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Leaked Memo Shows Banks Asked Telcos To Charge For USSD


Nigerian banks proposed to telecom companies to charge customers
directly for USSD services, a memo seen by TheCable has revealed.
This seems to contradict the public denial by bank CEOs on Monday.

They
said the decision “on whether, and what amount, to charge a customer
for accessing USSD is entirely that of the telco company, in the same
way a customer is billed for calls, SMS and data”.

In a letter to
the Association of Licensed Telecommunications Operators of Nigeria
(ALTON) by the Body of Banks’ Chief Executive Officers (BOBCEO) dated
September 16, 2019, the bank MDs had proposed an “orderly
implementation” of end-user billing for bank customers, “aligning with
the standard practice for USSD billing.”

They said: “Customers using non-bank services already pay for USSD sessions.”

The letter was signed by 13 banks.

On
Sunday, MTN sent this message to its customers: “Please note that from
Oct 21, we will charge N4 per 20 seconds for USSD access to banking
services. Thank you.”

Isa Ali Ibrahim Pantami, the minister of
communications, immediately directed the Nigerian Communications
Commission (NCC) to suspend the new charge.

In the memo to ALTON, the bank MDs had kicked against sharing the revenue from USSD transactions with the telcos.

GTBank, for instance, charges N50 plus VAT for instant transfers to other banks and N20 plus VAT for GTB-to-GTB transfers.

The
telcos, who 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.

However, the banks kicked against it, alleging that it would raise the cost by 450 per cent.

THE BANK CEOS’ LETTER IN FULL

Re: Anti-competitive practices on Reverse Corporate Billing for Bank USSD Services
We
write with reference to instructions to our USSD aggregators, demanding
Banks to subscribe to corporate-level billing for USSD services.

The
demand forces us to a level where we will pay N4.5 per USSD session of
20 seconds, amounting for (to) around 450% increase in tariff.

Many
transactions extend to two or three sessions. This is a cost that will
destroy the financial inclusion strides made by banks where we have
included almost 20m more citizens in the financial system by building
services that run on USSD. Our partnership spirit and recognition of
USSD as a critical national asset to drive financial inclusion has
served all stakeholders well, especially those previously excluded
Nigerians.

Beyond the huge cost-per-session, this would render
the laudable financial inclusion initiatives of the Federal Government
of Nigeria unsustainable which would impede development and economic
growth. We will resist the move to reverse billing by multinational
telecomms companies for the good of our National agenda.

Reverse
billing gives no visibility to on actually sessions used forces to pay
for failed sessions and leaves us exposed to spurious USSD usage that
will increase costs.

We are proposing an orderly implementation
end-user billing for bank customers, aligning with the standard practice
for USSD billing.

Customers using non-bank services already pay
for USSD sessions. It forces cost transparency between the Telecoms
Company and customer, and will ensure the customer demands a reliable
service that works when they need it at a price they can afford. In the
Reverse Corporate Billing situation we are unable to attain
competitiveness nor transparency.

We trust that on understanding
our concern, and the perilous impact that your stated actions will have
on the National Financial Inclusion Strategy, you will implement
end-user billing to ensure customers have a fair deal and a choice. Our
relationship until this juncture has been a symbiotic one that benefits
the millions of users of cost-effective banking solutions, the banks and
the telecom companies for whom Bank channels have become one of the
biggest sellers of airtime using the same USSD channels and other
applications or integrations. If USSD services are used to ransom banks
into exiting our financial inclusion goals, everybody will lose out –
most notably the vulnerable, financially excluded Nigerian.

We look forward to immediate dialogue and appreciate your response by Monday 23rd September. Yours faithfully,
Bank CEOs of Nigeria.

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Last Updated: October 23, 2019

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