13 banks clear USSD debts as Nigeria shifts to airtime-based billing model

ussd

13 banks clear USSD debts as Nigeria shifts to airtime-based billing model

In a development for Nigeria’s digital financial services, thirteen commercial banks have fully settled their outstanding debts for Unstructured Supplementary Service Data, USSD, services owed to Mobile Network Operators, MNOs, paving the way for a new, streamlined billing structure.

The remaining three banks are nearing completion of their payments, having cleared over 95 percent of their respective debts.

The disclosure was made by the Chairman of the Association of Licensed Telecommunications Operators of Nigeria, ALTON, Engr. Gbenga Adebayo, during the ‘ASK the Exec’ virtual session hosted by MTN Nigeria.

This resolution paves the way for a new billing system for USSD banking transactions. Going forward, charges for these services will be debited directly from customers’ airtime accounts.

The update on debt settlements and the upcoming billing model were discussed Thursday, during the ‘ASK the Exec’ online meeting anchored by MTN.

Participants included Lynda Saint-Nwafor, Chief Enterprise Business Officer at MTN, and Engineer Gbenga Adebayo.

According to the ALTON chairman, there has been substantial progress in resolving the long-standing debt issue. “As of January, the outstanding debt from banks to MNOs for USSD services was N180 billion. Of the 17 banks with pre-API outstanding payments (excluding Heritage Bank, which is insolvent), 13 have fully settled their debts, and the remaining three are in the final stages of installment payments, with over 95% of the debt cleared”, he explained to journalists present at the call.

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This significant clearance of historical debt is crucial as the industry moves to a new operational model. “Banks with outstanding debts will not be excluded from the new system; they can either migrate to end-user billing once their debts are cleared or choose to remain on the old corporate billing model, provided they settle their outstanding obligations”, Adebayo also pointed out.

Since 2021, collaborative efforts between the telecommunications and banking industries, supported by their regulators, have aimed to standardize charges for USSD banking transactions, resulting in a unified fee of N6.98 per transaction.

MTN’s Chief Enterprise Business Officer, Lynda Saint-Nwafor, explained the upcoming change: “The most significant change is the transition to end-user billing, where customers will now be billed for USSD transactions directly from their airtime accounts instead of their bank accounts. This means deductions will no longer occur from bank balances but from airtime balances held with MNOs.”

Previously, banks directly debited customers’ bank accounts, a system that presented challenges regarding transparency and control. To address this, an Application Programming Interface (API) was developed, granting banks full control over their USSD channels. For instance, a bank like GTBank with the USSD code *737# can now ensure a customer’s number is accepted by the bank before a transaction proceeds, after which the bank applies the N6.98 charge. MNOs like MTN simply facilitate the connection, earning their N6.98 fee for providing the channel.

To ensure a smooth transition and consistent experience, a standardized process for end-user billing has been implemented across all operators and banks: Consent Message: Customers dialing a bank’s USSD code will receive a clear consent message informing them of the N6.98 deduction from their airtime and requesting acceptance. Aggregator Communication: Upon acceptance, the MNO will contact a USSD aggregator to confirm the bank’s availability, preventing billing for unfulfilled services. Transaction and Billing: Once the bank confirms readiness, the MNO connects the customer and bills the airtime account.

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All MNOs have also unified their messaging to customers, providing consistent communication on service levels and transaction outcomes, clarifying if a transaction failed due to issues on the bank’s end or the telco’s side.

Crucially, telco service purchases (airtime and data) from banks are zero-rated when customers use direct strings (e.g., dialing 73710000# for N10,000 airtime instead of the generic *737#). This informs both the MNO and the bank of the specific intent, making these transactions free. Customers are strongly encouraged to use these direct strings to avoid charges, and extensive communication campaigns are planned. Any instance of double deduction (from both airtime and bank accounts) should be reported to the customer’s bank.

Adebayo addressed several key questions, reassuring the public about the implications for consumers and businesses. He noted that for consumers, the shift to end-user billing has a zero net effect on cost, as they were already paying the N6.98 fee, albeit from their bank accounts.

Transparency and accountability are enhanced through standardized consent messages, inter-industry agreements, and MNOs’ commitment to provide monthly performance statistics to regulators.

ALTON Chairman explained: “If a transaction fails due to MNO network issues, the customer will not be billed, or any deduction will be reversed. However, if the failure originates from the bank’s end (e.g., insufficient bank balance, bank system downtime), the customer will still be billed, with the reason for failure communicated.”

The concern about USSD usage limiting access for those in unbanked areas or without airtime was also addressed. “The N6.98 charge is considerably lower than alternative transport costs to physical banking points. Furthermore, customers can purchase airtime from their bank accounts at zero cost using direct strings, even if they have no airtime, as long as they have funds in their bank account. USSD is seen as a convenience channel, with all stakeholders contributing to the cost of providing financial services”, Adebayo stated.