As banks strive to beef up security on the Unstructured Supplementary Service Data (USSD) banking platform, the Central Bank of Nigeria (CBN) has shifted the date of the implementation of the regulatory guideline from June to October 2018.
Banks were expected to beef up security and put a limit on the amount that could be transacted via the channel by last week Friday, June 1, 2018, but the CBN in a circular issued at the weekend said it decided to shift the implementation date to ensure the objective of the guideline is achieved.
The circular which was signed by the CBN director, Banking and Payment Systems Department, Dipo Fatokun said the CBN “observed that in order to fully realise the objective of the framework, the bank considered and approved the extension of the implementation date” and the guideline is now to be effective from October 1, 2018.’’
A source within the banking industry told LEADERSHIP that the shift in deadline was imperative as some banks alongside other operators in the USSD banking space are putting final touches to the USSD technology platform to ensure that customers’ funds are kept safe.
With the implementation of the guideline, bank customers will not be able to conduct transactions that is above N100,000 through the USSD platform on a daily basis. Also they will have to use both PIN and a soft token to authenticate transactions above N20,000.
Presently, USSD transactions require only PIN to authenticate transactions and some do not even require PIN. Asides the beefing up of authentication procedures, the guideline stipulates that service providers put in place systems that enable users/subscribers to block their account from operating USSD service.
This means that no USSD Financial Service should be activated for customer unless the deactivation mechanism. In addition, the framework requires banks to install a, Behavioural Monitoring system with capability to detect SIM-Swap/Churn status, user location, unusual transactions at weekends, etc.
The regulatory framework for the use of USSD for financial services in the country had been issued in April this year as the CBN noted that the vast applications of the USSD technology, in terms of available services have raised the issue of the risks inherent in the channel.
A circular issued by the apex bank on the guideline noted that “the implementation in Nigeria has 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.”
Other measures announced by the CBN in the new guidelines are that, financial Institutions shall be responsible for setting up dispute resolution mechanism to facilitate resolution of customers’ complaints and that resolution of any customer-related issues must be resolved within three working days.
While USSD mobile money transfer service is fast and convenient, financial experts have argued that its security features were not on the same level as that designed for Internet banking. Furthermore, bank customers have also complained about the slow response of banks to errors in USSD transactions. Specifically, analysts also argue that the absence of an authentication mechanism means criminal elements who have access to individual’s phones, can carry out unauthorised and fraudulent transactions.
USSD which requires that the customer have a GSM enabled phone is being used for mobile money transactions such as buying airtime, account opening, balance inquiry, money transfer to same bank and other banks, cash-on-the-go, among other services.
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