On Wednesday, August 13, 2014, the Central Bank of Nigeria (CBN) reintroduced charges on withdrawals on Automated Teller Machines (ATM) of the nation’s commercial banks. A circular issued by the apex bank reads, “The CBN hereby issues the following directives: The re-introduction of ‘remote-on-us’ ATM cash withdrawal transaction fee 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 card holder, thereby making the first three ‘remote-on-us’ transactions free for the card holder, but to be paid by the issuing bank. September 1, 2014 shall be the effective date for the implementation of the new charge; all ATM cash withdrawals on the ATM of issuing banks shall be at no cost to the cardholder.”
Thus, Monday, September 1 marked the commencement of the new policy and beginning of a new era in the nation’s financial sector. Based on the implementation of the apex bank’s directive, bank customers would henceforth pay N65 on the fourth withdrawal on the ATM machines. This affects users of ATMs maintained by banks where they do not keep accounts. It is pertinent to note that prior to the regime of N65 fee on the fourth transaction, banks charged a flat rate of N100 per transaction irrespective of who owns the ATM machines that rendered the services at the point. Most of the complaints under the old system centred around high charges, debiting of customers’ accounts for cash not dispensed or seizure of cards, epileptic network, complete breakdown or malfunctioning of the machines, resulting in long queues at the ATM pay point.
For the customers, frustration and disappointment were regular experiences. However, in order to mitigate the problems associated with the ATM patronage, the CBN in collaboration with the Bankers’ Committee in December 2012 abolished the N100 charge on ATM cash withdrawals. It then transferred the payment of the N100 charge to the issuing banks of the ATM cards. The fee was borne by the acquiring bank, issuing bank and switch companies at the commencement of the arrangement. But the CBN in another circular explained that the issuing banks had during the commencement of the arrangement in 2012 decided to waive the issuing 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 other banks’ ATMs. With the implementation of the new policy of N65, the cost (which covers the remuneration of switches, ATM monitoring and fit-notes’ processing by acquiring banks) is now being passed on to the customers. We understand that the new policy has not gone down well with ATM users. And they are demanding a reversion to the old order. In a recent survey conducted by an independent research and intelligence group based in Lagos, about 70 per cent of Nigerians want the new policy cancelled.
Ordinarily, we support the reintroduction of ATM fee on the grounds that the monies collected would be deployed to address the problem of poor services and related problems. But the fundamental question is, will the new charges improve bank services? However, experiences have shown that service charges are hardly utilised to improve customer services. It is, therefore, rational for the customers to resist any policy that might add to their financial burdens rather than abate them as revealed by the survey.
In the light of the customers’ contempt for the new regime of N65 fee, we urge the CBN to impress on the banks to use the revenues accruing from the charges to enhance customer services. The apex bank should also monitor ATM services by various banks to ensure that customers get commensurate value for their money.
