On 20th October 2019, MTN subscribers received a love letter from MTN. The message read: "Yello, as requested by your bank, from October 21, we will start charging you directly for USSD access to banking services. Please contact your bank for more info".

Shortly after, another Yello message was sent to draw the attention of Nigerians to the N4.00K charge on every 20 seconds session access to USSD banking services.

The Minister of Communications, Dr Isa Pantami, released a press statement that the government was not aware of the N4.00K Unstructured Supplementary Service Data ("USSD") charge by MTN and would direct the Nigerian Communications Commission ("NCC") to investigate this.

The reality however is that the USSD charge is not new. Contrary to popular opinion, USSD charges in Nigeria have never been free. When the service was first introduced, it was impossible to conduct transactions via USSD on a mobile network operator ("Telco") without a minimum balance of N12.00K. One of the reasoning behind this could be that USSD session was expected to last for a maximum period of one minute. This is why a USSD session would terminate if the same is idle for 1 minute and users would have to reinitiate the transaction.

I think the NCC's investigation should not be premised on the fact that MTN is charging for USSD sessions. Rather, the question should be whether MTN is charging above minimum fixed pricing under the determination of USSD Pricing issued by the NCC on 23rd July 2019 - which was effective from 1st September 2019 ("NCC USSDPricing Regulation").

From my experience working with Banks, Fintechs and Mobile Money Operators (USSD Participants), USSD and SMS services are charged to customers by USSD Participants and paid in bulk to MTN on a monthly basis, while other Telcos charge USSD fees directly to customers.

If you do a quick calculation, you will find that MTN's N4.00K per 20 seconds equals N12.00K per minute. This is not in any way different from what other Telcos are charging at the moment.

The NCC USSD Pricing Regulation provides that the price cap for a twenty (20) second USSD session is N4.89k, which means that MTN is only charging 82% of the price cap fixed by the NCC and nothing more.

The fact here is that MTN may decide to take its money directly, without having to go through the rigours of reconciliation caused by bulk payments by USSD Participants. Perhaps MTN feels it is being cheated by USSD Participants and now wants to charge directly to its customers.

Another question that needs to be answered is whether MTN is charging the N4.00K fee atop the USSD charges by the USSD Participants. This is an important question that needs to be answered by the Telcos. If Telcos are indeed charging atop the USSD charges already charged by Banks, then they are acting contrary to the Central Bank of Nigeria's (CBN) regulations.

The CBN Guide to Bank Charges Circular issued in 2017, provides that the USSD rates to be charged to customers are subject to cost recovery. By implication, only cost incurred in providing the USSD services are recoverable from the customers and no additional profit ought to be made from the service by USSD Participants.

In my opinion, MTN should continue to adopt the existing model and allow USSD participants charge the customers directly. If it eventually obtains its Payment Service Bank (PSB) licence, it will be able to drive its business with more competitive pricing.

It is also suggested that the Federal Government should consult with the NCC and the CBN for direction on this issue. It would be unfair to customers and a violation of the consumer protection legislations where MTN has not amended its pricing terms with the USSD Participants, but goes ahead to charge the new N4.00K fees in addition to the existing charges by the USSD Participants.

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