4 June 2012

Nigeria: Dilemma of Rising ATM Fees Amidst Poor Service


"Dear Customer, effective May 2012, our monthly card maintenance fee will be revised from N100 to N200. We are committed to delivering world class service."

This was the message sent via SMS to customers of a bank intimating them about the increase in cost of using Automated Teller Machines (ATMs).

Customers have in recent times come under a barrage of deductions from their accounts by banks for the use of ATMs. Incidentally, many customers do not know how much they are charged for using the ATM because only a few banks send alerts to notify their customers of such deductions.

LEADERSHIP investigations reveal that some banks charge their customers as much as N50 per transaction on their own ATMs while other banks insist that apart from an initial payment for the issuance of the card, withdrawal on their own ATM is free.

How much should banks charge for ATM usage?

On a monthly basis the amount paid by the average customer (savings account holders inclusive) runs into several hundred naira which the banks tag as payment for one service or the other. One of such charges which cut across all banks and all types of accounts is the fees for Automated Teller Machines (ATM) user fees.

There seems to be no coordination on what the banks can charge their ATM card-carrying customers. The Central Bank of Nigeria guidelines on ATMs do not specifically state what the banks can charge their customers for the use of ATM cards, apart from the directive for interbank usage which it specifically mandates that "Transaction fees shall remain pegged at a maximum of N100 per transaction, for all ATMs. All ATMs shall clearly display the transaction fees for card holders to accept, before the transaction is consummated."

There are two types of ATM withdrawals namely intra-bank and inter-bank. Intra-bank withdrawal is when a customer withdraws money from the ATM of his/her bank, while inter-bank is when the customer withdraws money from the ATM of other banks. The latter is what the CBN guideline covers while it is silent on the issue of card maintenance fee, leaving that at the discretion of individual banks.

Most ATM card holders however conceded that their bank statements debit their accounts minimum of N100 per month even when they did not utilise the ATM service. Some bank customers told LEADERSHIP that they cancelled their ATM service because they deemed it unjust.

But officials the banks have defended such charges as being the cost of maintaining and operating the system.

When LEADERSHIP asked Interswitch Limited - the switching company for banks in Nigeria - what the accepted fee for ATM was, a staff of the company who opted to speak off record said "Interswitch is only involved when you use your bank's ATM Card on another bank's ATM, then Interswitch charges a transaction cost of N100 instantly. However, maintenance charge is at the discretion of individual banks to fix. It is not controlled by us and the money does not come to us."

If the SMS sent by Ecobank to its customers is anything to go by, bank customers should be prepared for further increase in the cost of using ATMs. This is because other banks would soon want to follow suit.

Despite what is charged for the use of ATMs, customers seem more concerned about the quality of service provided by these banks. LEADERSHIP spoke with some of the customers who have received the SMS notifying them of the increase and this is what they said.

One customer, who simply introduced himself as Mr Adeleke said there was the need for banks, particularly the big ones to improve their ATM services.

He said, "My problem is with the big banks; their customers have grown enormously in the last few years but they have refused to grow their services at the same pace with the growth in their customer base.

"Their ATM points are always crowded and their services are poor. If you cannot transfer online, then you will have to withdraw in some cases above the limit over the counter, which means you will be charged for the banks' poor services."

Another customer, Mrs Lilian Eroche said she was always disappointed most times she wanted to use the ATM. "Most of the ATMs are not functional most times. You have to drive round the town to locate a functional ATM and when you do there would be long queues. I think the banks should try to make their ATMs more functional," she said.

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