As the N65 charge on extended use of other banks’ Automated Teller Machines, ATMs, reintroduced by the Central Bank, kicks off today, September 1, Nigerians have continued to react to a policy many believe is unnecessary.
While most Nigerians accuse the CBN of abandoning its regulatory responsibilities and taking sides with the bank to exploit customers through the policy, the CBN says the decision is aimed at curbing frivolous withdrawals and abuse by ATM users.
The new policy alters the old arrangement in which the CBN resolved with the Bankers Committee in December 2012 to transfer the payment of N100 fee on remote-on-us ATM withdrawal transactions to issuing banks.
Under that arrangement, the fee was shared between the ATM acquirers, card issuers and switches. Banks, as the issuers of the ATM cards, were required to waive the N35 issuer’s fee, while bearing only the cost of N65 each time their customers used another banks’ ATM.
The CBN said the loss for not collecting the N35 issuers’ fee from the card users had imposed a substantial cost burden on banks.
The bank said the re-introduction of the remote-on-us ATM cash withdrawal transaction fee of N65 per transaction was necessary to cover remuneration for switches, ATM monitoring and fit-notes processing by acquiring banks.
The new charge was applicable from the 4th remote-on-us withdrawal in a month by a card holder.
By implication, the first three transactions by a card holder using ATMs of banks other than theirs would be free, as the charge for such transactions would be paid for by the issuing bank.
On the other hand, all ATM cash withdrawals by customers on ATMs owned by their issuing banks would continue to be free.
CBN abandoning its role
Centre for Social Justice, CSJ, a non-governmental organization in Abuja, in its review of the policy, criticized the decision, saying there was no reasonable justification for CBN to have done so.
The CSJ Lead Director, Eze Onyekpere, and partner, Ikenna Ofoegbu, said a reversal of the policy by CBN did not address the premise and rationale for the removal of the charges in the first place.
According to Mr. Onyekpere, if the removal was to support and encourage CBN’s cashless or cash-lite policy and ensure that bank customers got value for their patronage, nothing seem to have changed to warrant the removal.
“Or is the CBN now about to reverse the cashless and cash-lite policy?” the Mr. Onyekpere asked, pointing out that the new CBN Governor, Godwin Emefiele, had, while unveiling his agenda on assumption of office, vowed to reduce poverty, ensure job creation and development agenda in monetary policy.
Wondering how the policy would help realise Mr. Emefiele’s agenda, CSJ described it as “a clear retrogressive step that will unduly burden bank customers, discourage the unbanked from using the banking system and negate the cash-lite policy.”
The policy, the civil society group stated, was equally a negation of Nigeria’s international and domestic economic and social rights obligations to respect already guaranteed rights, especially 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.
The policy, the CSJ said, questions the basis and concept of regulation in an economy, arguing that what should concern regulators in taking policy decisions should not be the benefit of the strong, rich and accentuation of inequality, but the interest of all parties
that may be affected.
It also condemned the CBN for allowing the banks to arm-twist it into approving extra charges from ATM withdrawals alongside bank charges and commissions imposed on customers, including ATM issuance and maintenance fees, N50 charges on SMS alerts, emails, print of account
“It appears the appointment of a former director of a mainstream bank is leading to a policy in favour of his former constituency and colleagues in the industry without taking cognizance of the bigger picture of the rights of the Nigerian people who are ultimately his
employers,” CSJ stated.
CBN claims policy will curb abuse
However, CBN insists the policy was necessary to ensure that ATMs continue to function across the country to the satisfaction of all bank customers.
According to CBN, Cash withdrawals at the ATMs of a customer’s bank are free. The Apex bank said that “Remote-on-us” transaction was when a card holder goes to the ATM machine of another bank other than his or her own bank to make a withdrawal.
The N100 fee on “Remote-on-us” ATM cash withdrawal transactions transferred to issuing banks, in line with the resolution reached with the Bankers’ Committee on December 2012, the CBN noted, was never removed, rather it was only for the customer’s bank to pay, to
encourage the use of ATMs nationwide.
Consequently, under the proposed policy, CBN said the first three “Remote-on-us” transactions in a month would be FREE for the card holder, but PAID FOR by the issuing bank.
The N65 charge, CBN stated, would only apply from the 4th transaction when a customer withdraws cash from another bank’s ATM other than that of his/her bank in a month.
Policy not to discourage financial inclusion
CBN’s Director in charge of Corporate Communications Department, Ibrahim Mu’azu, said the N65 charge was not intended to discourage financial inclusion, assuring that the CBN would not endorse any anti-customer policy.
“Charging of fees on interbank networks is a widely acceptable practice globally,” Mr. Mu’azu said, pointing out that ATM charges were meant to guarantee better services to customers and increase healthy competition among banks.
The CBN Director of Payment Systems, Dipo Fatokun, said transactions volume on ATMs by banks across the country increased significantly from about N1.3 trillion in 2012 to about N1.7 trillion as at June 2014.
These transactions, he said, were conducted at different locations across the country through ATM machines, which grew in number from about 10,727 to about 15,000 within the same period.
According to Mr. Fatokun, the country’s Point of Sales, PoS, terminals equally increased from 21,400 in 2012 to 135,000, with transaction volume increasing from N57.3 billion to N138 billion during the period.
With such increases, CBN said transaction volumes at other banks’ ATMs have risen astronomically due to the free cash withdrawals at other banks’ ATMs, with some customers beginning to abuse the system through frivolous daily withdrawals, increasing the volume of cash transactions and negating the cashless policy.