News Column

CBN Defends Reintroduction of ATM Withdrawal Charges

August 20, 2014

Obinna Chima



The Central Bank of Nigeria (CBN) has said that its directive to deposit money banks to re-introduce a charge of N65 per transaction on remote-on-us automated teller machines (ATMs) cash withdrawals will not affect its financial inclusion campaign.

Speaking in an interview in Lagos, the Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, insisted that the policy was not a re-introduction of charges.

Remote-on-us are transactions done by a card holder on another bank's ATM. Fatokun explained that prior to the amendments in December 2012, it used to be N100 on any remote-on-us withdrawal.

But he said the N100 was removed then so that people would be encouraged to go to other banks' ATMs.

"But the truth is that, as we said in the circular, that of the N100, N35 goes to the payment bank, which has now been completely waived. But in going to other ATMs to make withdrawals, your bank, which is the acquirer bank, incurs a cost of N65 which they pay to the switches and the owner of the ATM that you are using.

"Between 2012 and recently when the review was done, it was discovered that people have actually turned ATMs into their personally purses because nothing is charged. Somebody needs N500, N1, 000, he will go to an ATM to withdraw, such that in a day, some people can patronise ATMs up to five times," he said.

According to him, this had created a huge cost burden for the banks that issued the cards. This, according to him was the major reason why the central bank decided that even though remote-on-us would still be encouraged, a customer can go to other banks' ATMs and withdraw up to three times and there would not be any charges. But the customer would be charged N65 when he makes the fourth withdrawal.

"Of course, if you go to the ATM of your bank, you are free to withdraw as much as you like. So, it does not discourage financial inclusion," Fatokun argued further.

The policy takes effect from September 1, 2014. The central bank had explained that it took the latest decision as a result of the unintended consequences on banks.

It had said the earlier arrangement had resulted in substantial cost burden incurred by banks in defraying the cost for the service. According to the CBN, the re-introduction of the fee was also to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: AllAfrica


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters