…Bank charges exploitative – Customers
…Excessive deductions discourage financial inclusion – Erhirhie
…Charges necessary to offset operational expenses – Banker
A growing number of bank customers in Nigeria have voiced concerns over multiple and excessive charges on their transactions by commercial banks. BENJAMIN SAMSON reports on how the development is threatening the country’s financial inclusion drive of the government and what should be done to halt it.
Nigerians at home and abroad are lamenting their experiences in the hands of commercial banks, who they accuse of exploitative tendencies. Their concerns range from excessive deductions in bank charges for card maintenance and electronic payments to double deductions of stipulated charges.
Unending charges
Our correspondent gathered that the Automated Teller Machine (ATM) withdrawal charge introduced by the Central Bank of Nigeria (CBN) is just one of many deductions that Nigerians face daily.
Most banks deduct between N50 and N100 monthly for account maintenance. Interbank transfers attract charges ranging from N10 to N50 per transaction. Customers are also charged between N6 and N15 per SMS alert on transactions, while using a bank’s short service code incurs a charge of N6.95.
Additionally, a N50 deduction applies to transfers above N10, 000, while ATM card replacements attract fees ranging from N1, 000 to N2, 000. Some of these charges also include a 7.5 per cent Value Added Tax, further increasing deductions.
Nigerians groan
Speaking with this correspondent, a bank customer, Mrs. Grace Ajaka, who described the idea of deducting from customers’ accounts as exploitative, said that she could not fathom why customers had to lose their money for choosing to save in banks.
She said, “From SMS alert charges to charges on automated teller machines and online transfers, to account maintenance charges and other charges that I don’t understand, all to make abnormal profits from customers’ accounts.
“Saving gives one a way out of the uncertainties of life and provides you with an opportunity to enjoy a quality life. But this is being defeated by continuous deductions of customers’ money kept in the bank. At times, one is charged for unsolicited messages received.
“All these unreasonable charges should stop. Every customer by right should know why any amount is being deducted from his/her accounts. The current administration should please look into this.”
Another bank customer, a student, Ocheneyi Oisi, said that it was frustrating that his bank deducted from his monthly pocket money, adding that he could not fathom why he had to lose his money for choosing to save in banks.
“Why should banks who encourage people to save money be deducting the money saved? For me, as a student, these unreasonable charges are insane. How do you want me to survive? I’m considering closing my account and God help them. They put me through trouble when I want to close it, that is when they will know the agony they have been putting me through. Some of my friends are having similar experiences and are also ready to close down their accounts. We keep money in banks for safety but I don’t think it is secure any longer,” he said.
Likewise, a tiller, Mr. Olusola Lasisi, said, “The risk of keeping money in the shop or in the house is the reason I go to the bank. Otherwise, there is nothing they offer that is spectacular. I get monthly deductions by way of account maintenance charge. Then, they send another notification that they have deducted VAT on account maintenance charge.
“Please, what is it that they are maintaining in my account? Does my money require any maintenance? I just don’t understand. I used to ignore the amounts deducted, but I have recently developed interest in knowing what happens to my account. Apart from the maintenance charges, they also deduct SMS alert charges and others that I can’t remember very well. When I confronted them recently, they said it was because I was withdrawing more than three times from my account.”
Diaspora Nigerians too
Nigerians in the Diaspora have also taken to social media to narrate their experiences. A UK-based Nigerian medical doctor, Harvey Olufunmilayo @Harvey, lamented the state of banks in Nigeria in comparison with banks in foreign countries.
“I have lived in the UK a few years now and NEVER has my bank ever charged me one penny for bank transfer. Never. Not (for) once!”
Another Nigeria based in Qatar, Eniola @Henzyshso, stated that banks in Qatar do not charge customers for the use of ATMs.
Fintech to the rescue?
As charges imposed on banking customers on every single transaction carried out using their various online channels continue to bite, many are found to switch over to fintech apps to avoid incurring such charges.
Eric Okafor, a Point-of-Sale (PoS) operator, said the services of fintech are much more seamless than the bank.
“I make use of Moniepoint and Opay Pos in my business, the difference is very clear in terms of network, service rendered, etc. And there are no hidden charges,” he said.
For Chidozie Michael, he carries out transactions using the Opay app and has never incurred any glitch and the charges are minimal.
