The Central Bank of Nigeria (CBN) recently introduced changes to the fees charged by banks and other financial institutions for electronic banking transactions, account usage and maintenance, and ATM withdrawals.
The fees were reviewed downwards and contained in the revised “Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions” (the “Guide”) issued in December 2019.
The Effect of the Charges
The CBN believes the reduced fees will incentivise stakeholders, especially those making micropayments, to further embrace electronic banking channels, which will in turn improve financial inclusion.
The revision of these charges is a welcome development to encourage financial inclusion of the underbanked in Nigeria. It is, however, useful to note that Fintech companies in payments space, such as PalmPay and Kuda Bank, are already playing an important role in improving access to finance by offering lower fees on electronic transfers and online payments.
With this reduction, it might appear on the face of things that banks are in even more competition with Fintech companies. The reality, however, is that there has been a longstanding issue in Nigeria with access to finance, and this competition is likely to solve this issue in good time.
We have set out the key changes in the Guide below:
Key Changes Made in the Guide
- Electronic Transfers: Transfers between bank customers were reduced to ₦10 for transfers below ₦5,000, and ₦25 for transfers between ₦5,000 and ₦50,000, while the previous charge of ₦50 was retained for transfers above ₦50,000.
- ATM Withdrawals: The ₦65 charged after the third withdrawal within a month on other banks’ ATM was reduced to ₦35 after the third withdrawal within a month.
- Current Account Charges: The card maintenance fee previously charged on current accounts was removed, while the annual card maintenance fee of foreign currency denominated cards was reduced to $10 from $20.
- Savings Account Charges: The card maintenance fee charged on savings accounts is now to be charged quarterly, as opposed to monthly. The ₦50 charge was retained, however.
- Hardware Tokens: The fees charged for hardware tokens were reduced to a maximum of ₦2,500 from the previous maximum of ₦3,000.