Establishing framework on USSD for banks


September 13, 2017 | 1:35 am
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In furtherance of its mandate for the development of the electronic payments system in Nigeria, the Central Bank of Nigeria (CBN) last week issued exposure draft of regulatory framework for Unstructured Supplementary Service Data (USSD) for the financial system.

The framework seeks to establish the rules and risk mitigation considerations when implementing USSD for financial services offering in Nigeria.

Consequently, Dipo Fatokun, director, banking and payments system department, in  a circular released last week, requested for inputs on this on or before September 21, 2017.

The inputs are expected from all deposit money banks, mobile money operators, payment solution service providers and other service providers.

Fatokun had last month disclosed that soon the CBN would issue a circular on the minimum regulatory requirement on the use of USSD.

“We have reached an advanced stage on that and we will be presenting to the board of Governors of the CBN soon”, he said recently at a Bi-Monthly Forum organised by the Finance Correspondents Association of Nigeria (FICAN) in Lagos.

The USSD technology is a protocol used by the GSM network to communicate with a service provider’s platform.  Recently, providers of mobile telephony-based financial transactions are increasingly adopting the USSD technology while the range of services supported by their mobile transaction services using the USSD channel is broadening rapidly.

Among financial services provided through the channel include, account opening,balance and other inquiries, money transfer, airtime vending, bill payment, internet/mobile banking detail retrieval and one-time password.

“It is part of our regulatory requirement that any bank that is applying for a product licence of the use of USSD must also have special PIN. You find out that when some of the banks started to use USSD they only adopted a static Personal Identification Number (PIN) which is usually taken from the product. But we noticed that that is prone to fraud”, Fatokun said.

The circular stated that all mobile money operators are eligible for the issuance of short codes from the Nigerian Communication a Commission (NCC) after meeting the necessary requirements of the NCC.

For those other than mobile money operators, the circular said a letter of comfort from the CBN would be required before being considered for issuance of the short codes by the NCC.

The exposure draft stated that all providers of USSD-based financial services shall put in place, a proper message authentication mechanism to validate that request/responses are generated through authenticated users.




September 13, 2017 | 1:35 am
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