Banks Defend Reintroduction of ATM Withdrawals Charges

As some bank customers continue to express displeasure over the decision to introduce N65 on remote-on-us automated teller machines (ATMs) transactions in the country, bank executives have stressed the need for more understanding on the policy. Remote-on-us are transactions done by a cardholder on another bank’s ATM. The policy takes effect from September 1, 2014.

Speaking in an interview with THISDAY yesterday, the Deputy Managing Director, Diamond Bank Plc, Mr. Uzoma Dozie said the fee would encourage people to conduct banking transactions through other channels, such as mobile money and point of sale terminals (PoS). According to Dozie, the decision was taken because it was discovered that as a result of the removal of the charges on withdrawals from other banks’ ATMs in 2012, a lot of pressure was being put on the ATMs mostly by customers withdrawing very little amount of money.

“The justification for the policy is to drive people to use other channels such as mobile money, Internet banking and PoS. If you transact a business through PoS, the cost is even lower and customers are even rewarded for using PoS. “So, it is going to reduce the incentive to use ATM and encourage other channels,” Dozie added. Also, Sterling Bank’s Executive Director, Finance and Strategy, Mr. Abubakar Suleiman argued that contrary to the misinformation widely peddled, the use of your bank’s ATM is totally free of charge.

He maintained that the restatement of cost recovery for the use of other banks’ ATM is intended to limit the cost incurred by banks and does not constitute profit. Banks are still left with the burden of three free withdrawals a month, which translates to N195 monthly charge, he explained. The Sterling Bank Executive noted that while the cost is less than the income on medium and high value accounts, it was sufficient to render most low value accounts unprofitable. This, he noted would force banks to discontinue marketing such accounts.

“The previous policy on limitless withdrawals might have benefited those who were already financially included in the short term but would have harmed mostly poor people with banks scaling back investments for mass market and refocusing on the middle class,” he added. In addition, he pointed out that the current burden on Nigerian banks as a result of the AMCON levy as well as the increased cash reserves requirement gives less little room for pushing additional cost to banks.

According to him, the huge cost on banks was becoming a source of concern for investors and could have negative impact on capital flows. The Chief Executive of Ecobank Nigeria, Mr. Jubril Aku argued that the move was part of measures to make banking business sustainable in the country. He reiterated that the fee was introduced as a result of the rising cost of maintaining ATMs.

“If your bank has made its own ATMs free for you anytime you want to use it, then you should make use of it. The banks must be encouraged to continue to invest in ATM,” Aku said. The Central Bank of Nigeria (CBN) had said that the policy would ensure that customers get better services from banks. The banking sector regulator also insisted that the fee would engender healthy competition among banks. The Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun had also said the policy would not affect the central bank’s financial inclusion strategy.