USSD Banking Crisis Looms as Telcos, Banks Clash Over Billing Model and Debt Repayment

 

A major conflict is brewing between Nigeria’s telecommunication providers and the banking sector over the latest developments in the billing model for USSD-based financial transactions. Telecom giants MTN, Airtel, Globacom, and 9Mobile, operating under the Association of Licensed Telecom Operators of Nigeria (ALTON), have issued a stern warning that they may suspend all USSD services to banks if what they call “misleading information” being spread to customers is not corrected.

USSD (Unstructured Supplementary Service Data), a mobile technology widely used by Nigerians for performing banking transactions without internet access, has once again become the flashpoint of an industry-wide controversy. At the heart of the latest dispute is a new billing structure and an ongoing disagreement over debts owed by banks to telecom operators.

On June 3, banks began sending messages to their customers, announcing that, based on a directive from the Nigerian Communications Commission (NCC), charges for USSD transactions would no longer be deducted from customers' bank accounts. Rather, the messages stated, users would now have the charges taken directly from their airtime, marking a shift to what is known as the End-User Billing (EUB) model.

According to the banks, each USSD session will now cost ₦6.98 per 120 seconds. Customers will reportedly be asked to confirm their consent at the start of each session, and deductions will only occur if there is sufficient airtime and the bank is ready to fulfill the service.

This announcement, however, drew a swift and forceful reaction from the telcos, who accuse the banks of deliberately twisting the facts for their own advantage. ALTON Chairman, Engr. Gbenga Adebayo, criticized the banks’ messaging to customers, stating it is not only misleading but also fails to reflect the true nature of the agreement reached by the stakeholders.

Adebayo clarified that the shift to end-user billing was not a unilateral directive from the NCC. Rather, it stemmed from a consensus agreement involving the NCC, the Central Bank of Nigeria (CBN), the banks, and telecom operators. He emphasized that the agreement was conditional, and implementation hinged on whether the banks had cleared their outstanding debts to the telecom providers before June 2.

“There was a consensus that banks could transition to the end-user billing model, but only after clearing all legacy debts owed to telecom operators for USSD services,” Adebayo said. “Unfortunately, while some banks have fulfilled this requirement, the majority are yet to do so.”

He further explained that telcos were particularly concerned about the transparency of the migration process. The telecom operators insisted that no subscriber should face double charges — from both airtime and their bank account — for the same USSD transaction. The integrity of this process, he warned, was being jeopardized by premature and inaccurate announcements from the banks.

With tensions escalating, ALTON is now contemplating a complete withdrawal of USSD support for the banks, a move that could disrupt mobile banking services for millions of Nigerians. Adebayo emphasized that USSD banking, while important, is not an indispensable service from the perspective of the telcos. “It is not a must-have,” he declared. “If the banks cannot honor agreements, we can pull the plug.”

The ongoing row underscores the fragile cooperation between Nigeria’s critical service sectors — telecommunications and finance — and how disagreements over revenue sharing and regulatory interpretation can rapidly evolve into potential service disruptions.

This isn’t the first time USSD services have been the subject of heated debate between telcos and banks. Past disputes over transaction charges and revenue remittance have repeatedly highlighted a structural weakness in how the two sectors collaborate, despite their interdependence.

What remains uncertain is how regulators — particularly the NCC and the CBN — will step in to prevent a total collapse of USSD-based banking. Customers across the country rely heavily on these services for daily transactions, particularly in rural and underbanked areas where smartphone and internet penetration remain low.

Industry observers are calling for immediate regulatory intervention to enforce clarity and ensure service continuity. If left unresolved, the disagreement could not only frustrate customers but also hamper Nigeria’s efforts toward broader financial inclusion.

As of now, the future of USSD banking services hangs in the balance, with the ball firmly in the banks’ court to fulfill their obligations and restore trust in the tripartite agreement. Whether they will meet the telcos’ demands or risk the suspension of a vital financial lifeline remains to be seen.