The Long USSD War Is Over, and Nigeria’s Mobile Banking Users Are Now in the Middle

Nigeria’s USSD dispute is over, at least on paper. After 5 years of wrangling, commercial banks have cleared nearly ₦300bn owed to telecom operators for unstructured supplementary service data sessions. The payment closes one of the most protracted stand-offs between two sectors that depend on each other yet rarely trust one another.

The announcement came from the Association of Licensed Telecom Operators of Nigeria, whose members had long argued they were financing mobile banking infrastructure without timely compensation. For operators, USSD traffic is not incidental. It consumes network resources in real time. Every unpaid session was, in their view, a cost absorbed.

Banks saw it differently. They contended that pricing models and billing transparency required review. That argument held for years. The result was a cycle of threats, partial payments, and regulatory nudges. In January 2025, the Nigerian Communications Commission intervened directly, warning 9 banks that failure to settle outstanding USSD obligations could lead to disconnection before month-end.

Disconnection never happened. But the threat hung there long enough to force closure.

The debt is settled. The deeper recalibration is just starting.

₦6.98 and the End of Bulk Invoicing

The compromise did not simply clear arrears. It replaced the billing architecture.

Under the newly adopted end-user billing model, customers are charged ₦6.98 per 120-second USSD session, deducted directly from airtime balances. The charge applies only after user consent and a completed transaction.

This alters the direction of cash flow. Previously, operators invoiced banks in bulk for sessions initiated by customers. Banks then either absorbed the cost or passed it on through separate charges. Disputes grew when invoices piled up and reconciliation processes lagged.

Now the charge attaches to the individual transaction. The operator collects directly from the user’s prepaid balance. The bank is no longer the intermediary debtor.

For telecom operators, this reduces counterparty risk. For banks, it removes a volatile line item from their operational expenditure. For customers, it introduces visibility. Every session carries a defined price.

Yet the neatness of that logic obscures a more delicate question. Who ultimately bears the burden?

Financial Inclusion Still Runs on GSM, Not Apps

Nigeria’s smartphone penetration has grown steadily, but USSD remains indispensable. It functions on basic GSM devices, requires no data connection, and operates in areas where 4G coverage falters. In rural communities and among low-income users, USSD is the banking interface.

That fact shaped the stakes of the dispute. Operators threatened suspension at various points. Had they followed through, millions would have lost access to transfers, balance checks, and micro-loans overnight.

The new ₦6.98 fee per 120 seconds appears modest. Converted at recent exchange rates, it is roughly US$0.005. But frequency changes the arithmetic. A customer navigating a failed session or repeating inputs can trigger multiple charges in minutes.

In high-volume markets, small fees accumulate quickly. The risk is not immediate exclusion. It is gradual friction. If users begin to associate mobile banking with unpredictable airtime deductions, usage patterns could bend.

Banks may respond by streamlining session design to reduce duration. Operators may optimize routing efficiency to limit dropped connections. Each side now has incentive to refine performance because inefficiency is no longer hidden inside institutional billing disputes. It shows up in a customer’s balance.

Regulatory Authority as Referee, Not Architect

The Nigerian Communications Commission did not design the banking ecosystem, but it became its enforcer. By setting a deadline in January 2025 and threatening code withdrawal, it signaled that telecom infrastructure would not be used indefinitely without compensation.

The regulator’s leverage stemmed from technical control. USSD codes exist within telecom networks. Without operator cooperation, banks cannot deploy them. That asymmetry granted the commission practical authority.

Still, regulators prefer not to police recurring commercial disputes. The adoption of end-user billing reduces the likelihood of another ₦300bn backlog. It also transfers potential consumer complaints into a new domain. If users object to repeated deductions, oversight may expand beyond telecom regulation into consumer protection and financial conduct supervision.

Inter-agency coordination becomes unavoidable when telecom networks double as banking rails.

Trust Deficit Between Banks and Operators

The dispute exposed structural mistrust. Nigerian banks have invested heavily in digital platforms, app ecosystems, and fintech partnerships. Telecom operators have invested in fibre backbones, spectrum licenses, and mobile money subsidiaries. Both sectors claim to underpin digital finance. Both rely on each other’s infrastructure.

Yet the USSD saga revealed how thin that partnership can be.

Operators argued that they provided a transport layer for banking services and deserved prompt payment. Banks questioned invoicing accuracy and fee structures. Each side publicly framed the other as the bottleneck.

The ₦300bn settlement closes the ledger but not necessarily the tension. Direct billing removes one friction point. It does not dissolve competitive overlap. Telecom-led mobile money platforms compete with bank accounts for deposits and transfers. Banks increasingly explore embedded finance and agency banking models that reduce reliance on telecom interfaces.

The relationship remains cooperative in practice and competitive in ambition.

A Precedent Beyond Nigeria

USSD billing disputes have surfaced in other African markets, though rarely at this scale. Nigeria’s resolution will be studied. The country’s size amplifies consequences. When 1 policy adjustment affects tens of millions of users, it sets a reference point.

End-user billing could become the regional norm. It simplifies accounting. It clarifies responsibility. It also reframes inclusion debates. Instead of arguing over institutional arrears, policymakers will confront consumer cost sensitivity.

If transaction fees accumulate, political scrutiny may follow. Financial inclusion strategies often depend on minimizing visible barriers. A system that deducts airtime for every session must demonstrate reliability and fairness to sustain public trust.

The Infrastructure Beneath the Interface

USSD is often described as basic technology. It predates smartphones and rides on GSM architecture. Yet its endurance speaks to a broader truth about digital development. Infrastructure layers do not disappear when newer tools emerge. They persist, especially where income levels and connectivity gaps remain uneven.

Nigeria’s fintech narrative often spotlights venture capital flows and app adoption. Beneath that narrative sits a simpler reality. Many citizens still transact through numeric menus on feature phones.

That duality complicates digital strategy. Policymakers promote broadband expansion. Banks promote app usage. Telecom operators monetize legacy protocols. The system is layered, not linear.

The USSD dispute forced attention back to the foundation.

After ₦300bn, a Different Set of Risks

With arrears cleared and billing restructured, immediate instability recedes. The next phase revolves around execution.

If session failures remain frequent, customer dissatisfaction could intensify. If banks redesign interfaces to compress interactions under 120 seconds, usability could suffer. If telecom operators treat USSD primarily as a revenue stream rather than a public utility layer, pricing debates may re-emerge in another form.

Digital finance rarely collapses in dramatic fashion. It erodes at the margins. A few naira deducted here, a failed session there. Over time, behavior adjusts.

Nigeria’s USSD dispute ends with a ₦300bn payment and a ₦6.98 charge. The numbers are precise. The outcome is less so. The architecture of mobile banking now rests more directly on the individual user. Whether that strengthens sustainability or introduces new strain will depend on performance, transparency, and the willingness of banks and operators to treat infrastructure as shared terrain rather than contested ground.

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