N65 ATM Charge: Banks Encourage Customers To Use Own ATM

Ahead of the September 1, 2014 commencement date of the new policy on automated teller machines (ATM) charges, banks have commenced the education of their customers, even as analysts and banking experts say the new policy would help banks provide better service to their customers. Customers had at the introduction of the policy condemned the N65 charge on the usage of Remote-on-Us ATMs from the fourth transaction within a month. A Remote-on-Us transaction is when a customer uses his or her card to make a withdrawal on the ATM of another bank other than his or her own bank. Basically, this means that when a customer uses his card obtained from bank A to make withdrawals from the ATM of bank B, the first three transactions within the month are free, but subsequent withdrawals from bank B’s ATM will attract a N65 charge. However, if the customer makes three withdrawals of say N20,000 totalling N60,000 at once, the three free withdrawals has been exceeded and subsequent withdrawals will attract a fee of N65 per transaction. Using the card obtained from bank A on bank A’s ATM would however not attract any charge, no matter how many withdrawals were done within the month. Consequently, banks had begun sending notices to their customers with only one week to the commencement of the charges. Fidelity Bank had sent a message saying “our ATMs will always be free, why use other banks’ ATM.” All the banks that had sent messages to their customers last week, had focused on encouraging their customers to use their ATM points with some offering maps to their ATM points. Although, the policy had been faulted by some customers, operators in the banking industry and analysts have said the policy would in the long run, benefit customers as the banks strive to give better service. In his own explanation, executive director, Finance and Strategy at Sterling Bank, Abubakar Suleiman, said the policy was 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. The last thing the country needs is a rollback of the financial inclusion campaign which has resulted in a noticeable uptick in customer enrollment 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 stated. Suleiman added that banks in recent times, have been burdened with the combined weight of Nigeria Deposit Insurance Corporation (NDIC) premiums and Assets Management Corporation of Nigeria (AMCON) levies, as the increasing cost of cash reserves gives less little room for pushing additional cost to banks. This was corroborated by the managing director and chief executive of Financial Derivatives Company Limited, Bismarck Rewane, who stated that aside the burden of AMCON and NDIC, “the commission on turnover (COT), which is also a cash spinner for lenders are also almost being removed by the apex bank.” Bismarck noted that it was wrong for CBN to have removed the charges in the first place, insisting that the charge was necessary given that the dynamics of banking was such that banks would continue to invest and re-invest in infrastructure to make sure that they continue to provide quality services for their customers. Speaking in an interview in Lagos, director, Banking and Payment System Department, CBN, Mr Dipo Fatokun, said the policy would not affect the apex bank’s financial inclusion campaign, insisting that it was not a re-introduction of charges. 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.

“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. LEADERSHIP