CBN: Why we reintroduced ATM withdrawal fee

Following criticism of its decision to reintroduce fees for withdrawal by bank customers from Automated Teller Machines (ATMs) outside their banks, the Central Bank of Nigeria (CBN) on Wednesday gave eight reasons for the policy shift, about 19 months after the fee regime had earlier been abolished.
A statement by Ibrahim Mu’azu, Director, Corporate Communications Department of the apex bank, lamented that whereas the ATMs were to enable customers get better services,
some “were beginning to abuse the use of ATMs through countless daily withdrawals”.
As a result of such abuse, it said, transaction volumes at other banks’ ATMs have increased astronomically, due to the free cash withdrawals as a result of which “the wear and tear as well as the frequency of servicing the ATMs have increased significantly”.

The development, it added, increased cash transactions, thereby negating the CBN’s cash-less policy.
The statement also said the fee is to help the banks maintain their ATMs, a cost that is expensive.
“If a part of this cost goes unabated, the banks may be forced to reject transactions coming from their customers at another bank ATMs, thereby frustrating the interoperability of payment systems,” Mu’azu said.
The introduction of the N65 fee, which is upon the fourth withdrawal in one month, the apex bank continued, is also to increase healthy competition among the banks, such that each would ensure there is no downtime on ATMs, thereby preventing their customers from going elsewhere.
While reassuring the public that the long term interests and welfare of all bank customers remain the goal of all banking policies, the CBN also stressed that “charging of fees on interbank networks is a widely acceptable practice globally”.
The N65 charge only applies when a customer withdraws cash from another bank’s ATM other than that of his/her bank.
The N65 starts to apply from the 4th transaction at another banks’ ATM in a month.
Contrary to the widely held opinion, the statement said the charge is not a negation of the financial inclusion policy, as it would not endorse any anti-customer policy.
It insisted that cash withdrawal at the ATMs of a customer’s bank remains free, defining ‘Remote-on-us’ transaction as “when a card holder goes to the ATM machine of another Bank other than his or her own bank to make a withdrawal”.
It also explained that contrary to the belief that the CBN removed fees on ATM withdrawals using machines of other banks in December 2012, “the CBN, in collaboration with the Bankers’ Committee, transferred the payment of N100 fee on ‘Remote-on-us’ ATM cash withdrawal transactions to issuing banks.
“The N100 was never removed. It was only transferred to customer’s bank to pay, and this was intended to encourage/promote the use of ATMs nationwide,” it said, adding that “having sufficiently raised customers awareness, the first three ‘Remote-on-us’ transactions in a month are free for the card holder but paid for by the issuing bank”.