To ask end-users to pay for USSD access fees for banking services is to expose bank customers to double billing, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has said in a recent explanation it shared with the media.
The USSD – Unstructured Supplementary Service Data – is used by all banks to facilitate mobile-based financial transactions. More than 90% of already banked customers now depend on the USSD to carry out a number of banking transactions by simply using a combination of codes and hashtag on their mobile phones.
ALTON is the umbrella body for all telecom operators in Nigeria including MTN which recently had its plans to directly charge customers for USSD access fees stopped by the Minister of Communications, Dr. Isa Ibrahim Pantami.
Against public outcry condemning the plan by the MTN to start charging N4 (four naira) for USSD service beginning from Monday, October 21, the communications ministry said it was not aware of the sudden plan by the telco to charge users for USSD transactions. The ministry then directed the telecoms regulator, Nigerian Communications Commission (NCC) to ask the discontinuation of such plans by MTN and other operators.
ALTON in a statement issued in Lagos alleged that banks already were charging customers for USSD services but the financial players under a new arrangement decided that telecom operators should charge directly for the service which could expose customers to double billing.
“Our members were however concerned that the banks were unlikely to discontinue the USSD service fees charged by the banks when customers utilize the USSD channel thereby resulting in double and over billing, whereby our members charge consumers for the USSD access from their airtime and the Banks still proceed to charge the same consumers a service charge from their bank,” said ALTON in a statement jointly signed by its Chairman, Mr. Gbenga Adebayo and Head of Operations, Gbolahan Awonuga.
“Our members are deeply concerned about the feelings of customers who have been instrumental in the growth of the telecommunications sector. Given our members’ commitment to the ethos of accountability and transparency in engagement with consumers, we wish to provide clarity on the issues surrounding the USSD access and the associated charges,” said ALTON even as it called on the NCC and the Central Bank of Nigeria to convene a meeting of the financial and telecoms industry stakeholders in order to address the issue.
Issues surrounding USSD access and associated charges, by ALTON
- The USSD channel has evolved over time from a telco exclusive channel used for only telco services such as balance inquiry and recharges, to a channel being utilized for the deployment of financial, insurance, agricultural and government services, etc. The USSD channel is delivered using the Standalone Dedicated Control Channel (SDCCH) which is also used for call set-up, SMS set-up, and delivery.
- Similar to the other telco services such as SMS, voice and data, network resources are utilized in the provisions of USSD services and as such there are significant costs associated with deploying and maintaining the service.
- The Banks however identifying the convenience of delivering services to its customers over the USSD channel applied to the Nigerian Communications Commission for USSD codes to deliver these services. USSD Shortcodes were thereafter issued to the Banks and as is expected, they became fully responsible for the charges associated with delivering services to their customer through these shortcodes.
- Recently, the USSD channel has become a preferred service channel for the financial sector because of the cost efficiencies derived from the adoption of the channel. Today, USSD codes such as *737#, *906# have become leading brands because Banks have intensified the promotion of this channel to mostly the banked base towards the overall improvement of efficiencies with less focus on other service channels such as brick and mortar centers.
- With the increase in USSD traffic driven by financial services which currently constitutes approximately 90% of the entire USSD traffic, our members have continued to incur additional costs to provision additional SDCCH channels to mitigate against the negative impact on the quality of service. It is therefore factually incorrect when allusions are made that USSD costs incurred by our members are sunk costs which are not recoverable
- In order to accelerate the adoption of financial services on USSD, the banks partnered with our members to zero-rate the USSD access to end-users, while the banks bore the cost for the provision of service. Based on this arrangement, the banks took on the responsibility of billing customers and paid our members for use of the USSD infrastructure from the service fees deducted from the customer’s bank account. These service fees charged by the banks, were however far in excess of the costs remitted to our members by the Banks for providing the USSD platform and have since remained so.
- Following the issuance of the USSD Pricing Determination by the Nigerian Communications Commission which resulted in a price review of USSD service by our members, the banks stated that they would no longer pay for USSD service delivered to their customers and requested our members to charge customers directly for use of the USSD channel. This billing methodology where the Banks customer is directly charged USSD access fees by our members irrespective of the service charges that the bank may subsequently apply to the customers’ bank account is called “End-User Billing” which the banks specifically demanded that all our members implement. The banks, however, provided no assurances to our members that such service fees charged to customers’ bank accounts for access to bank services through the USSD channel will be discontinued post implementation of end-user billing by our members. The removal of these service fees by the banks would have meant that if bank customers were charged only the USSD costs communicated by our members per USSD session, bank customers will be paying far less than what they are currently being charged by the banks which in some instances are as high as N50. Additionally the banks and telco’s will be applauded for collaborating towards the financial inclusion objectives of the Federal Government.
- Our members were however concerned that the banks were unlikely to discontinue the USSD service fees charged by the banks when customers utilize the USSD channel thereby resulting in double and over billing, whereby our members charge consumers for the USSD access from their airtime and the Banks still proceed to charge the same consumers a service charge from their bank accounts. In the interest of the consumers, our members challenged the implementation of end-user billing until a formal request for its implementation was received from the Body of Bankers Chief Executive Officers and several banks specifically demanding that end-user billing be implemented.
- In view of the opposition to the implementation of end-user billing by customers, our members, as responsible and responsive corporate citizens are committed to safeguarding consumer interests, and in this regard, we are willing to explore mutually beneficial solutions which ensure that costs associated with the provision of USSD services as determined by the Nigerian Communications Commission are fully recovered by our members and customers are not billed twice for the same service and by different institutions which is what end-user billing advocated by the banks will entail.
- In this vein, we call on the Nigerian Communications Commission and the Central Bank of Nigeria to, as a matter of priority, convene a meeting of the financial and telecoms industry stakeholders to address this issue for the benefit of the consumers and other stakeholders.