Enforcement of N65 ATM charge begins today

Enforcement of N65 ATM charge begins today


BANKS operating in the country will today commence the N65 charge on Remote-On-Us Automated Teller Machines (ATMs) transactions which the operators and some analysts have said would create competition among banks and lead to improvement of services to customers.

The Central Bank of Nigeria (CBN) cancelled N100 on any remote-on-us withdrawal in 2012, citing the need to encourage people to use the ATM of other banks.

However, the recent announcement of the reintroduction of the charge sparked criticism from some quarters, but the apex bank and the Bankers Committee stated that the decision is in the economic interest of the country, as the removal of the charges had a negative effect on the cashless policy.

They said the wear and tear as well as the frequency of servicing the ATMs had increased significantly since the removal of the charges. Indeed, some customers are beginning to abuse the use of ATMs through countless withdrawals. This development, the apex bank, observed has led to increase in cash transactions, which negates the bank’s cashless policy the CBN said in a circular.

According to the CBN if a part of this cost goes unabated, the banks may be forced to reject transactions coming from their customers at other banks’ ATMs, thereby frustrating the inter-operability of payment systems.

Maintaining that ATM is expensive and requires economic incentive to maintain, an Economist and Managing Director, Financial Derivatives Company Limited, Mr Bismark Rewane, said the reinstatement of the ATM charge was appropriate.

He said the removal of ATM charges was wrong in the first instance, adding that there was no way a bank can recover its costs and improve its profitability.

For instance, he noted that banks had to pay AMCON levy, NDIC charges and at the same time losing money from COT 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,” Rewane said.

Also, Sterling Bank’s Executive Director, Finance and Strategy, Mr Abubakar Suleiman, said that what happened was a restatement of cost recovery for the use of other banks, “adding that it is intended to limit the cost incurred by banks and does not constitute profit.

“Banks are still left with the burden of three free withdrawals 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 said 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,” he said.

“Again, the current burden on Nigerian banks arising from the combined weight of Nigeria Deposit Insurance Corporation, NDIC, premiums and Asset Management

Company of Nigeria, AMCON, levy as well as the increasing cost of Cash Reserve Requirements give little room for pushing additional cost to

banks“It is also becoming a source of concern for investors and could have negative impact on capital flows. When it comes to the cost of using ATMs, Nigerian banking customers still have one of the best deals you can find in any

jurisdiction”, Suleiman said.

According to Access Bank plc, Managing Director the zero charge led to free

cash withdrawal and increased cost for the banks, as they had to pay for the use of other banks’ ATMs by their customers. Mean while the CBN assured that the long-term interest and welfare of all bank customers remain a

priority in the goal of all its banking policies.