The hidden cost of USSD: How Nigerians are losing money to failed bank transactions

When Chinyere, a petty trader in Lagos, tried to transfer N5,000 to her supplier using her bank’s USSD code, she thought it would take only seconds. Instead, the transaction failed midway.

Frustrated, she tried again. The second attempt also collapsed without delivering the funds. But when she checked her balance, she discovered N13.96 had been deducted N6.98 for each failed session.

Transaction was unsuccessful and she was charged twice without getting any value.

Chinyere’s story was not an isolated case. This has been the experience of many bank customers using the USSD channel to perform basic transactions across Nigeria.

The situation becomes more worrisome because neither the banks nor the telecom operators are ready to take the blame, leaving the customers to bear their losses in silence.

Threat to financial inclusion 

According to the National Vice President of Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) Mr. Yusuf Adeyemo, the rising cases of failed USSD transactions and loss of money by bank customers is now threatening financial inclusion in Nigeria.

He noted that many Nigerians still depend on USSD for transactions, but the experience of losing money is now discouraging them from using the channel.

“We are not even talking about agents because they might not be affected much because they use POS. But we are worried for a lot of our customers who have had to use USSD code unsuccessfully, but they were debited,” he said.  

• Adeyemi said while some people may see the N6.98 as insignificant, multiple deductions of the same amount for unsuccessful transactions has become the hidden costs several bank customers are paying.
• This, he said, is making financial inclusion in Nigeria to become more expensive and may discourage many from putting money in their bank accounts.
• He noted that many customers have lost money to transactions as little as checking their BVN or retrieving NIN as they get debited without getting the service.

“Affordability is the basis of financial inclusion, when it is no longer affordable to carry out financial transactions, then people get discouraged. 

“There’s a need for the banks and the telecom operators to look at it critically. If a transaction is not successful who is tracking it back to pay the consumer back? It’s a conversation that we all need to sit down to look into and find solutions,” he said. 

Who is to blame, banks or telcos? 

With the recent shift to end user billing, telecom operators now deduct charges for USSD directly from the bank customers using their airtime.

This, in a way, has passed the buck to the table of the telecom operators. However, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Engr. Gbenga Adebayo, said the telcos cannot be blamed as they deliver their part of the service at every point of a USSD transaction.

According to him, the telecom operators are like the vehicles taking the bank customers to their bank, whether they get money from the bank or not is not the fault of the telcos.

“Operators deliver you to the infrastructure of the bank, we have no control over what happens there.  

“You know, sometimes, just like the ATM where you don’t have money, sometimes when you interact with the bank, the server is resetting, it’s taking signals from somewhere, and you can’t blame the operator for that incomplete service,” he said. 

Suggesting that the banks should blamed, Adebayo used an analogy to explain his point:

“I’ll give you an example. I went to the bank to collect my debit card. My driver took me to the bank. After I collected the debit card, they said I can go downstairs to the ATM machine to go and use it. 

“I went in. There were seven machines there. The first one, no money. The second one, no money. So, I went back upstairs and I said to them, this thing is not working.  

“So, they checked it and said the card is working, the ATM has no money. I can’t blame my driver for it. He took me to the bank.” 

• Meanwhile, a bank official who spoke with Nairametrics on condition of anonymity, said the banks could have taken the blame when they were still doing corporate billing, that is, banks deducting charges from customers’ account.
• While he acknowledged that there may be issues once in a while leading to failed transactions, he said the banks have also invested and are still investing heavily in tech infrastructure to ensure that their customers enjoy seamless services.

“How can you blame the banks for the money they are not collecting? You know USSD is now on end-user billing, the telcos are the ones deducting money directly from the customers, not the banks,” he said.  

• Mr. Elvis Eromosele, the Editor of TheNumbersNG, a business publication, who has also experienced debits for failed USSD transactions, corroborated the bank official’s position, noting that the telecom operators must accept the blame because the money is deducted by them.
• He also faulted the entire process of the USSD arrangement that leaves no room for resolutions of issues arising from failed transactions and debits.

Ways forward 

According to Eromosele, to regain user trust and ensure fairness, the USSD charge must only apply after the transaction is successfully completed.

• He added that telcos must auto-refund airtime where a session fails or terminates prematurely just like bank reversal notifications
• He also wants the NCC to compel telcos to create user-friendly, time-bound dispute resolution platforms where customers can easily report and resolve airtime deductions for failed transactions.
• Eromosele noted that many Nigerians are still in the dark about this billing change, hence there must be a comprehensive public awareness initiative to educate users on how the system works and how to seek redress.

“The operators and the banks need to go back to the Nigerian Communications Commission and the Central Bank of Nigeria to deliberate on how they will resolve this. The blame will always go to the telcos because they are the ones collecting the money,” Eromosele said. 

When contacted, a source at the NCC, who would not want to be named because he was not authorized to speak on the matter. however, said the Commission has also received reports on the development and would soon come out with modalities to address the issue.

What you should know 

Effective from June 18, 2025, telecom operators started deducting charges for USSD transactions from customers’ airtime, marking shift to end-user billing from the previous model where banks deduct the charges from customers’ bank accounts.

• According to ALTON, the migration to end-user billing follows the Determination of USSD Pricing and Services issued by the NCC, which was developed in collaboration with the Central Bank of Nigeria (CBN) and other key stakeholders.

• This new model was adopted to put an end to the years long impasse between banks and telcos over USSD debt as the former often fail to remit to the latter after deducting from customers’ accounts.
• The hidden cost of USSD: How Nigerians are losing money to failed bank transactions  - Nairametrics