Many bank customers have expressed
displeasure at the recent introduction of a N65 Automated Teller Machine
fee. But the Central Bank of Nigeria and the Bankers’ Committee are
going ahead with its implementation from September 1 (today). The issue,
however, is whether this can lead to better service delivery as
promised by the banks, OYETUNJI ABIOYE writes
This inefficiency has often led to frustration and disappointment for bank customers, with long queens at most ATMs.
Amid this situation, the Central Bank of
Nigeria and the Bankers’ Committee about two weeks ago announced the
re-introduction of a (N65) ATM fee effective September 1 (today).
This came almost two years after the CBN and Deposit Money Banks had cancelled N100 ATM charge in December 2012.
But the new CBN directive, dated August
13, and posted on its website, stated that instead of N100 per
withdrawal, customers using other banks’ ATMs would now pay N65.
The Director, Banking and Payment Systems
Department, CBN, Mr. Dipo Fatokun, in the circular, stated that the
central bank and the DMBs had agreed to re-introduce the ATM fee because
the cost of transaction was becoming too burdensome for the banks to
continue to bear.
He also said the new charge would become
effective on the fourth ATM withdrawal in a month, thus making the first
three withdrawals on other banks’ ATMs within the month free.
The circular dated August 13, 2014, read
in part, “The CBN hereby issues the following directives: The
re-introduction of ‘remote-on-us’ ATM cash withdrawal transaction fee,
which will now be N65 per transaction, to cover the remuneration of
switches, ATM monitoring and fit-notes processing by acquiring banks;
the new charge shall apply as from the fourth ‘remote-on-us’ withdrawal
(in a month) by a cardholder, thereby making the first three ‘remote on
us’ transaction free for the cardholder, but to be paid by the issuing
bank.
“September 1, 2014 shall be the effective
date for the implementation of the new charge; banks are expected to
conduct adequate sensitisation to the customers on the introduction of
the new fee; all ATM cash withdrawals on the ATM of issuing banks shall
be at no cost to the cardholder.”
The CBN, in collaboration with the
Bankers’ Committee, had in December 2012 transferred the payment of the
N100 fee on ATM cash withdrawal transactions to the issuing banks.
The fee was borne by the acquiring bank, issuing bank and switch companies at the commencement of the arrangement.
Fatokun, in the latest circular, however,
explained that issuing banks had during the commencement of the
arrangement in 2012 decided to waive the issuer fee of N35, which should
ordinarily have been an income to them.
Consequently, the issuing banks only bore the cost of N65 each time their customers used another banks’ ATMs.
The N65 cost (which covers the
remuneration of switches, ATM monitoring and fit-notes’ processing by
acquiring banks) is now being passed on to the customers.
The CBN said the new charge would help
banks to improve on the ATM service delivery and ultimately put an end
to the frequent malfunctioning and breakdown of the ATMS.
It also argued that the new charge would make banks to deploy more ATMs across the country.
This is expected to put an end to the
several multiple queues that have become the usual signpost of most of
the ATMs in Nigeria.
However, some industry stakeholders and
customers have insisted that there is no justification for the
imposition of the new N65 charge.
A bank customer, Mr. Sola Omotola, said,
“Every year, banks keep declaring higher gross earnings and profits.
None of the banks made losses in the last quarter. The worst that
happened was that an insignificant number of them made lower profits.
“So, if banks are declaring profits after
tax running into several billions of naira, on what ground are they
passing this N65 charge to innocent customers who have been ripped off
in other hidden bank charges? There is no reason for this in the light
of the bumper profits the banks are declaring.”
Another bank customer, Mrs. Ngozi Nwachukwu, argued the fee could be sustained by the bank, having borne it for over two years.
“If the N65 fee has been sustained since
December 2012 when it was cancelled by the Bankers Committee, I believe
it can still be sustained further. The CBN only needs to put measures or
policies in place to keep encouraging the banks to continue to do this.
