Why telcos will now deduct USSD charges from your airtime

Starting later this June, a new guideline proposed by the Nigerian Communications Commission (NCC) will charge mobile airtime balances instead of customers’ bank accounts for Unstructured Supplementary Service Data (USSD) sessions. This change marks the latest development in a years-long standoff between telecom operators and banks over who should bear the cost of USSD transactions—a dispute that has left over ₦160 billion ($106.67 million) in unpaid fees hanging in the balance.

The new billing model, first hinted at in a June 3, 2025, customer notice issued by Sterling Bank and United Bank for Africa (UBA), states that each USSD session will cost ₦6.98 per 120 seconds. Telecom operators will deduct this amount directly from the subscriber’s airtime, but only after the user consents and the bank confirms it is ready to deliver the requested service. 

The NCC has yet to release a full public statement on the policy, but sources familiar with the ongoing discussions confirm that final implementation details are being worked out between banks and telcos, and implementation is likely to kick off before the end of June. While the commission declined to comment on this story, an NCC official said the commission was preparing a detailed position on the new rules. 

A long-running dispute, finally addressed

The new model is intended to break the cycle of payment disputes that have plagued USSD services since their inception. Initially, telecom operators provided USSD infrastructure to banks, who in turn billed customers and were expected to settle service charges with the telcos. However, there was no clearly defined revenue-sharing model, and as user adoption soared, so too did the debt owed by banks to telcos.

In 2019, MTN Nigeria attempted to shift the cost to subscribers directly by introducing an end-user billing model. The move was quickly halted by the NCC and the Central Bank of Nigeria (CBN), which argued that USSD was a “sunk cost” and not meant to be charged to end users. The NCC later adopted a corporate billing model in 2020, instructing banks to bear the service costs while collecting transaction fees from customers separately.

Despite efforts to standardise USSD billing, disputes between banks and telecom operators persisted. In 2021, a flat fee of ₦6.98 per USSD session was introduced, with banks expected to collect this fee from customers and remit it to telecoms. However, compliance remained weak. 

Over time, unpaid fees accumulated significantly, and before regulatory intervention, telecom operators claimed that banks owed them around ₦250 billion for USSD services. In response, the CBN and the NCC directed banks to settle ₦212.5 billion, representing 85% of the total debt, by the end of 2024. The debt had steadily grown over several years due to delayed payments and unresolved billing models. By early 2025, MTN reported it had recovered ₦32 billion but still had ₦42 billion outstanding.

What changes with direct airtime billing?

The NCC’s directive effectively returns to end-user billing, but with safeguards in place. Instead of silently passing fees through bank channels, users will now be required to authorise each transaction. Once consent is given, the ₦6.98 fee will be deducted from their airtime balance, giving telecoms full control over fee collection.

For telecom operators, the shift to direct airtime billing represents a long-overdue resolution, offering multiple operational advantages. It eliminates the need to pursue banks for settlements, reducing bad debt as payments are collected instantly at the point of transaction. Additionally, it gives telcos full oversight of USSD billing and revenue tracking, while also streamlining operations by removing the legal and administrative burden of dealing with unpaid debts from banks.

What does it mean for customers?

For subscribers, the most immediate impact of the new USSD billing model is the requirement to have sufficient airtime before initiating any transaction. This marks a shift from the previous system, where charges were deducted directly from bank accounts, and it may prove inconvenient for users who are not in the habit of topping up mobile credit. For those accustomed to seamless banking without the need to manage airtime balances, this could disrupt routine financial transactions.

However, the model introduces certain benefits that could enhance the overall user experience. One key improvement is the introduction of a consent prompt before any charge is applied. This ensures that users are fully aware of and agree to the charges, fostering greater transparency and trust in how USSD services are billed.

The standardised pricing—₦6.98 per 120 seconds per session—provides predictability. With clear and consistent costs, users can better plan for and manage their mobile banking expenses, which may, in turn, encourage more frequent use, especially in areas with limited access to internet-based banking options.

USSD remains a vital channel for financial access in Nigeria, particularly in rural and underserved areas where mobile apps and internet connectivity are less prevalent. By simplifying the cost structure and improving reliability, the new model may enhance confidence in USSD banking and preserve its utility as a financial inclusion tool.

While the NCC’s new rules resolve one of the telecom sector’s longest-running disputes, some questions remain. Will subscribers push back against airtime billing? How will banks adapt to a diminished role in the USSD transaction chain? And can this model be sustained in a market already grappling with rising costs and inflation?

In the short term, telcos like MTN and Airtel stand to benefit from improved revenue collection and a stronger grip on service delivery. In the long term, however, the policy’s success will depend on user experience, public education, and the ability of stakeholders to maintain service affordability.

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