Nigerian banks have restricted transactions on USSD channels with Nigeria’s biggest mobile network operator, MTN Nigeria over a dispute on vending commission rate.
This restriction which took effect on April 1, 2021 was a result of the reduction of commission accruable to telecommunication Value Added Services (VAS) Aggregators and banks from 3.5 per cent to 2.5 per cent.
The aggregators alleged that had on March 31 informed them about the reduction in the commission earned by them which took effect the following day. Both the aggregators and the banks were uncomfortable with the new rate and the banks decided to restrict USSD channel transactions with MTN Nigeria to show their annoyance.
This new dimension is a dent on the recent resolution by both the telecommunications and banking industry regulators, the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) to resolve the USSD dispute which has lingered since 2019.
One of the aggregators alleged that MTN was bent on playing a dominant role in the digital financial services subsector in Nigeria and would do anything to limit the influence of the banks.
Reaction to the development, a telecom industry source who pleaded anonymity as he was not authorised to speak on the matter informed SiliconNigeria that “The overnight suspension of airtime sales by some of the banks was not restricted to USSD channels alone, but includes airtime purchases through all banking channels – bank apps, bank USSD codes, even debit cards.”
Another source, said “The current dispute by the banks and the telecom industry is as a result of the debt of N42 billion owed telecom operators by banks. They want to surreptitiously factor it into a new price regime so that customers will unknowingly help them pay what they had already billed them. Of course, we refused, which is why they are fighting us now. USSD has not been cut by MTN.”
According to him, banks did not send a formal communication to customers or to MTN before taking this action. With their action, the banks are denying customers from accessing their money to make legitimate purchases/transactions. The banks are willing to cut off services to customers in order to protect profits.”
In the last four years, the banks have made:
Bank Turnover Bank/ Earnings:
2017 – N148b/N8b 5.5%;
2018 – N240b/N13b 5.5%;
2019 – N320b/N14b 4.5%;
2020 – N470b/N18b 4%;
2021 – Projected N652b/N20b 4% Q1 & 2.5% YE.
The NCC had in 2018 carried out the licensing of Value Added Services (VAS) Aggregators in the bid to improve the service delivery framework and improve consumer satisfaction on value-added services. The framework was to ensure that telecom subscribers truly get added value when they sign up for such services, and that all stakeholders along the value chain are treated equitably so that the industry can grow.
The Commission had licenced about 233 registered operators in the VAS segment of the telecoms industry. It allocated Short Codes to the 233 VAS licencees for the provision of different VAS services which has immensely enhanced service delivery in the Nigerian telecom and financial services industries.
For instances, you can now recharge your mobile phone line, pay utility bills, make mobile Payments through VAS platforms. VAS has thus made life simple, contributed to the promotion of the financial inclusion policy of the government and facilitated the creation of wealth for many Nigerians.
According to the Executive commissioner, technical services, NCC, Engr. Ubale Maska, ““Anything outside your telephone call or text message we consider it as VAS. It is good for the industry because it has brought a lot of convenience.For instance, you can sit down and transfer money to any account with short codes without going to the bank to queue.”