CBN Unveils Regulatory Framework for USSD


Obinna Chima

In furtherance of its mandate to develop and enhance the security of the electronic payments system, the Central Bank of Nigeria (CBN) thursday released the framework for the use of the Unstructured Supplementary Service Data (USSD).

The implementation of the framework takes effect from June 1, 2018.

The CBN disclosed this in a circular dated April 17, 2018, signed by its Director, Banking and Payment System Department, Mr. Dipo Fatokun, a copy of which was posted on its website thursday.

It explained that the framework became necessary because mobile phone had become a veritable tool for enhancing financial inclusion with the advent of mobile payments, m-commerce, m-banking and other implementation for financial transactions based on mobile telephony.

According to the central bank, providers of mobile-based financial services have options of adopting varying technologies for enabling access and transmitting data including Short Messaging Service (SMS), USSD, Interactive Voice Response (IVR) and Wireless Application Protocol (WAP), stand-alone mobile application clients and SIM Tool Kit (STK).

It, however, noted that providers of mobile telephony-based financial transactions had been increasingly adopting the USSD technology while the range of services supported by their mobile transaction services, using the USSD channel, was broadening rapidly.

Among services provided through the channel include, account opening, balance and other enquiries, money transfer, airtime vending, bill payment, etc.

The USSD technology is a protocol used by the GSM network to communicate with a service provider’s platform. It is a session based, real time messaging communication technology, which is accessed through a string, which starts normally with asterisk (*) and ends with a hash (#). It is implemented as an interactive menu driven service or command service. It has a shorter turnaround time than SMS, and unlike SMS, it does not operate by store and forward which indicates that data are neither stored on the mobile phone nor on the application.

“USSD technology is considered cost effective, more user-friendly, faster in concluding transactions, and handset agnostic

“The vast applications of the USSD technology, in terms of available services have raised the issue of the risks inherent in the channel,” it added.

According to the central bank, its implementation in Nigeria had created multiple USSD channels to customers, thereby increasing their exposure to risk, without a common standard for all.

“This framework therefore, seeks to establish the rules and risk mitigation considerations when implementing USSD for financial services offering in Nigeria,” it added.