This charge, the Central Bank of Nigeria (CBN), said will remain in order to have efficient ATM service delivery across the country.
Speaking to The Guardian at a post-event interview in Lagos, at the weekend, the Deputy Director, Payment System Department, Central Bank of Nigeria (CBN), Jimoh Musa Itopa, said that a lot of people take advantage of no fee charge on ATM withdrawals to make unnecessary withdrawals at will, thereby incurring huge cost on the acquirer banks.
Itopa however, admitted that the introduction of new fee on ATM withdrawals will not have any negative impact on the financial inclusion drive of the CBN.
“When the initial N100 fee was removed, it was discovered that people were no longer going to their ATMs to withdraw. The behavior of card holders changed. Your bank is here, but because the queue is long, you moved to another bank. Those acts have put serious financial burden on the customer’s bank”, he stated.
The CBN chief explained that the withdrawal of the N100 ATM fee earlier was targeted at helping the poor in the society.
According to him, when the fee was removed, peoples’ attitude changed, which saw banks paying heavily to maintain the ATMs, which are about 13, 770 in the country.
“You know when you go to another bank’s ATM to withdraw other than your own bank; you are creating wealth for that bank. For instance from the initiatial N100 fee, that bank takes part of it, and other maintenance cost enters as well, leaving just a minute portion for your bank”, he stated.
He disclosed that the CBN discovered that this issue brought huge challenge to the industry, stressing that issue of failing transactions emerged on a high level, “a situation where you go to an ATM and the system will say card issuer not available or contact your financial institutions became the order of the day. Everybody was now looking for ways to reduce such burden and by so doing there were several blocked transactions.
And CBN will not allow a situation where interoperability, compromises will be a challenge in the industry. ”
And to avoid the situation degenerating into another thing entirely, Itopa said the CBN had to meet with the Bankers Committee to find a sustainable model for the industry, a more favourable cost structure.
As such, he said the cost of ATM was identified; number of times/year it takes the machine to worn out; components (switching companies cost); connectivity cost from the telecommunications operators and service cost of the ATMs, “at the end of the several meetings, we arrived at N65. We got to N65 by also looking at how much your bank was taken when it was N100 fee, then it was N35, which is known as the issuer fees. So, if a bank customer goes to another bank to use the ATM, the bank will forfeit N35. So, we arrived at N65, which is the cost to be transferred to the bank that owns the ATM. From here, the switches; telecoms operators; security and maintenance take theirs.”
He said to further alleviate bank customers pains, the CBN and Bankers Committee agreed that the first three ATM transactions, the bank where the account is domiciled will pay, while from the fourth transactions the customer starts paying.
“However, all these cost are avoidable. People say because by bank is far, not withing my reach, reason they use another bank’s ATM machine, it is better to open an account at a bank close to you. Today’s KYC allows you not to even have a money before you can open an account, besides you can open account using your mobile phone, which prevents you from bringing in valid Drivers License; International Passport and the rest.
“We advice customers to open a closer branch account rather than creating unnecessary overheads and crises of interoperability in the industry. What the CBN is pushing is to ensure that ATMs work at any time.”
It will be recalled that the CBN had in August in a circular signed by the Director of Payment services at the apex bank, Dipo Fatokun reintroduced the fee that banks charge on ATM withdrawals.
The circular, which came into effect on September 1, expected bank customers to pay N65 per ATM withdrawal, however, after three transactions from an ATM not belonging to an issuer bank.
In the directive, the CBN said the reintroduction of “remote-on-us” cash withdrawal transactions fee, “which will now be N65 per transaction is to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks.”
The new charge, it noted, “shall apply as from the fourth “remote-on-us” withdrawal (in a month) by a card holder, thereby making the first three transactions free for the card holder, but to be paid for by the issuing bank.
“All ATM cash withdrawals on the ATM issuing banks shall be at no cost to the card holder”, the circular informed.
This fee, the circular said is to be shared between the acquirers, issuers, and arms switches.
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