Nigeria: Waiting for the storm to blow over - African Business Magazine
Nigeria: Waiting for the storm to blow over

Nigeria: Waiting for the storm to blow over

The highly unpopular ATM transaction fee is back as banks contemplate a lean year so far. However, both banks and large firms have been raising additional funds to meet demand but equity investors are left biting their nails as profits have remained elusive so far. Michael Nwadike presents a round-up of the past three months in the Nigerian banking world.

Until December 2012, Nigerians wishing to withdraw money from ATMs other than those of their own banks (remote-on-us), had to pay a fee of N100 ($0.60) per transaction. Then, at a Bankers’ Committee meeting with the Central Bank of Nigeria CBN, the stakeholders agreed to stop all ATM charges to promote a cashless policy. The step was then applauded by bank customers.

But in August, following a review, a reduced charge of N65 ($.0.39) was re-introduced leading, not unexpectedly to more controversy. But it was left to Dipo Fatokun, CBN director of the Banking and Payment System Department to explain exactly why the charge was reintroduced. He said. “The plan is to get customers to understand that banks need the charge to improve ATM services and achieve the seamless, cashless banking they have been asking for.”

He explained that the earlier N100 fee on remote-on-us withdrawal was removed in December 2012 so that people would be encouraged to go to other banks’ ATMs. “But the truth is that of the N100, N35 went to the payment bank, which has now been completely waived. But in going to other ATMs to make withdrawals, your bank, which is the acquirer bank, incurs a cost of N65 which they pay to the switches and the owner of the ATM that you are using.

“Between 2012 and recently, when the review was done, it was discovered that people had actually turned ATMs into their personal purses because nothing is charged. This has to change as it has created a huge cost burden for the banks that issued the cards.

“The fee shall apply in remote-on-us withdrawal by a card holder, thereby making the first three remote-on-us transactions free for the card holder, but to be paid for by the issuing bank. Of course, if you go to the ATM of your bank, you are free to withdraw as much as you like at no cost. So it does not discourage financial inclusion,” Fatokun argued.

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Written by African Business Magazine

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