CBN Defends Reintroduction of Charges on ATM Cards

Godwin Emefiele

Contrary to the general belief, the Central Bank of Nigeria says the re-introduction of N65.00 charge on every fourth ATM withdrawal at non-issuing banks, is not intended to punish the customers

By Anayo Ezugwu  |  Sep. 1, 2014 @ 01:00 GMT

FROM September 1, Nigerians who patronise the Automated Teller Machines, ATM, would have to pay N65 per transaction. The Central Bank of Nigeria, CBN, said charges on ATM withdrawals would cover remuneration for the switches. The reintroduction of the new charge was contained in a circular signed by Dipo Fatokun, director, banking and payment system department of the bank.

The circular stated that the reintroduction of “Remote-On-Us’’ ATM cash withdrawal transactions fee, will be N65 per transaction to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks. “The new charge shall apply as from fourth “Remote-on-us’’ withdrawal in a month by a card holder, thereby making the first three `remote on us’ transactions free for the card holders, but to be paid for by the issuing bank,’’ it said.

According to the circular, Sept. 1, 2014 shall be the effective date for the implementation of the new fee. It stated that banks were expected to conduct adequate sensitisation of their customers on the introduction of the new fee. The circular stated that all ATM cash withdrawals on the ATM of issuing banks, should be at no cost to the card holder.

It recalled that CBN, in collaboration with the Bankers’ Committee had, in December 2012, transferred the payment of N100 fee on remote-on-us ATM cash withdrawal transactions to issuing banks. This fee was shared between the acquirers, issuers and switches. On the commencement of the arrangement in December 2012, banks decided to waive the issuer fee (N35) which should have ordinarily been an income to them. Consequently, banks only bore the cost of N65 each time their customers use another banks’ ATM.

ATM Machines
ATM Machines

This action has generated criticisms among ATM users in the country. The Centre for Social Justice, CSJ, has faulted the decision of the CBN to reintroduce charges for the use of ATM by bank customers. The CSJ, in a statement, condemned the reintroduction of the fee, stating that there was no justification for it. The group’s statement was signed by Eze Onyekpere, its lead director. It argued that since the charges were stopped in 2012, banks had been declaring huge profits. It added that there was no credible evidence that banks’ balance sheets had been unduly impaired by their bearing of the charges.

The group, therefore, described the reintroduction of the ATM charge as a retrogressive step that would unduly burden bank customers, discourage the unbanked from using the banking system and also negate the cashless policy. It stressed that a reversal of the policy should have addressed the premises and the rationale for the removal of the charges in the first place.

It, therefore, urged the CBN to consider the interest of all the parties that would be affected by this new directive and balance any conflicts by apportioning obligations to those best positioned to bear them. The group also noted that the reintroduction of the ATM charge negated Nigeria’s international and domestic economic and social rights obligations as provided in Chapter 2 of the 1999 Constitution and the obligations under article 2 (1) of the Covenant on Economic, Social and Cultural Rights.

“This new policy is an apparent evidence of regulatory capture. Essentially, the regulator has been captured by the core institutions it is supposed to regulate. It is regrettable that the banks, which collect deposits from customers with little or no interest on savings, charge double digit interest rates on lending, will come around to force the arms of the CBN into ensuring extra charges from ATM withdrawals alongside the bank charges and commissions placed on customers, such as the ATM issuance and maintenance fees; N50 charges on SMS alerts, emails and printing of account statements.

“It will, therefore, not be out of place to ask: what services do the banks specifically render to customers aside the safe keeping of customers’ cash? The group added, “In the light of the foregoing, the CSJ calls for the urgent reconsideration of the new policy to allow the status quo to remain by removing the newly introduced ATM charges. This will give a good signal to the Nigerian banking public of the sincerity of the new CBN governor to walk the talk, thereby achieving credibility through policy consistency,” it said. The group stated that if the CBN could not use its policy to facilitate the improvement of living conditions, it should not increase the burden of the people.

But the CBN on Thursday, August 14, said it has not reintroduced charges on the use of ATMs as being speculated. Dipo Fatokun, director, banking and payments system department, CBN, said after his meeting with the Nigeria Electronic Fraud Forum in Lagos, that it is not a reintroduction per se. “You have to agree with me that when the amendment was made in November 2012, it used to be a N100 for any remote-on-us withdrawal that you did. And you know that the remote-on-us is when you as a card holder goes to the ATM of a bank other than your bank to withdraw cash. It was removed then so that people would be encouraged to go to other ATMs without paying for it.

“But the truth is that as we said in the circular on the Introduction of Fees on Remote-On-Us ATM Withdrawal Transactions recently, the N100 included the N35 that goes to the issuing bank, which has now been completely waived.  The issuing bank does not make any thing, but in going to other ATMs to make withdrawals, your bank, that is, the acquirer bank, incurs 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 have actually turned ATMs into their personal purses because nothing is charged. Somebody needs N500, or N1000, he will go to ATM and withdraw, he needs N2000, he will go to ATM and withdraw, so that in a day some people can patronise ATM for up to four or ten times. That has created a huge cost burden for the banks that issue the cards. It was becoming discouraging to them.

“So that is why we said, you can go to an ATM other than your bank’s ATM to withdraw  up to three times and no charges would be imposed on you, but it is when you make the fourth withdrawal that you will pay the N65 that ordinarily your bank would have paid on your behalf.  But, of course, if you go to your bank’s ATM, the issuer, for withdrawal, you can withdraw as many times as you like without being charged. So, it does not discourage financial inclusion. You should bear in mind that when you talk of cashless regime, you are encouraging people to do their transactions electronically other than the use of cash. So, it is a motivation for people to patronise the ATM,” he said.


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