“Whenever I carry out any transaction using either my Opay card or app, I don’t incur any charge compared to when I was a bank customer at one of the tier-one banks,” he said.
In his view, Adedeji Olowe, A fintech expert, explained that overcharging the masses does not make the push to achieve a cashless economy seamless as it is more likely to affect the poor Nigerians.
“If CBN wants to go cashless then it should make transfers free. The poor are most affected by the cashless, and the elites (the CBN and bank executives) think about money and value differently. Time is expensive for the executives, so paying N50 for the transfer is nothing to them. But for the poor, every kobo counts,” he said.
Bank CEO gives reasons
However, speaking recently, the Managing Director of Sterling Bank, Abubakar Suleiman, gave reasons for the operational challenges and costs incurred by banks in providing the personalized services desired by customers.
Suleiman said that contrary to the thoughts of some customers, banks are not greedy or have no intention of taking all their money.
He, however, said modern payment systems leverage a tremendous amount of technology, which requires huge amounts of investment.
He said, “Whenever you see an instant payment that moves quickly, there are at least eight or nine different software of which the majority of them are imported; and they are necessary solutions to protect your data and to ensure that we can trace your money.
“So much is invested by banks and that is why we have to charge to recover that money. I guarantee you that it doesn’t even cover the full cost. A lot of the cost that goes into technology doesn’t even show as technology cost.
“In addition to that, a lot of losses that are suffered during instant payments are borne by the banks. We are not operating with the mindset of just charging; we charge because we are dependent on very expensive systems that we now trust to recover the money from this billing.”
Further explanations
Meanwhile, a banker who spoke on the condition of anonymity advised customers who are not clear about any deductions in their accounts to approach their banks for better clarifications.
She said, “The charges were necessary to offset their operational expenses and stimulate the economy. It is normal for customers to complain, but they should understand that they are to pay for any service the bank renders. However, it is advisable for any aggrieved customer to visit the bank for better explanation.”
Call for review
Speaking with this reporter, a development economist and financial expert, Joseph Erhirhie, criticised the banking system for overburdening Nigerians.
He said, “The CBN needs to review these policies. It is becoming unbearable. The apex bank knows that most of these ATMs do not have cash. They know. One may need to depend on the ATMs of other banks.
“While financial institutions need to generate revenue, excessive deductions discourage financial inclusion. Many Nigerians will opt to keep their money in cash rather than deposit it in banks, and this contradicts the goal of a cashless economy.”
Similarly, a banking expert, Dr. Samuel Okolobia, called for a revision of the charges.
“The increase in transaction costs could push more people towards informal financial services, such as cash savings and non-regulated financial institutions. The government needs to find a balance between encouraging digital banking and ensuring that people are not discouraged from using formal financial services due to high costs,” he said.
He advised the federal government, the CBN, and policymakers to address concerns of Nigerians, adding that the policy reduces the purchasing power, imposes a financial burden, and discourages Nigerians from savings.
“As part of the monetary policy framework, CBN regulates bank charges and deductions, including those related to cash transactions and account maintenance.
“These charges vary across banks and are dependent on the specific type of transaction. According to CBN, the reintroduction of the charges on certain cash deposits and withdrawals is to promote a modern and efficient payment system.
“It aims to reduce the country’s reliance on cash transactions, which can be costly and hinder economic development,” he said.
Okolobia said it was obvious that the policy would discourage excessive cash handling, minimise operational costs, and encourage Nigerians to adopt alternative payment methods, such as digital transactions.
He said that the country’s current economic climate posed significant challenges to the policy’s effectiveness.
He said further, “Paramount among these challenges is security concerns, as electronic payment systems are vulnerable to cyber threats and data breaches.
“Additionally, unreliable infrastructure, including limited access to the internet and power, hinders the widespread adoption of digital payment methods.
“The low digital literacy, particularly in rural areas, and the recent approval of a fifty per cent hike in telecom tariffs may continue to discourage Nigerians from embracing the new policy.
“To ensure the successful implementation and adoption of the policy, policymakers must first tackle pressing customer concerns, including the steady increase in telecom tariffs, cybercrime fears, and technical issues.”
He also advised the apex bank to consider other measures like implementing a downward review of Automated Teller Machines (ATMs) and (Point of Sales (PoS) transaction service fees, as well as interbank charges to decrease financial burdens on customers.
“There should also be increased access to ATMs and POS terminals, particularly in rural areas, to promote financial inclusion.”