Banks Criticise MTN Over Cuts In Vending Commission

Commercial banks have criticized MTN Nigeria for cutting vending commission from four per cent to 2.5 per cent. This represents 37.5 per cent reduction in income previously earned by the lenders when the telecom giant’s subscribers buy airtime or data through the banks’ e-payment channels.

The vending fee slash is causing strain to customers with many subscribers unable to buy airtime and data through their banks’ Unstructured Supplementary Service Data (USSD) and other payment platforms.
“Dear customer, this service is temporary unavailable. Kindly contact your Telecom service provider,” a message from one of the banks said, after a failed attempt to use its USSD. Industry source said a MTN Nigeria acted based on directives from its South African parent company. When contacted through phone calls and text message, MTN Nigeria Spokesman, Foluso Aina did not respond.

But an industry source disclosed that the service provider recently facilitated a meeting with aggregators and announced a 37.5 per cent  reduction in its vending commission without prior discussions, notice or approval from the Nigerian Communication Commission (NCC) nor the Central Bank of Nigeria (CBN). Acting unilaterally, without consultation or negotiation with any financial institution MTN informed all aggregators that it will be reducing the agreed commission that it will be remitting for airtime sales on banking platforms from four to 2.5 per cent.
If no other service provider is supporting this stance, why is MTN hard-balling and making life hard for its customers? Didn’t CBN just resolve a dispute with the telcos, now this?

Findings showed that Airtel and MTN were paying the least commissions at four per cent. GLO, pays six per cent and 9mobile, 7.5 per cent – agreements based on volume. The source said the MTN Nigeria move puts the Banks in a precarious and economic loss position, as the cost of marketing and airtime vending infrastructure maintenance by the banks outweigh the new commission rate imposed by MTN.
In a shocking reveal by internal sources not supportive of the MTN’s arbitrary reduction of commission to airtime resellers, “the move is part of a market dominance plan which will seek to control the Nigerian telecoms and financial sectors, eliminate aggregators and squeeze margins from all third party contractors and business partners.” What they are not considering is that they are preventing Nigerian Banks from providing seamless services to customers via its telecoms platform.
“Not saying that we have the best policies or practices in Nigeria-far from it-but, MTN’s use of lobbyist and practice of exerting aggressive margin pressure on business partners was the model used in Ghana, Benin, Uganda and Ivory Coast to achieve dominance in Telecoms and Mobile Money”.