Unstructured Supplementary Service Data (USSD) was initially set up to create another channel for financial inclusion for the underserved; however, the latest figures show it is not relenting in growth.
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The expected trajectory of USSD payments might have been in the line of USSD transactions and payments decreasing as more people acquire smartphones and transact more online. Meanwhile, as mobile penetration expands and payment services are spreading wider into hinterlands, the number of those captured under USSD keeps increasing.
According to the National Bureau of Statistics (NBS) fourth quarter (Q4 2020) electronic payment channels report, Nigerians recorded a transaction volume of about 145,581,469 on the USSD platform to transfer N1.63 trillion. The figure increased by 9% compared with Q3, while the value rose by 22.64 per cent within the period.
In comparison with other forms of payment available in the country, transactions via the use of cheques stood at N4.20 trillion, indicating a 10.28 per cent increase over Q3 while transactions via Automated Teller Machine (ATM) and Point of Sale (PoS) transactions totalled N4.54 trillion and N1.52 trillion (25.49 per cent increase) respectively.
Some kind of politics had earlier ensued between Telcos and banks which seemed to threaten the health of USSD use since early in the year 2021. Deposit Money Banks (DMBs) and telecommunications operators had a spat where the telecoms firms claim that banks owed them about N45 billion for USSD enabled services within the last 10 months.
As of a month back, telcos insisted that all the debts must be paid adequately else the banks will be disconnected from further having access to the USSD service which they provide.
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It took the intervention of the Minister of Communications and Digital Economy, Dr Isa Pantami, and the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, for the matter to be partly resolved.
Despite this temporary setback for USSD payment within the country, the recently released figures are evidence that it gained more usage from users who are progressively using it as a form of payment despite its higher transaction cost.
With users who do not necessarily need to have a smartphone before they can execute transactions, the user base comes from diverse facets of life such as personal use, businesses, churches, mosques, non-profit organisations, government, merchants, supermarkets and grocery stores, artisans, petty traders, taxi drivers, logistic and so on. USSD automatically has one of the largest range of users.
Now that USSD charges will be borne totally by customers going forward – at a flat rate of N6.98k per transaction – with effect from March 16, 2021, customers will be paying double what they used to bear.
Subsequent data by NBS may reveal if this little policy change will affect the steady growth in USSD payments.
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