Nigeria Closes the Book on N300 Billion USSD Debt After Four-Year Banking-Telecom Standoff
Nigerian banks and telecom operators have settled a four-year dispute over mobile banking charges, clearing nearly N300 billion in accumulated debt and shifting billing responsibility to customers.
Syntheda's AI technology correspondent covering Africa's digital transformation across 54 countries. Specializes in fintech innovation, startup ecosystems, and digital infrastructure policy from Lagos to Nairobi to Cape Town. Writes in a conversational explainer style that makes complex technology accessible.
Nigeria's banking and telecommunications sectors have finally resolved a bitter four-year dispute over Unstructured Supplementary Service Data (USSD) charges, clearing close to N300 billion in accumulated debt and fundamentally changing how Nigerians pay for mobile banking services.
The settlement marks the end of a standoff that threatened to disrupt mobile banking access for millions of Nigerians who rely on USSD codes to check balances, transfer money, and pay bills without internet connectivity. Under the new arrangement, customers will now bear the cost of USSD transactions directly, rather than banks absorbing these fees on behalf of users.
From Free Convenience to Payment Dispute
USSD banking became wildly popular in Nigeria precisely because it worked on the most basic mobile phones without requiring data connections. Customers could dial simple codes like *737# to access their accounts, making financial services accessible even in areas with poor internet infrastructure. At its peak, USSD channels processed hundreds of millions of transactions monthly across Nigeria's banking system.
The problem started when telecom operators—led by MTN and Airtel—began demanding payment for the infrastructure costs of routing these banking transactions. According to Legit.ng, the dispute dragged on for four years as banks and telcos argued over who should foot the bill. Banks initially absorbed the costs as part of their digital banking push, but as transaction volumes exploded, so did the unpaid bills to telecom companies.
The N300 billion debt accumulated as banks effectively received telecom services on credit while negotiations stalled. Telecom operators threatened to cut off USSD banking access entirely at various points, which would have left millions of Nigerians—particularly those in rural areas or with basic phones—without access to their accounts.
End-User Billing: The New Reality
The breakthrough came when both sides agreed to transition to an end-user billing model, meaning customers now pay a small fee each time they use USSD banking codes. This approach mirrors how data charges or SMS fees work—the person using the service pays for it directly rather than the service provider absorbing the cost.
For Nigerian bank customers, this represents a shift from what felt like free mobile banking to a pay-per-use model. The fees are typically modest—usually between N6.98 and N10 per transaction—but they add up for frequent users. Banks have been communicating the change to customers, though the transition hasn't been entirely smooth as some users expressed frustration on social media about unexpected charges.
The settlement also required banks to clear their accumulated debts to telecom operators. The nearly N300 billion payment represents one of the largest inter-industry settlements in Nigerian business history, according to Legit.ng. Payment terms weren't publicly disclosed, but industry observers suggest the debt was likely restructured rather than paid in a single lump sum.
What This Means for Financial Inclusion
The resolution removes a major uncertainty hanging over Nigeria's digital financial ecosystem, but it also raises questions about financial inclusion. USSD banking's appeal was partly its perceived lack of direct cost to users—you didn't need a smartphone, data plan, or even basic literacy with apps. Just memorize a code and dial.
Now that customers pay per transaction, some analysts worry that the most financially vulnerable Nigerians might reduce their use of formal banking services or revert to cash transactions to avoid fees. Others argue the charges are small enough that convenience will win out, especially as Nigeria continues its push toward a cashless economy.
The settlement also establishes a clearer commercial framework for future telecom-banking partnerships. As Nigerian fintech companies continue innovating—from mobile money to agent banking—having predictable cost structures for underlying infrastructure makes business planning more straightforward for everyone involved.
For telecom operators, the resolution means they can finally monetize infrastructure that was being used extensively but not paid for. For banks, it removes a growing liability from their balance sheets and clarifies the economics of their digital channels. And for customers, it means continued access to mobile banking, albeit with a new line item on their transaction costs.