UNDERSTANDING ATM CARD WITHDRAWAL AND N65 DEDUCTION
The Central Bank of Nigeria has said its directive to Deposit Money Banks to re-introduce a charge, of N65 per transaction, on remote-on-us Automated Teller Machines cash withdrawals will not affect its financial inclusion campaign.
The Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, said this on Thursday 21st
Remote-on-us ATM transactions are transactions done by a cardholder on another bank’s ATM.
Fatokun, in a statement by the CBN, explained that prior to the amendments in December 2012, it used to be N100 on any remote-on-us withdrawal.
But he said the N100 was removed then so that people would be encouraged to go to other banks’ ATMs.
He said, “But the truth is that, as we said in the circular, of the N100, N35 goes to the payment bank, which has now been completely waived. But in going to other ATMs to make withdrawals, your bank, which is the acquirer bank, incurs a cost of N65 which they pay to the switches and the owner of the ATM that you are using.
“Between 2012 and recently when the review was done, it was discovered that people have actually turned ATMs into their personally purses because nothing is charged. Somebody needs N500 or N1, 000, he will go to an ATM to withdraw, such that in a day, some people can patronise ATMs up to five times,” he said.
He said the development had led to huge cost burden for the banks that issued the cards.
This, he said, was the major reason the central bank decided that even though remote-on-us transactions would still be encouraged, a customer could go to other banks’ ATMs and withdraw up to three times and there would not be any charge.
But the customer will be charged N65 when he makes the fourth withdrawal.
“Of course, if you go to the ATM of your bank, you are free to withdraw as much as you like. So, it does not discourage financial inclusion,” Fatokun argued.
The policy takes effect from September 1, 2014.
The central bank had explained that it took the latest decision as a result of the unintended consequences on banks.
It had said the earlier arrangement had resulted in substantial cost burden incurred by banks in defraying the cost for the service.
According to the CBN, the re-introduction of the fee was also to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks.
The CBN had on Wednesday said banks might be forced to reject Automated Teller Machine transactions other than theirs if customers failed to accept the N65 ATM service charge it recently re-introduced.
However, the central bank had come under severe criticism over the reintroduction of the ATM charge last week, two years after it abolished the N100 fee per withdrawal on third-party ATMs.
The Director of Corporate Communications, CBN, Mr. Ibrahim Mu’azu, had explained that the new charge would help the banks to keep more ATMs serviceable across the country, thereby making banking more convenient for customers.
source: Business news
Please note that the following facts about the N65 ATM charge
1. Cash withdrawal at the ATMs of a customer’s bank is free
2. The first three transactions in a month by the customer of another bank are FREE for the card holder but PAID FOR by the issuing bank
3. The N65 charge only applies when a customer withdraws cash from another bank’s ATM. The N65
starts to apply from the 4th transaction at another banks’ ATM in a month.
4. The ATM charge is not intended to discourage financial inclusion
5. Charging of fees on interbank networks is a widely acceptable practice globally
6. The CBN will not endorse any anti-customer policy
7. ATMs are deployed to ensure that customers enjoy banking convenience.
A little illustration:
• As a Cardholder in any Nigerian Bank say (First bank), it is free every time you withdraw on a (First Bank) ATM.
• If you withdraw on another bank’s ATM it is free the first 3 times every month.
• From the 4th time in a month you withdraw from another bank’s ATM, there is a N65.00 fee.
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