# USSD Banking: Why It Still Matters for App Development in Nigeria in 2026
TL;DR: USSD transactions grew 20.89% to 669.55 million in 2025, Nigeria just switched to a new end-user billing model for USSD in June 2025, and roughly 40 million adults remain formally unbanked — which means any Nigerian fintech or banking product built without a USSD fallback is designing for a market that doesn't fully exist yet.
The smartphone-first assumption doesn't hold in Nigeria
It's tempting for a product team to treat USSD as legacy infrastructure — a stopgap from the 2010s that a modern React Native or Flutter app has made obsolete. The 2025 numbers say otherwise. According to Central Bank of Nigeria (CBN) data reported by Leadership, e-payment transaction volume across all channels hit 47.879 billion in 2025, up from 11.27 billion in 2024. Within that mix, ATM transactions rose 61.94% to 1.655 billion, POS rose 19.78% to 15.661 billion — and USSD still grew 20.89% to 669.55 million transactions, not a shrinking channel being replaced, but one still expanding alongside app and card usage.
That growth makes sense against Nigeria's device and connectivity reality. Feature phones still accounted for 46% of the mobile market as of Q2 2025, per TechCabal's reporting on Nigeria's smartphone market recovery. Add patchy 3G/4G coverage outside major cities, the cost of mobile data relative to income, and frequent app-store friction (large APK sizes, storage constraints on entry-level Android devices), and USSD remains the only channel that reliably reaches a large chunk of the addressable banking population — no app install, no data bundle, no smartphone required.
Financial inclusion is close, but not closed
Nigeria's most recent EFInA Access to Finance (A2F) survey put formal financial inclusion at 64% in 2023, with total inclusion (formal plus informal) at 74% — down from 32% financial exclusion in 2020 to 26% in 2023. That progress is real, driven partly by fintech and mobile money uptake (non-bank formal inclusion rose from 5% to 12% over the same period). But it also means roughly 40 million adult Nigerians are still formally excluded from financial services, concentrated in rural and lower-income segments where smartphone and broadband penetration lag hardest. For any product targeting agent banking, micro-savings, remittances, or agri-fintech use cases, that's not a rounding error — it's the primary underserved segment.
What actually changed in 2025: the USSD billing overhaul
The bigger story for developers and product owners isn't just usage volume — it's a structural change to how USSD is billed, and it followed a genuinely disruptive dispute.
Through 2024, banks and mobile network operators (MNOs) were locked in a long-running fight over unpaid USSD access fees, with the Nigerian Communications Commission (NCC) citing roughly ₦160 billion in accumulated debt dating back to 2019. The CBN and NCC set a deadline for banks to clear 85% of outstanding invoices by December 31, 2024. When several banks missed it, the NCC ordered telcos to disconnect USSD access for nine banks — Fidelity, FCMB, Jaiz Bank, Polaris Bank, Sterling Bank, UBA, Unity Bank, Wema Bank, and Zenith Bank — starting January 27, 2025. Some banks scrambled to settle: reporting from Techpoint Africa noted banks paid down ₦32 billion of a ₦74 billion debt owed to MTN alone just before the deadline.
That crisis forced a permanent fix. From June 18, 2025, Nigeria moved to an End-User Billing (EUB) model for USSD banking: the ₦6.98 flat fee for a 120-second session is now deducted directly from the customer's airtime by the MNO, rather than routed through a separate inter-corporate billing arrangement between banks and telcos. TheCable's explainer on the new model frames it as one of the most significant changes to Nigeria's USSD architecture since the channel launched — because it removes the systemic risk of banks accumulating telco debt that can get an entire USSD code disconnected overnight, taking down every customer's access to *wxyz# banking regardless of their individual account standing.
For anyone building or maintaining a USSD banking flow in 2026, that history matters practically: it explains why USSD codes can go dark with little warning (it happened industry-wide in January 2025), and why the current EUB billing model is worth understanding before quoting session costs or designing balance-check flows that assume charges come from the customer's bank balance rather than their airtime.
Why USSD still belongs in a 2026 build, not just a legacy one
A few concrete reasons USSD keeps showing up in scopes we work on:
- Zero-data reach. No app download, no data bundle, no OS version compatibility matrix. It works on a ₦15,000 feature phone as reliably as a flagship Android device.
- Resilience during outages. When data networks degrade (common during peak load or in low-coverage areas), USSD's SS7/signaling-channel delivery often still works, making it a legitimate fallback channel for balance checks, PIN resets, and transfers even for smartphone-owning customers.
