A text message sent to subscribers of MTN network on Saturday informing them of plans to charge N4 for every 20 seconds for use of USSD services, had users outraged and authorities running to press to issue ‘stop work’ statements.
The Minister of Communications Isa Ali Pantami who claimed he was not aware of the development said he has directed the sector regulator, the Nigerian Communications Commission (NCC) to ensure that MTN “suspends” such plans until the minister “is fully and properly briefed.”
Like Pantami, the governor of the Central Bank of Nigeria, Godwin Emefiele told reporters far away in Washington, that the MTN plan will not be allowed to happen.
According to him, the apex bank had in a meeting with some telecommunication companies and big banks “agreed” that the use of USSD was a “sunk” cost. A sunk cost is an additional cost on the infrastructure of the telecom company.
“But the telecom companies disagreed with us,” Emefiele said. “They said it was an additional investment in infrastructure and for that reason, they needed to impose it.”
The CBN governor said the big banks and telcos were later asked to come up with an option since imposing charges on users was not an option for the bank regulator.
MTN’s message to its subscribers on Saturday could, therefore, be the conclusion it arrived with the banks.
Interestingly, the office of the minister of ICT was left out of the entire discussion, now forcing the current minister to claim ignorance of the situation.
It should be said, however, that charges on USSD transactions is not a new development and if the minister of ICT has ever made a transaction using any bank USSD code he would have long realised this.
How USSD work
Unstructured Supplementary Service Data (USSD) is to SMS what IM (Instant Messaging) is to email. It is a protocol used by GSM cell phones to communicate with their service providers’ computers.
USSD can be used for wireless application protocol (WAP) browsing, prepaid callback service, mobile money services, location-based content services, menu-based information services, or even as part of configuring the phone on the network.
For the banking sector in Nigeria, Niyi Toluwalope, managing director and CEO of eTranzact, in an interview with BusinessDay, said the company kicked off USSD transactions, partnering with Guarantee Trust Bank (GTBank) to launch its now-famous *737#.
Users do not necessarily need an internet connection to carry out transactions; hence it is ideal for persons in regions where broadband is either non-existent or very poor. It is also driven by adaptability. It is easy to understand. Anyone who can dial a phone number is capable of doing USSD transaction. Finally, the literacy level is of little consequence.
The success of the SANEF initiative of the CBN and some Nigerian banks and other mobile money efforts towards increasing financial inclusion depends mainly on the use of USSD technology. Nearly every Nigerian bank has a USSD code including Access Bank (*901#); Ecobank (*326#); Fidelity Bank (*770#); First Bank (*894#); FCMB (*329#); Heritage Bank (*322#); Keystone Bank (*533#); Skye Bank (*833#); Stanbic IBTC (*909#); Sterling Bank (*822#); Union Bank (*826#); UBA (*919#); Unity Bank (*7799#); Wema Bank (*945#); Zenith Bank (*966#); and Jaiz Bank (*389#).
Origin of USSD charges
Since it became mainstream, USSD Transactions has always attracted charges and that remains one of the sore spots in the drive to include millions of Nigerian who are financially excluded. From the beginning, USSD users have had to pay banks separately for certain levels of transactions they carry out using USSD and telcos for every level of the transaction.
Currently, users are not allowed to initiate a USSD transaction without having credit on their phones. When initiating a transaction via USSD, every process comes at a cost to the network provider. This is also known as USSD Session Charge. Depending on how many steps required to complete the transaction and the quality of the network, charges could go as high N120 for a transaction.
In a WhatsApp response to a concerned customer, Wema Bank explained that the USSD Session Charge includes transactions on airtime and data recharge; transfer, bill payment, cash-on-the-go; balance inquiry; account opening; link BVN; and just dialing *945# without initiating any transaction.
Other banks like Access Bank charge N84 for all fund transfer to other banks and the user must have airtime to initiate a USSD transaction. GTBank charges N10 per inquiry.
Unifying USSD charges
While the statements from the Minister of Communication and Central Bank Governor would go a long way in to pacify outraged users, they are tantamount to playing to the gallery and will not address the real problem. First, without the telcos making their infrastructure available there will be no USSD technology for banks to leverage. Thus, it beats fairness to allow banks that are riding on telecoms infrastructure to reap the benefits while telcos are asked to see their efforts as “sunk” costs.
The CBN perhaps missed an opportunity to set a price threshold for USSD in its Guide to Bank Charges Circular in 2017 when it vaguely categorised USSD charges as “cost recovery,” giving financial institutions the room to exploit its interpretation.
A better approach today would be to bring the stakeholders, including NCC or Minister of ICT, telcos, and banks, in a room and have them agree to a harmonised fee to be shared by all providers. Until that is achieved, telcos and banks will continue to shortchange the progress being made on financial inclusion.
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