The remote-on-us automated teller machine (ATM) withdrawal charge of N65 just introduced by the Central Bank of Nigeria (CBN), from today, is to ensure better services for customers, increase healthy competition amongst banks, reduce wear and tear on the ATM machines, so that they can serve the customers longer, and checkmate increase in cash transaction, which negates the cash-less policy.
These are the reasons behind the introduction of N65 remote-on-us ATM charges, which will only be charged after the third remote-on-us ATM withdrawal in a month according to the apex bank.
Remote-on-us withdrawal is the case when a card holder goes to the ATM of a bank other than his bank to withdraw cash.
This charging of fee on interbank network, a global best practice, is a widely acceptable practice globally and it is used to pay the cost for the remuneration of the switches, ATM monitoring and fit-notes processing. Not charging of this fee is already causing discouragement to banks and this poses a threat to financial interoperability.
To address this and as a responsible apex bank, the Godwin Emefiele-led CBN in meeting his regime’s objective of entrenching macroeconomic stability and engendering economic development in Nigeria, came up with this policy.
According to the CBN Director, Corporate Communications Department, Mr. Ibrahim Mu’azu, between 2012 and this year, when the review was done, it was discovered that unexpected wear and tear on the machines caused by incessant withdrawals have created a huge cost burden for banks and it was becoming discouraging to them.
This unintended consequences made the CBN to take the latest decision and it should be pointed out that even at the charge of N65, the banks have forgone their income of N35 that they made in old N100 per remote-on-us withdrawal apart from bearing N65 each on the first three remote-on-us withdrawals in a month, as a form of service to their customers in this new policy. It is obvious that the policy of outright cancellation of the charge had resulted in substantial cost burden incurred by banks in defraying the cost for the service.
And it should be stressed that the initial policy of N100 is on every remote-on-us ATM withdrawal, while the new policy is free on the first three made in any calendar month as the customer only pays from the fourth remote-on-us withdrawal and that the issuing bank does not make any thing. But by going to other ATMs to make withdrawal, the customer incurs cost of N65, which goes to the switches and the owner of the ATM that the customer used.
Nevertheless, a customer can still withdraw 10 or more times on ATM in a month free provided such withdrawals are done on the ATMs of his bank.
Consequently, the charge is not punitive as banks cannot fully bear the burden of a cost that is outside of their operations; and getting customers to use their own banks’ ATMs, which is free, no matter number of times the customers withdrawal in a day or a month, promotes financial discipline.
Also, there are many advantages in this new policy that the customers, banks and the economy will benefit from. These include: Check excess uses of ATM and remove the associated cost, which will ensure that customers do not incur unnecessary costs; consolidate financial inclusion as the policy aims to ensure that customers are appropriately charged and not indirectly charged; encourage financial discipline from the customer by watching his cost; encourage savings, as no customers will be indirectly charged. This will increase the capacity of the number one economy in Africa to increase his capital formation, which will help not only the entrepreneurs but all customers in particular long term; increase the financial intermediation capacity of banks in economic promotion; work towards the much anticipated and needed reduction in interest rate, which will empower entrepreneurs to create more jobs for the economy, thereby meeting the job creation goal of the new CBN governor and improve the country’s growth and development; indirectly reduce the risk of ATM transaction and negate threats to financial system stability, financial inclusion, cashless policy and systemic risk in the industry.
Othes are increase healthy competition amongst banks in deploying more ATM machines for the benefits of their customers in order to guide against customer porting, which will in the medium to long term, meet the CBN Governor’s mission of a people-centred central bank; provision of the platform to reduce financial tightening in the system as cost of operation becomes low, which will be in tandem with the CBN’s core mandate of ensuring monetary and price stability and a sound financial system and customers engagement in remote-on-us withdrawal three times monthly at no extra cost, which means that the use of other banks’ ATMs is not cancelled, only that frivolous remote-on-us withdrawals are discouraged but could still be done only that the customer will bear the cost rather than his bank after all, the customer is the one collecting money from where he did not keep it.
Expectedly, there are positions against this policy as Centre for Social Justice through his Lead Director, Mr. Eze Onyekpere, said there is no justification for the new policy and that it would unduly burden bank customers, discourage the unbanked from using the banking system and also negate the cashless policy.These positions have obviously been defeated by the above details.
For instance, the Chief Executive Officer of Financial Derivatives, Mr. Bismarck Rewane, a frontline economist, said: “It makes a lot of sense to return the charges for the ATM as you cannot keep your money with Bank A and always keep collecting it from Bank B; that will be a case of working for John Bull and collecting salary from Afamako company.’’
- Ayeni, an economist and public commentator, writes from Kano.