- Agent and merchant banking. POS agents and rural merchants — a segment growing 19.78% in transaction volume per the 2025 CBN figures — frequently rely on USSD as the interface layer behind agent banking terminals.
- Regulatory and BVN tie-ins. With Nigeria's BVN database reaching 67.8 million enrolments by the end of 2025 (per NIBSS), USSD remains a primary self-service channel for BVN-linked actions like account verification and NIN-BVN linkage checks for customers without banking app access.
The technical shape of a USSD build in 2026
USSD development is a different discipline from app development, and it's worth product owners understanding the constraints before scoping:
| Constraint | Implication for build |
|---|---|
| ~182-character screen limit per menu | Menu copy and flow depth need aggressive information design, not just translation of app screens |
| Session timeout (typically 120 seconds per hop, no persistent connection) | State must be managed server-side across each digit the user sends; no client-side session storage |
| No native encryption on the USSD bearer channel | PIN entry and sensitive data need compensating controls — tokenization, out-of-band OTP, or routing PIN capture through a more secure channel where possible |
| Billing now airtime-based (EUB, since June 2025) | Session-cost assumptions in customer support flows and reconciliation logic need updating from the old inter-corporate billing model |
| Requires a telco/aggregator gateway relationship | You're integrating against NCC-licensed USSD aggregators or direct MNO short-code agreements, not a simple public REST API |
That last point is where most of the actual engineering effort lives. A USSD banking flow isn't just menu logic — it's a real-time integration between your core banking or ledger system, a USSD gateway/aggregator, and often NIBSS' Instant Payment (NIP) rails for the underlying transfer once a PIN is confirmed. Getting the session handling, idempotency, and reconciliation right across those three systems is the actual hard part, and it's the same category of work as wiring up card processors, mobile money APIs, or KYC/BVN verification services. If you're scoping this kind of build, it overlaps heavily with what we cover under API integrations — connecting a product to third-party payment, identity, and telco rails without the integration becoming the fragile part of the system.
FAQ
Is USSD banking still relevant given how many Nigerians now have smartphones?
Yes — feature phones still made up 46% of Nigeria's mobile market as of Q2 2025, and USSD transaction volume grew 20.89% year-on-year in 2025 even as app and card channels also grew. It's not a zero-sum shift; USSD is holding its own as one channel among several rather than being displaced.
What changed with USSD billing in 2025 and does it affect app development?
Nigeria moved to an End-User Billing model on June 18, 2025, where the ₦6.98/120-second session fee is deducted from the customer's airtime by their mobile network operator instead of being billed inter-corporately between banks and telcos. It matters for development because it changes how session costs should be communicated in-app and removes (in theory) the risk of an entire bank's USSD code being disconnected over unpaid telco debt, which happened to nine banks in January 2025.
Can a fintech build USSD banking without a bank charter?
Yes, typically through a partner bank or licensed switching/aggregator relationship and an NCC-recognized USSD short code, similar to how many licensed microfinance banks and fintechs operate mobile money and agent banking today. The technical integration work — session handling, ledger updates, NIP settlement — is comparable regardless of who holds the banking license.
Is USSD secure enough for financial transactions?
It's used at scale for exactly that purpose today, but the bearer channel itself isn't encrypted the way HTTPS or app-layer TLS is, so security has to be engineered around it — PIN tokenization, transaction limits, device/SIM-binding checks, and OTP step-ups for higher-value transfers are standard compensating controls in production USSD banking flows.
Sources
- E-payments Hit N3.46quadrillion Amid $143.4m Pan-African Transactions – CBN
- Nigeria's BVN Database Hits 67.8 Million Registrations by End of 2025 — NIBSS
- NCC issues ultimatum to nine Nigerian banks on USSD debts — Developing Telecoms
- UBA, Zenith, FCMB... NCC directs telcos to disconnect nine banks from USSD platform — The Cable
- Banks settle ₦32bn out of ₦74bn USSD debt to MTN — Techpoint Africa
- EXPLAINER: Everything to know about NCC's new USSD billing model — The Cable
- New USSD billing model gives Nigerians more control over charges — TechCabal
- Formal financial inclusion in Nigeria soars to 64%, driven by non-banking channels — A2F/EFInA
- Nigeria posts fastest smartphone market growth since Q1 2024 — TechCabal