The Founder/CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf has said the new withdrawal fees introduced by the Central Bank of Nigeria (CBN) is tolerable given the rising cost of operations.
The CBN had in a circular signed by the Acting Director of the Financial Policy and Regulation Department, John Onojah, on Tuesday announced a review of transaction fees for automated teller machines (ATMs) across the country.
According to the apex bank, the review aims to address rising operational costs and enhance efficiency within the banking sector.
The revision effectively eliminates the three free monthly withdrawals previously granted to customers using other banks’ ATMs and applies to all banks and financial institutions operating in Nigeria and is set to take effect from March 1, 2025.
The most significant change is the complete removal of the previous policy that allowed bank customers three free monthly withdrawals on ATMs belonging to other banks. This means that every withdrawal on another bank’s ATM will now attract a charge.
The circular noted, “Furthermore, the three free monthly withdrawals allowed for Remote-On-Us (other bank’s customers/Not-On-Us consumers) in Nigeria under Section 10.6.2 of the Guide shall no longer apply.”
The CBN said it expects that this adjustment will accelerate the deployment of ATMs across Nigeria while ensuring that financial institutions appropriately charge customers for the service.
The circular read, “In response to rising costs and the need to improve the efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020 (the Guide).
“This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service. Accordingly, banks and other financial institutions are advised to apply the following fees with effect from March 1, 2025.”
Hereunder are key changes under the recent CBN review:
On-Us transactions (same bank’s ATM): Customers withdrawing from their own bank’s ATM will continue to enjoy free withdrawals.
Not-On-Us transactions (other banks’ ATMs):
On-site ATMs (within bank premises): A fee of N100 per N20,000 withdrawal will apply.
Off-site ATMs (outside bank premises): A fee of N100 per N20,000 withdrawal, plus an additional surcharge of up to N500, will be charged.
International withdrawals: The charge will be based on the exact amount imposed by the international acquirer.
Dr. Yusuf in his reaction, said “In view of the rising cost of operations, the new fees that has been introduced are tolerable because you also need to look at sustainability.”
He said the machines need to be acquired, they need to be maintained and they also need to be secured. “These costs need to be covered. So we also have to be fair to the banks especially as the fees are tolerable,” he said.
He noted that the fees are still far cheaper than patronising the point of sales (POS) which charge between N200 and N300 for N10,000.
He however said, “Addressing the issue of availability of cash is also very important, we must commend the effort that has been made by the CBN to ensure availability by sanctioning some banks.
“But more importantly the CBN also needs to ensure that adequacy of supply is addressed. Yes, there are issues of abuses and corruption, but these things happen because of scarcity. “So they need to address the fundamental problem of scarcity. Once you address the problem of scarcity the opportunity for abuse will go.”
Also reacting, Professor Godwin Oyedokun, a professor of Accounting and Financial Development at Lead City University, Ibadan, says the introduction of a fee may indeed encourage banks to increase the deployment of ATMs, as the new charges create a direct incentive for banks to ensure their ATMs are robustly stocked to minimize costs for consumers.
He said while the CBN’s new policy may serve to encourage an increase in ATM deployment and may have an impact on consumer behavior towards PoS usage, there is skepticism about whether it will solve the fundamental issues of cash scarcity and high transaction fees affecting consumers. Its success will depend largely on how banks respond in terms of cash availability, and whether the consumers perceive value in the services offered. Continuous dialogue and assessments should be conducted to ensure that such policies genuinely serve the public interest rather than becoming an additional financial burden.