Banks in Nigeria have axed MTN from their Unstructured Supplementary Service Data (USSD) channel.
The decision to yank MTN off the platform is not in isolation with arbitrary reductions of commissions paid to banks and agents selling airtime on their behalf.
Rather than pay the industry rate of six to eight percent which other telecommunication companies pay, MTN paid as low as four per cent which is the lowest in the industry.
As if that was not bad enough, the South African telecommunication company recently reduced its commission to a shocking 2 per cent; an amount which many Industry Experts argue hardly sustains business for the banks.
The four per cent was barely able to meet the service obligation to the telecoms, and further reducing it to two per cent, made it impossible for the banks and its agent to continue to render the service.
Note that this problem is peculiar to MTN alone and not the entire telecos. From available indications, MTN is trying desperately to up their profit by reducing the margin.
According to experts in the industry, MTN’s arbitrary reduction of commissions has put the businesses of the commercial banks at risk, as huge sums have been spent on managing infrastructure and other operational costs. Even worse is the fact that the telecommunication company unilaterally and arbitrarily reduced their commission without consulting the banks.
A source in the financial industry revealed that MTN gave the banks barely 48 hours and the banks also decided to follow the same timeline. According to our source, “MTN wrote to its distributors and agents giving them barely 48 hours notice. The banks initially rejected the new offer and warned MTN that if they go ahead and implement it, they would also remove MTN from their USSD services following the same timeline they had given.”
The consequence of the action of MTN has seen its subscribers unable to recharge their phones using the USSD banking channel which they have become used to.
Statistics have revealed that over 60 per cent of airtime vending by telecommunication companies are done electronically through banks.
The saga between banks and the telecommunication companies didn’t start yesterday, as many would recall efforts by the Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC) to resolve the difference between the two.
A recent communique issued at the end of a meeting to resolve the disagreement between the banks and telecommunication companies stated that effective from March 16, 2021, USSD services for financial transactions conducted at banks and all CBN- licensed institutions would be a flat rate of N6.98k per transaction.
This was considered a better option by Industry Experts who stated that the new offering had a cheaper average cost for customers, while ensuring financial inclusion. For them, the new offering was a more positive approach when compared to the previous per session billing structure.
Part of the communiqué read: “To promote transparency, the new USSD charges will be collected on behalf of MNOs directly from customers’ bank accounts.
“Banks shall not impose additional charges on customers for the use of USSD channel.
“A settlement plan for outstanding payments incurred for USSD services previously rendered by the MNOs is being worked out by all parties in a bid to ensure that the matter is fully resolved.”
Meanwhile, Industry Experts have confirmed that the services rendered to MTN by banks and other agents literarily save the telecommunication company billions of Naira in printing and distribution of recharge cards.
An analysis of 2020 financial year of MTN shows a profit rise beyond that of the entire Nigerian banking industry in the same year.
MTN Nigeria is the backbone of the South African Telecommunication giant who two years ago was caught up in a controversial repatriation of profits from the Nigerian arm of the company to South Africa.