According to Segun Agbaje, CEO of GTCO, the parent company of GTBank, the high cost imposed by telecommunication companies (telcos) for USSD transactions is partially responsible for a 22% decline in their USSD transactions.
This criticism reflects a growing dissatisfaction with telecommunication companies in Nigeria. Agbaje referred to the N6.98 charge as a punitive cost that discourages people from using USSD, leading to its stagnation.
This statement marks the culmination of ongoing tensions between the Association of Licensed Telecommunications Operators of Nigeria (ALTON), representing telcos, and Deposit Money Banks over a N120 billion debt. ALTON claims that banks have not settled their USSD debt for years and has recently obtained approval from the Nigerian Communications Commission to disconnect customers from the service.
While many leaders in the banking sector have remained passive, Agbaje emphasized the need for reduced internet costs, asserting that USSD is not a state-of-the-art technology.
Agbaje’s Thought on USSD
Agbaje argued that USSD is a clumsy technology, and to achieve financial inclusion, the cost of data must decrease, making it more affordable.
He believes that a superior technology can be used once data costs are lowered. USSD is considered a mobile banking service as it allows users to perform transactions on their phones. Ben Lyon, CEO and Co-founder of Stax, supports this perspective, stating that mobile banking refers to electronic channels, such as SMS, USSD, or mobile apps, for accessing and managing bank accounts.
However, while USSD transactions do not require an internet connection, accessing mobile banking apps necessitates a stable internet connection. This limitation means that only smartphone users can utilize this service, hindering true inclusion.
Nigeria currently has a smartphone penetration rate of 35%, and with increasing device and data costs, transitioning from feature phones becomes challenging. Agbaje attributes the main issue to the high cost of internet access. Research from Cable indicates that the average data package in Nigeria costs nearly N32,000, with the cheapest plan around N15,000.
Last October, telcos raised their data bundle fees by 10% to mitigate the impact of an economic downturn. Although this increase was later reversed following an order from the regulatory commission, it indicates that data is expensive in Nigeria.
Agbaje argued that lowering data costs is crucial for achieving financial inclusion, claiming that Nigeria is being exploited when compared to data costs elsewhere.
In addition to data costs, the problem of data depletion has sparked discussions among Nigerian telecom consumers. Many subscribers complain of exhausting their data balance days or weeks before the expiry date, despite purchasing data bundles at high prices.
While telcos attribute data depletion to customers’ usage, users feel it is a deceptive tactic to maximize profits at the expense of user satisfaction.
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