New ATM Charges: A Spanner in the Wheels of the Cash-less Initiative!

Lolade Odeyemi  |

No doubt, technological advancement comes at a cost, which no one is ever a fan of, especially where considerable sums are to be paid for the service. It seems like this is what is currently happening in the Nigerian banking sector with regard to the use of Automated Teller Machines (ATMs) across the country. With the reintroduction of charges for ATM usage, which Nigerians have enjoyed free of charge in the last two years, starting from today, September 1, many are wondering if the move is not a spanner in the wheels of the cash-less initiative of the Central Bank of Nigeria (CBN).


Ever since the CBN introduced the first ATM in Nigeria in 1989, all banks and bank customers operating in the country have wholeheartedly embraced the Self Service technology due to its cost effectiveness and the relief it brings to the banking system, which had been clogged with strenuous activities that affected both banks and bank customers.

With the introduction of Automated Teller Machines in Nigeria, banks started issuing ATM cards to account holders on request, giving them access to cash at any time of the day. Initially, withdrawals from the ATM of the issuing bank were free, while withdrawals from the ATM of other banks attracted the sum of N100 per withdrawal. Although the widespread use of Automated Teller Machines definitely brought a lot of relief to the unnecessary rigor that was associated with banking transactions in Nigeria, many bank customers believed it also attracted an unnecessary expense, which was a disincentive for its usage, especially when the ATM of their banks was not within reach.

Even though some bank customers got accustomed to the charges over time, most low income earners didn’t find losing N100 on every withdrawal very palatable. As a result, at the early stages of implementation the cashless policy, many preferred the withdrawal of large sums of money at a go, in order to avoid repeat withdrawals; needless to say that the development was defeating the purpose of the cashless initiative, which was supposed to reduce the physical movement of large sums of cash to the barest minimum.


However, just about two years ago, precisely in December 2012, ATM card users let out a sigh of relief when the CBN abolished the N100 fee on remote-on-us ATM cash withdrawal transactions, transferring such costs to the issuing banks. The apex bank and the Bankers Committee had taken into consideration the complaints of many customers and the strain the charges was putting on the implementation of the cashless policy. According to the CBN, the move was to minimize the financial burden on bank customers and make the services friendly to the middle class and low income earners. On commencement of the new arrangement, banks decided to wave the issuer fee (N35), which should have ordinarily been an income to them and, for almost two years, ATM card holders enjoyed free transactions. But that was until the recent bomb dropped by the CBN, albeit, to the bewilderment of many bank account holders.

About two weeks ago, the CBN directed deposit money banks across the federation to re-introduce a charge of N65 per transaction on remote-on-us Automated Teller Machines (ATMs) cash withdrawals. According to the apex bank, the new charge will apply from the fourth remote-on-us withdrawal (in a month) by a card holder, thus making the first three remote-on-us transactions free for card holders, a cost which will be borne by the issuing bank. Although the reintroduced charge is way lesser than the initial charge of N100, which was still effective as at 2012, many industry observers would wonder why the CBN is returning to that policy after less than two, and how the new fee will foster the success of the still teething cashless initiative.


In consequence, the Bankers’ Committee, comprising the Central Bank Governor, chief executive officers of banks and top directors of the apex bank, has explained that the latest decision came as a result of the need to cover the substantial cost incurred by banks in settling the cost for the service. The CBN made it clear that the decision was taken after due consideration for the success of the cashless policy, as well as the real cost to the banks in deploying and maintaining their ATMs. This new fee (N65) is paid to the acquiring bank (the bank which owns the ATM) and the switching company, to cover the costs of the switching, ATM monitoring and fit notes processing by the acquiring bank.

Speaking on the reintroduced charges, the Group Managing Director of Access Bank Plc, Herbert Nwigwe, pointed out that the CBN took the decision to re-introduce the charges on ATM usage after discovering that some customers make up to 500 withdrawals a month from other banks, whereas their banks have made the same service available to them free of charge.

From all indications, though the newly introduced charge will definitely bring immediate relief to the banks, it is possible that it could also discourage rampant ATM usage across banks and, maybe, encourage the habit of holding and moving cash. It is the fear of many that this, in itself, could stall or impede the progress of the cashless initiative, except, of course, bank customers are encouraged to embrace other channels of cashless transactions.

Lolade Odeyemi  

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