In the near future, telecom customers will have to pay for the use of Unstructured Supplementary Service Data (USSD) by having their airtime deducted. According to information obtained by The Guardian, discussions to implement an end-user billing system between telecom providers and deposit money banks (DMBs) are presently in advanced stages.
A system that charges the client directly for utilizing the USSD service instead of the service provider is known as end-user billing. This implies that, independent of any further fees the bank may impose, the customer’s mobile account (airtime or direct billing) is deducted for the USSD session.
This is a shift from the conventional corporate billing approach where banks were invoiced for USSD usage. The Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, said to The Guardian that conversations are underway, and the mechanisms are being fine-tuned to suit subscribers, telcos and DMBs.
End-user billing, which the banks have been supporting for a while, may help prevent accumulated debts, as seen by the current crisis between the banks and telecom providers, according to Adebayo.
Therefore, we have started talking about switching to end-user paying without causing customers’ services to stop working. The banks now charge you and debit your account when you make USSD (Debit alert for the transfer). Banks won’t debit you again after the talks are over; instead, your airtime will be used immediately. The funds will be deducted from your airtime rather than your account by the banks.
“The discussion has begun; we will work with the banks to agree on a migration plan. The banks have long been demanding a solution to the USSD debt problem, and this will be it. In order to prevent consumers from being charged for services they did not receive, the parties must nevertheless agree that systems must be updated and operations must be transparent. “The discussion is underway,” he said.
Recall that on September 16, 2019, the Bank Chiefs wrote to ALTON on behalf of the Body of Banks’ Chief Executive Officers (BOBCEO) proposing a “orderly implementation” of end-user charging for bank clients that would “align with the standard practice for USSD billing.”
The bank executives expressed disapproval of splitting the profits from USSD transactions with the telcos in the note to ALTON. They stated that the service providers, who supply the platform for the USSD service, had suggested deducting N4.50k per 20 seconds from the fees that clients pay the banks. The banks objected, claiming that it would increase the cost by 45% immediately.
However, the dynamics, especially the underlying technology, made the concept unpopular with the telcos at the time. Instead, the carriers had demanded corporate billing. According to the telecoms, the banks declined to attend a roundtable in 2020 to address the issue and put a definitive stop to it.
As a result, the USSD obligations that are presently being recovered from were greatly exacerbated by the matter’s failure to be resolved five years ago. Since March 16, 2021, subscribers have been charged N6.98K for each USSD transaction.
The authorities instructed DMBs and MNOs to agree on payment options, either a lump amount or instalments, by January 2, 2025, in a circular jointly issued by the Central Bank of Nigeria (CBN) and NCC.
They stated that the payments must be finished by July 2, 2025, if they are chosen.
It is required that 60% of all pre-API bills be paid in full and as a final settlement. By January 2, 2025, a concerned DMB and MNO must agree on payment options (lump amount or instalments).
To be clear, if a DMB suggests instalment payment, it must be based on equal monthly instalments, and the money must be paid by July 2 at the latest.
Just to be clear, if a DMB suggests instalment payment, it must be based on equal monthly instalments, and the money must be paid by July 2 at the latest.
In accordance with past decisions made by the CBN and the NCC, DMBs are required to settle eighty-five percent (85%) of all unpaid invoices between the relevant DMB and MNO (also known as post-API debts) by December 31, 2024, following the implementation of Application Programming Interfaces (API) in February 2022.
Additionally, within a month of the invoice being served, 85% of all subsequent invoices must be paid off.
The NCC will initiate the required regulatory procedures to switch back to End-User Billing (EUB), provided that the directions in Paragraphs 1 and 2 above are satisfactorily implemented and that the agreement between DMBs and MNOs for the switch to EUB is furthered.
Only MNOs and DMBs that fully adhere to the aforementioned paragraphs 1 and 2 will be permitted to switch to EUB. In due order, the CBN and the NCC will offer guidelines on public education initiatives related to the changeover. MNOs are required to implement the “10-second rule” for USSD invoicing until the transitional procedures in paragraph 3 above are finalized.
Thus, any USSD session that lasts less than 10 seconds is not eligible for billing. “DMBs with prepaid billing options have the opportunity to migrate to EUB, subject to the execution of the required regulatory processes,” the authorities added.
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