1 week ago
22
While the recent decision by the Central Bank of Nigeria (CBN) to eliminate the three free monthly ATM withdrawals from other banks and introduce a N100 charge per transaction has generated controversy across the financial sector, Oladipo Ajayi, Head of Fixed Income and Forex at Chapel Hill Denham, believes the move is aimed at ensuring market efficiency while addressing the rising cost of maintaining ATMs.
In an interview on Channels Television’s Business Edge, Ajayi explained that the cost of maintaining ATMs has surged significantly since the initial directive limiting interbank ATM withdrawal fees to N65 after the third transaction and with banks struggling to cover operational costs, the CBN’s revision allows them to charge N100 for every withdrawal outside a customer’s bank.
“If you look at the cost of maintaining ATMs, I think the cost has actually increased aggressively since the last time this circular was actually released,” Ajayi stated.
The rationale behind this decision mirrors trends seen in the telecommunications sector, where operational costs have risen while price caps limit revenue potentials.
One of the most significant concerns has been the availability of cash at ATMs. Many Nigerians have noticed increasing out-of-service ATMs, often forcing them to use point-of-sale (POS) agents who charge higher transaction fees.
“That’s one of the reasons why you got to a point in time where the bank ATMs were not even dispensing cash, and people would rather go and patronise a POS guy on the road,” Ajayi explained.
At the height of cash scarcity, POS agents charged as much as N300 per N10,000 withdrawal, making the new CBN policy a potentially more cost-effective alternative for consumers.
“As much as we understand that there’s an increased cost of maintenance, they are trying to strike a balance between the efficiency of the banks and the cost of maintaining ATMs,” He stressed.
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