USSD disconnection looms as banks scramble to settle N160bn debt

The looming disconnection of Unstructured Supplementary Service Data (USSD) services for nine commercial banks in Nigeria has triggered urgent efforts by the affected banks to resolve their outstanding debts to telecom operators before the January 27, 2025 deadline.

As the deadline approaches, all eyes are on the banks and telecom operators to avert a crisis that could disrupt Nigeria’s financial ecosystem.

The affected Banks are: Fidelity Bank; First City Monument Bank (FCMB); Jaiz Bank; Polaris Bank; Sterling Bank; United Bank for Africa (UBA); Unity Bank; Wema Bank and Zenith Bank.

Telecom operators confirmed that some of the banks have started making partial payments, while others are seeking negotiation. This marks a shift from their earlier resistance prior to the threat of sanctions.

USSD banking, a widely used SMS-based service, allows millions of Nigerians to access banking services such as transfers, bill payments, and airtime purchases.

However, disagreements over the pricing model and transparency of charges have plagued the relationship between banks and telecom operators for years.

In March 2021, following interventions by the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), a per-session price of ₦6.98 was agreed upon for USSD transactions.

However, telecom operators allege that banks have been deducting the charges from customers without remitting them to the Mobile Network Operators (MNOs), resulting in a cumulative debt of N160 billion.

A joint circular issued in December 2024 by the CBN and NCC outlined a clear roadmap for debt settlement. 

Banks were mandated to settle 85 per cent of all invoices issued after the implementation of Application Programming Interfaces (APIs) by December 31, 2024, while older debts were to be settled at a 60 per cent rate by January 2, 2025.

Analysts have attributed the crisis to regulatory delays and a lack of stringent enforcement. A senior telecom official, who spoke on condition of anonymity, criticized the NCC’s approach:

“The regulator’s reluctance to take decisive action allowed this debt to accumulate. The banks would have complied much earlier if they had faced tangible consequences.”

Another stakeholder in the telecom industry echoed this sentiment, stating that the regulator’s “excessive patriotism” had prolonged the issue.

“Regulatory inaction has not only delayed debt recovery but also prevented a necessary review of tariffs, which have remained unchanged for over a decade despite inflation and rising operational costs,” he said.

The impending disconnection poses significant risks to the banks, including revenue loss and a potential decline in customer loyalty.