ATM charges in Nigeria

As the N65 charge on the use of other banks’
Automated Teller Machines, ATMs commenced last
week, as announced by the Central Bank of Nigeria,
CBN, customers have been cautious on its usage
as most customers used their banks’ATMs.
A visit to some of the banks last week showed that
about 95 per cent of the people seen withdrawing
money from the ATMs was customers of their
respective banks.
When asked why they prefered to remain in queue
instead of utilising other banks’ ATMs where there
were fewer queues, the customers said that they
were avoiding the N65 extra charges as announced
by the CBN.

The CBN had explained that the introduction of fees
on Remote –On-Us ATMs was a result of the
abuse in the use of ATMs , which provided
additional costs to the banks.
Therefore, with the introduction of N65 charge on
Remote-On-Us ATMs, customers would be very
careful in using the ATMs of other banks other
than theirs, since it attracts a little fee on the fourth
time usage in a month.
However, some people have argued that the
introduction of N65 fees on Remote – On –Us will
frustrate cashless policy of the apex bank.
According to them “Some customers may result to
dealing with cash instead of using ATMs to make
payments or settlement.” But, which ever way one
looks at it, there is always a cost, either implicitly
or directly.
Meanwhile, the CBN had noted that its intention
was not to add any extra burden on the customers,
rather to ensure that the abuse is eradicated and
excessive cost to the banks, eliminated.
It will be recalled that the apex bank noted some
public comments on its recent circular in respect
of fees/charges on the extended use of other
banks’ ATMs.
These reactions have been mixed with most
commentators showing great understanding and
other stakeholders expressing clear lack of
understanding of the rationale for this decision of
the Bankers’ Committee.
According to CBN “Our intention in this public
communication is to further explain the rationale
and the critical need for this measure which has
been taken in order to ensure that ATMs across
the country continue to function to the satisfaction
of all bank customers.
Cash withdrawal at the ATMs of a customer’s bank
is free; “Remote-on-Us” transaction is when a
card holder goes to the ATM machine of another
bank other than his or her own bank to make a
withdrawal.”
In December 2012, the CBN, in collaboration with
the Bankers’ Committee, transferred the payment of
N100 fee on “Remote-on-us” ATM cash
withdrawal transactions to issuing banks.
According to CBN, “The N100 was never removed.
It was only transferred to customer’s bank to pay,
and this was intended to encourage/promote the
use of ATMs nationwide.
Having sufficiently raised customers’ awareness,
the first three “Remote-on-Us” transactions in a
month are free for the card holder but paid for by
the issuing bank.
The N65 charge only applies when a customer
withdraws cash from another bank’s ATM other
than that of his/her bank. The N65 starts to apply
from the 4th transaction at another banks’ ATM in
a month.
“The charge is not intended to discourage financial
inclusion.The CBN will not endorse any anti-
customer policy .Charging of fees on interbank
networks is a widely acceptable practice globally
On the reasons for ATM charges, the CBN said “
To ensure customers get better services;
To increase healthy competition among the
banks.The increased transaction volumes at other
banks’ ATM have increased astronomically due to
the free cash withdrawal at other banks’ ATM. The
wear and tear as well as the frequency of servicing
the ATMs have increased significantly. Indeed,
some customers were beginning to abuse the use
of ATMs through countless daily withdrawals.”
The CBN stated that this development has led to
increase in cash transactions, which negate the
Bank’s Cash-less policy.
According to CBN “Maintaining ATM is expensive
and it requires economic incentive for owners to
deploy and maintain these machines.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.”