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How Banks Exploit CBN's Weakness To Impose Excessive Charges On ATM Users

When SaharaReporters sought clarification from the bank on why its machines have a lower single transaction limit, which means more charges, especially to non-FCMB customers, the bank’s Head of Media Relations, Louis Ibe, said it is a cash management strategy


Many Nigerian banks are ripping off customers making withdrawals via Automated Teller Machines (ATMs) by setting low maximum single withdrawal limits to cleverly sidestep the weak Central Bank of Nigeria (CBN) policy against excessive charges, SaharaReporters can reveal.

In September 2014, the CBN re-introduced the Remote-On-Us fee to discourage abuse of the banking technology through numerous daily withdrawals, which led to increase in cash transactions and constituted a negation of the apex bank’s much touted cashless policy.  The Remote-On-Us, a fee of N65, is charged when a bank customer makes a withdrawal from the ATM of a bank of which he/she is not a customer.

It was first introduced in 2012 when the CBN, in collaboration with the Bankers’ Committee, made it the responsibility of a customer’s bank to pay N100 as Remote-On-Us Fee if such a customer uses the ATM of another bank. The N65 charge, according to the CBN, is only applicable after three transactions at the machine of bank that is not the cash issuer.

At the time, all ATMs had the capacity to dispense N40, 000 in a single withdrawal if a customer was carrying out the transaction with the card issued by his/her bank, while a maximum of N20,000 could be withdrawn at once if a card issued by another bank was being used.

While this remains in operation at Access Bank, Standard Chartered Bank and Diamond Bank, many other banks have re-configured their machines to dispense lower amounts, thereby creaming off N65 on each transaction, especially from users withdrawing sizeable sums.

First City Monument Bank (FCMB) ATMs, for instance, dispense N15, 000 to non-customers and N20, 000 to their customers. As a result, customers of other banks who make withdrawals of a naira higher than the set limit on FCMB machines are charged twice.

When SaharaReporters sought clarification from the bank on why its machines have a lower single transaction limit, which means more charges, especially to non-FCMB customers, the bank’s Head of Media Relations, Louis Ibe, said it is a cash management strategy.

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“The decision on the limit from other banks’ cards is to manage our cash supply, so that our customers are given more access to cash,” Ibe said in an email reply to SaharaReporters’ enquiry.

While this appears plausible, further investigation by this website revealed that some of the machines dispense lower than N15,000 to non-FCMB customers.

The FCMB machine on Isaac John, Ikeja GRA, Lagos, has a single withdrawal limit of N10,000. Similarly, Fidelity, Skye and Ecobank have their cash machines programmed not to exceed the same amount in a single withdrawal.

A banker, who spoke on condition of anonymity, said banks programme to have low single withdrawal limits, so they could increase the number of times they charge N65 for use of ATMs.

“Banks are in the business to make money and they maximize every opportunity to make profit. I know for a fact that the machines are programmed to dispense N10, 000 or even less because I am in the department in charge of ATM in my branch.

“In some locations like markets, the machines are programmed to dispense as low as N5, 000. If you ask the banks, they would tell you it is to control the way people use the ATM or cash in circulation. Whatever reason they give, the truth is they only want to make profit,” he said before jokingly adding, “you can’t blame them; that is how I get paid.”

A United Bank of Africa (UBA) customer lamented to our correspondent how she once had to withdraw a large sum from an Ecobank ATM that has been programmed not to dispense more than N5,000 at once.

“I ran out of cash while buying goods, so I went to the Oceanic Bank machine (Ecobank bought over Oceanic Bank in 2014) to withdraw money. I could not withdraw N10,000. I could only withdraw N5,000 at once and I was being charged N65 on each transaction,” she said with barely disguised displeasure.

Similarly, Skye Bank ATMs around Berger (Ojodu), Ikeja and Victoria Island, where our correspondent attempted to make withdraws, all have N10, 000 as maximum single withdrawal limit.

