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CBN Re-introduces ATM Withdrawal Fee

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The Central Bank of Nigeria announced on Wednesday that, starting from the 1st of September 2014, Nigeria's bank customers will begin to pay charges for cash withdrawals made on the Automated Teller Machines(ATM) of other banks.

According to the statement signed by Mr. Dipo Fatokun, the Director, Banking and Payment Systems Department, CBN, the Central Bank and the Deposit Money Banks (DMBs) agreed to re-introduce the ATM charges because the cost of transaction (to cover the remuneration of the switches, ATM monitoring, and fit notes processing) was becoming too burdensome for the acquiring banks to continue to bear.

CBN re-introduced the ATM charges almost two years after its collaboration (in December 2012) with the Bankers' Committee to transfer the payment of the 100 naira fee on 'Remote-on-us' ATM cash withdrawal transactions to the issuing banks. A fee that is shared between acquirers, issuer bank, and switch companies.

Therefore, cardholders using other banks' ATMs will now pay 65 naira per transaction, but all cash withdrawals on the ATM of issuing banks will be at no cost. In addition, the new charge shall apply as from the 4th 'Remote-on-us' withdrawal in a month, which mmakes the first three 'remote-on-us' transactions free.

Before the  CBN suspended the service charge, bank customers were to pay 100 naira ATM maintenance fee for every cash withdrawal from a machine belonging to another bank.

It was reported that banks in Nigeria had given hints to the CBN to consider restoring the withdrawal charges on customers because they had been groaning under the burden of maintaining the ATMs without commesurate charge on customers.

The Chief Executive Officer, Dr. Bowo Olateru-Olagbegi said that he had credible information that the CBN governor Godwin Emefiele was under pressure to restore the withdrawal charge which was suspended by his predecessor Mallam Lamido Sanusi, to enable them deploy more machines.

"What the CBN did was to reduce the burden on the customers and allow the banks to pay the charges as part of their services to the customers due to the fact that the customers are already subjected to other service charges, including COT. CBN is the regulator, and when it gives a directive, you obey first, then complain and lobby. That is what the banks are doing, especially now that the CBN governor has a banking background and understands their plight". He said.

"If they don't generate income from the ATM, they will get it from other charges such as excess COT. Top banks are mounting pressure on the CBN to reserve it. Their argument is that the 100 naira was a bit convenient for customers to pay than joining a long queue in the banking halls. They argued that the customers were willing to pay and never complained. CBN decided to reduce the burden on the customers". He said.

Olateru Olugbegi added that it costs money to deploy and maintain ATMs, saying these were eating into the profit of the banks. He however noted that the device may be turned into an income generating infrastructure, and therefore there should be deployment of fewer machines.

An employee of a leading bank in Nigeria told New Telegraph on Sunday that due to the cancellation of the fee, most banks are losing revenue. He said that they were spending their resources on ATM inter-bank settlement and maintenance, which is the resultant effect of excess COT because the banks have to recoup that money one way or the other.

An ex-president of the Chartered Institute of Bankers of Nigeria and the Managing Director, Maxfund Investment and Securities Plc. Okechukwu Unegbu said there is nothing wrong with the policy if banks are lobbying CBN to return the 100naira withdrawal charge, adding that everywhere such services are conducted in the world, certain chharges are added to enable them maintain the machines.

"I don't envy the banks", he said, "these facilities are expensive to maintain. They are electroniv service providers and the owners pay rent where they are installed; they pay for installation, security, among others. I don't see anything wrong in it, especially since the CBN wants to stop COT charges. I wonder why they removed it in the first place. I have no issues with this but my quarrel is with the banks that still charge COT on that after charging 100 naira service fee. But i believe the fee should be a cost recovery and not another means of milking the customers further".

A professor of political economy, and a director at Lagos Business School, Pat Utomi, said he was aware of such a policy, adding that such fees are being charged all over the world for ATM transactions.

"Last week in the United States, I used two banks' ATMs, which are not my banks, and the machines charged me $3 for each of the transactions. So the service fee is universal. But what is charged depends on how much per unit of transaction for the shared bank structure. If both banks have a shared platform, then the cost would come to nothing. So there is nothing wrong in it coming back".

Mr. Emeka Ngige, a senior Advocate of Nigeria who specializes on monetary policy, urged the CBN not to succumb to pressures from the banks to restore the 100 naira fee, as such services are what the banks should render to the customers. He noted that the banks are already making money from a number of sources from the same customers.

The executive secretary, Association of Professional Bodies of Nigeria and Deputy President, Nigerian Institute of Surveyors, Mr. Akin Oyegbola said that the removal of the fee on the customers would put the banks on their toes to improve themselves and their business, rather than embarking on armchair banking.

"They have made their money", he said, "let them go and look for other legal businesses they can do to make money. I want the CBN to maintain status quo despite the pressures from the commercial banks".

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