by Tunji Andrews

The charge on extended use of other banks’ Automated Teller Machines (ATMs) reintroduced by the Central Bank of Nigeria, which took effect from Monday, has been considered as being unnecessary by Nigerians.

Below are few myths around the ATM charge implementation;

1. Bankers say paying interloping fees on behalf of customers greatly affected bank earnings.

A. It would appear that Nigerian banks have succeeding at painting these fees as a cost, rather than an expense. In the business of banking (world over), ATMs are a value added to both bank and customer. Customers get to have access to their money 24/7, while banks get to decongest their banking halls, create more mechanized branches (saving revenue on salaries, etc of a normal branch), and get to make more COT outside office hours.

Speaking specifics, when analysed, our editorial team detected that according to First Bank of Nigeria Holdco. 2013 full year results, it was noticed that the bank recorded N1.6 trillion in total transactions, within that year; which represents 33% of the total ATM transactions within the country.

In 2013 also, FBNH paid to other banks N25 billion in ATM fees, but when placed beside the N33 billion received from other banks, FBNH made N7 billion off their ATM line.

Our correspondent speaking off the record with another bank’s staff, who works with the bank’s ATM service unit, indicated that the monthly presentation of proceeds from their ATMs in his bank, is themed “SHOW ME THE MONEY”.

B. Banks charge clients N2 on every N1000 withdrawn or deposited, including ATM use, thus, this is a double charge, plus some banks charge an ATM maintenance charge.

C. Looking at bank’s 2013 yearly results, our team also observed that a large chunk of losses came from regulatory charges and bad debt, not ATM charges. Loans given to the high and mighty, whom the banks believe would pay back, at the expense of SMEs who desperately need these funds.

2. The CBN, via its press release titled “Public communication on the Introduction of fees on Remote-On-Us ATM transaction” says customers abuse ATM use by making “Countless” withdrawals daily

This, our team has noticed is an exaggeration, as there is a daily limit on all ATMs, of 5 withdrawals per day

3. The CBN says it will encourage investment in the sector.

The banks hit most by this expense, are banks who have less numbers of ATMs, as banks with a greater number in strategic locations(one mentioned above), generally have a larger number of 3rd party transactions, thus earn more. This actually, helps the smaller banks fall into a comfort zone and puts less incentive for them to invest.

4. The CBN, via the press release also says this move is in the best interest of customers.

The CBN press release listed 9 reasons for the reversal and 8 benefits of the reversal. Non, spoke of a benefit to the customer, while it was observed that all were bank focused.

5. This is not Godwin Emefiele’s first anti people policy. It is actually his 3rd in less than 3 months

A. Increase of BDCs capital base from N500,000 to N30 million, eliminating the possibility of start-ups entering this space.

B. Increase of Financial institutions capital base from N10 million to N100 million:

We have began to see the emergence of a few financial institutions like RenCap, who are offering retail credit to salary earners. You can get up to N500,000 in 24 hours to pursue your business. Also, they partner with electronics sales firms, to allow low income earners buy things like TVs, Phones, furniture, etc. And pay over a 3 month period.

Increasing their capital base and also pegging their minimum lending limit at N500,000, means that they can’t actually cater for the lower middle class anymore which was their niche market. Thus eliminating competition for the banks, who won’t still cater for this social class

After word:
Our sources exclusively indicate that more charges are to come, with the next alleged target, said to be COT reversal. With regulatory charges seemingly heavy on the banks, they have been looking for a means of release and having a person at the helm of regulation who knows in detail their pain, something must shift. A reversal on regulatory fees may be a lot harder to pull seeing that the economy leans on these areas; thus, bank customers may see a lot more charges being transferred to them.