News Column

CBN - ATM Withdrawal Charges Will Increase Competition Among Banks

August 22, 2014

Obinna Chima

As part of efforts to enlighten bank customers on its decision to introduce N65 on remote-on-us automated teller machines (ATMs) transactions in the country, the Central Bank of Nigeria (CBN) yesterday maintained that the policy would ensure customers get better services from banks.

The central bank also insisted that the fee would engender healthy competition among banks.

It noted that transaction volumes at other banks' ATMs had increased astronomically due to the free cash withdrawal at ATMs.

"The wear and tear as well as the frequency of servicing the ATMs has increased significantly. Indeed, some customers were beginning to abuse the use of ATMs through countless withdrawals. This development has led to increase in cash transactions, which negates the bank's cashless policy," the CBN added in a notice on its website yesterday.

Furthermore, the banking sector regulator argued that maintaining ATMs is expensive as it requires economic incentive for owners to deploy and maintain the facility.

"If a part of this cost goes unabated, the banks may be forced to reject transactions coming from their customers at another bank ATMs, thereby frustrating the interoperability of payment systems.

"The CBN wishes therefore to reassure the public that the long term interest and welfare of all bank customers remain the goal of all banking policies," it explained.

The Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, had said the policy would not affect the central bank financial inclusion strategy.

Prior to the amendments in December 2012, it used to be N100 on any remote-on-us withdrawal. But the N100 was removed then so that people would be encouraged to go to other banks' ATMs.

"But the truth is 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," Fatokun said.

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

Source: AllAfrica

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters