Telcos to Deduct Airtime for USSD Fees Under New Plan

Telecommunication companies and deposit money banks (DMBs) are in advanced talks to introduce a billing system that will deduct airtime from telecom subscribers for using Unstructured Supplementary Service Data, USSD.

End-user billing refers to a system where the customer is directly charged for using the USSD service rather than the service provider being charged. This means the customer’s mobile account (airtime or direct billing) is debited for the USSD session, regardless of any subsequent charges the bank might apply.

This is a change from the traditional corporate billing model where banks were billed for USSD usage. The Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, told The Guardian Newspaper that discussions are on, and the modalities are being fine-tuned to suit subscribers, telcos and DMBs.

Adebayo said end-user billing, which the banks have been advocating for some time now, might help to guard against accumulated debts as witnessed in the imbroglio between the banks and the telecom operators.

“So, we have now commenced discussion to migrate to End-User billing without disruption to services by subscribers. Today, when you do USSD, the banks charge you and debit your account (Debit alert for the transfer). When the discussions are completed, banks will not debit again, but it will go directly from your airtime. Instead of the banks taking the money from your account, it will go from your airtime.

“The conversation has started; there is a migration process that we are going to agree with the banks. This will be the end solution to the issue of USSD debts, which is what the banks have been clamouring for. The discussion is one, but parties still need to agree that systems need to be upgraded and operations need to be transparent so that people are not billed for services they did not get. The conversation is on,” he stated.

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Recall that in a letter addressed to ALTON by the Body of Banks’ Chief Executive Officers (BOBCEO), dated September 16, 2019, the bank chiefs had proposed an “orderly implementation” of end-user billing for bank customers, “aligning with the standard practice for USSD billing.”

In the memo to ALTON, the bank chiefs frowned at sharing the revenue from USSD transactions with the telcos as it claimed that the service providers, which provide the platform for the USSD service, had proposed to take a cut of N4.50k per 20 seconds from the charges paid by customers to the banks. The banks kicked against it, alleging that it would raise the cost by 450 percent as of then.

However, the proposal at the time didn’t sit well with the telcos because of the dynamics, including the technology behind it. The telcos had rather insisted on corporate billing. In 2020, the telcos claimed that the banks refused to come to a roundtable to discuss the matter and put a final lid on it then.

As such, the non-conclusion of the matter five years back contributed hugely to the accumulated USSD debts, which are currently under a recovery mechanism. Subscribers are currently charged N6.98K for every USSD transaction; this took effect on March 16, 2021.

As of November 2024, the Nigerian Communications Commission (NCC) put the USSD debt at N160 billion, of which the majority has been recovered following the directive handed to telcos in January to deactivate failing banks. About 18 banks were fingered to have been culpable.

Speaking on the recovery process so far, Adebayo said significant progress has been made to recover the debts.

“In terms of the debts, we have recovered significant payments. It is not yet uhuru! Quite a number of the banks have honoured their obligations as directed by the two regulators. Everyone is following the circular directive. There are some still not obliging the directive, but sanctions will come upon them,” the ALTON boss stated.

In the circular jointly signed by the Central Bank of Nigeria (CBN) and NCC, the regulators directed DMBs and MNOs to agree on payment plans, either a lump sum or installment by January 2, 2025.

They said if installment payments are opted for, they must be completed by July 2, 2025.