#); Carbon (app); Kuda (app); BillsnPay; myMTN Web, and Momo agent, *223#.

According to the telco, the Apps can be downloaded from Playstore and Appstore, adding that the upgrades also include bulk disbursement services enabling public and private companies to make payments en masse anywhere in Nigeria without a bank account, ATM availability, or bank branch.

Anthony Nwakaegho