I guess the new CBN governor is being too sympathetic to the cause of
the banks.”
The Managing Director, MarkAB Investment
Limited, Mr. Oladokun Dawodu, said the development might undermine the
cash-less policy drive of the CBN, arguing that the new charge could
discourage customers from using other banks’ ATMs.
He also maintained that contrary to the
argument in some quarters that the use of ATM attracted a fee in other
countries, there were no fees charged for using the ATM in several
countries of the world, citing the United Kingdom as an example.
However, an associate professor of
Economics and Director of Centre for Entrepreneurship Studies, Ekiti
State University, Dr. Abel Awe, said the N65 fee could not have been too
burdensome for customers, saying the amount was negligible compared to
what customers often withdrew through the ATMs.
He also said the fact that banks declared
profits running into billions of naira on quarterly basis did not mean
they were liquid and solvent.
“I don’t see N65 charge as being too
enormous for customers. I think it will also help to curb the
indiscriminate use of the ATMs by bank customers. Look at the telecoms
companies, imagine how they charge and deduct our money arbitrarily and
nobody to protect us against it; I don’t think what the banks are doing
is too much,” he added.
A frontline economist and Chief Executive
Officer, Financial Derivatives Limited, Mr. Bismarck, also felt the
re-introduction of the ATM fee was not punitive.
He said the removal of the N100 ATM fee
in December 2012 by the Bankers’ Committee was wrong in the first
instance, arguing there was no way banks could recover their costs and
improve their profitability.
For instance, he noted banks had to pay
the Asset Management Corporation of Nigeria’s levy, Nigerian Deposit
Insurance Corporation’s charges and also lose money from Commission on
Turnover charges, which were being gradually reduced and would
eventually be phased out in the next two years.
“Where do they expect banks to make
profits after all these deductions? Don’t forget that banks have to
invest and reinvest. So, it makes a lot of sense to return the charges
for the ATM,” he added.
Some insider sources in the banks told
our correspondent that many banks deliberately frustrated customers’ use
of other banks’ ATMs with the frequent network problems to avoid paying
the N65 levy for such service.
They also said the rising cost of the N65
fee (occasioned by customers’ frequent use of the ATM cards on other
banks’ machines) had affected banks’ ability to invest in the ATM
maintenance and deployment.
A top official of the CBN, who spoke
under the condition of anonymity because he was not authorised to speak
on the matter, said, “With this new N65 charge passed to customers,
banks will have enough to maintain those ATMs and also deploy more ATMs
across the country. In other words, all these frequent ATM network
problems will be reduced drastically, while several ATMs that have been
breaking down will become functional. We will have more new ATMs
deployed. By the time you put all these together, bank customers stand
to enjoy better service.”
The Executive Director, Finance and
Strategy, Sterling Bank Plc, Mr. Abubakar Suleiman, said the use of
bank’s ATM “is still totally free of charge.”
According to him, the introduction of the
N65 charge is intended to limit the cost incurred by banks, and does
not constitute profit.
“Banks are still left with the burden of
the first three withdrawals by customers a month, which translates to
N195 monthly charge. While this cost is less than the income on medium
and high-value accounts, it is sufficient to render most low value
accounts unprofitable, which will force banks to discontinue marketing
such accounts,” he added.
He also noted, “The last thing the
country needs is a rollback of the financial inclusion campaign, which
has resulted in a noticeable uptick in customer enrolment by banks and
has created access to financial services for more than one million
Nigerians in just over a year.
“The previous policy on limitless
withdrawals might have benefitted those who were already financially
included in the short term but would have harmed mostly poor people with
banks scaling back investments for mass market and refocusing on the
middle class.”
But concerning the expectation of a
better service delivery by banks based on the new ATM fee, analysts said
they would wait to see how they hoped to fulfil the promise.
For instance, Awe said, “It will be
difficult to comment on that proposal. However, between now and
December, we should be able to see signs if those improved and better
services that have been promised will be fulfilled.”