Each attempt on the machines resulted in the automated response: “Maximum amount exceeded. Please re-enter an amount less than NGN 10,000”.

However, the bank insisted that its machines could dispense as much as N40, 000 at a go to its customers.

“The daily limit of a customer is set on the card and such is set by the customer’s bank.  Skye Bank cannot determine the daily limit and count of a customer of another bank,” Rasheed Bolarinwa, the bank’s Head of Corporate Communications, told SaharaReporters via email.

 More ATM Users React

Customer displeasure at low single withdrawal limits, SaharaReporters discovered, is widespread.

A Stanbic Chartered Bank customer told this website that he cannot withdraw N40, 000 at once because the maximum limit is N20, 000.

“When I use a Stanbic card on other banks’ machines, some dispense N10,000, others N15,000.  If I am making a withdrawal of N100,000, it means N65 will be charged on each transaction. The government should look into this and provide a solution,” he said.

A First Bank customer equally complained about the cash volume available in a single transaction. While stating that the machine indicates the possibility of N40,000 withdrawal at once, the limit is actually N20,000. His experience with the machines of other banks is similar.

“If one is using other banks’ machines, they also have limits, with some being as low as 10,000,” he said.

He narrated his experience when he used an ATM in Akure, Ondo State. According to him, he wanted to withdraw N15,000 from the ATM of a bank, but his request was rejected until he reduced it to N10,000.

“I felt bad. There is a regulation that if one does more than three operations, you pay on subsequent transactions.

Most banks don’t comply with the regulation.

“They start charging from the first operation because you are not using your bank’s machine,” he explained.

He suggested that any machine that advertises the possibility of dispensing N40,000 in a single transaction but dispenses a lower sum be taken out of the system.

 Don’t blame the banks...

Banks, however, reject the blame being heaped on them by ATM users. A staff of Ecobank, who prefers not to be named, informed SaharaReporters that the withdrawal limits on machines are sometimes imposed by denomination of notes fed into them.

“There are some machines that dispense N20, 000. That means they have been loaded with N1000 notes and can dispense a maximum of 20 notes at once. But for machines that dispense N500 notes, it means the maximum possible is N10, 000,” he explained.

He equally informed that ATMs previously dispensed as much as N40,000, but banks were forced to reconfigure them to dispense lower amounts because the machines were experience frequent currency jamming.

“There was a time you could get up to 40 notes off the machine. But it was discovered that more the number of notes dispensed, the higher the chances of the machines to be jammed by notes. As such, they [banks) had to reduce it,” he disclosed.

 Blame CBN

An Operations Manager of a new generation bank maintained that the banks are not breaking any rule, as there is none prescribing single withdrawal limits. He blamed the situation on the CBN, which he said has not made a rule on it.

The ATMs of his bank, he said, still dispense as much as N40,000 to customers at once and N20,000 to non-customers.

“The banks are free to set whatever limits they desire; they are not breaking any rules. There is no CBN law that says they cannot set a N10, 000-limit or even lower. If CBN gives a directive on what should be dispensed, the banks will obey. But in the absence of such, you cannot blame the banks but the regulator,” he told SaharaReporters.

Efforts to reach the CBN spokesperson, Isaac Okoroafor, were unsuccessful. Text messages and calls put through to his mobile line were ignored.

 CPC will investigate

The Director General (DG) of Consumer Protection Council (CPC), Babatunde Irukera, informed SaharaReporters that the council has started the process of investigating all illegal bank charges. In addition to the N65 ATM charge, which he described as a violation of consumers’ rights, he said the CPC has notified the CBN of other charges and that a new guideline will released.

“Very shortly, we will open a very large investigation into these bank charges and bank operations with respect to consumers protection.

“Two things that have delayed the investigation is that we needed to curate more information and have a lot of data and secondly, we have a memorandum of understanding that we are negotiating with the CBN. “But we have not been able to negotiate key issues in the memorandum of understanding,” he disclosed.

Irukera added that the envisage investigation will commence “in a matter of weeks”