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The Central Bank of Nigeria (CBN), in the 2017 ‘Guide to Charges by Banks and other Financial Institutions in Nigeria’ makes provision for financial institutions to charge N50 monthly card maintenance and N100 annually on naira debit and credit card. The guide also allows banks to charge $20 per annum on foreign currency denominated debit and credit cards.
By that guide, every debit or credit card holder will pay N600 annually as against the N100 being paid previously. Data from released recently by the Nigeria Inter Bank Settlement System (NIBSS) the central database for banking transactions in the country show that as at September 30, 2016, there were 29.24 million active cards being used by the 63 million active bank customers. In essence, bank customers in Nigeria will pay not less than N1.462 billion every month to banks as card maintenance totalling N17.544 billion annually.
All this is separate from the issuance fee of N1000. A customer that lost or misplaced their card and wants a replacement is liable for a replacement fee of N1000. The CBN also allows banks to charge a renewal fee of N1000 once a customer’s card expires.
However, almost on a daily basis, bank customers complain about incessant card maintenance charges. Among the accusations are debiting customers’ accounts more than the stipulated N50 card maintenance charges, some banks charging N52 or N52.50 instead of N50, customers without ATM cards getting debit N50 alert, charging customers twice for card maintenance in one month, new account holders getting deductions for maintenance as well and many others.
One customer recently posed a question to the CBN on their Twitter handle, “Please why do banks charge us N50 each which they call card maintenance when in actual sense I paid before getting the ATM card?”
What is card maintenance?
It is a monthly charge of N50 that banks take from customers with active debit cards. The fees are charged each month by the banks for active cards (card whose PIN has been changed).
“ATM or Card maintenance fee is common in Africa but unknown in more developed countries,” a source in the banking sector told BusinesDay. For instance, Indian bank HDFC Bank issues ATM cards to its customers free of cost. Usage of the bank’s debit card at domestic merchant locations and websites is free of cost.
Bank ATMs in the United Kingdom do not charge usage fees if the withdrawal is within the region and in local currency.
Why card maintenance fee?
Pius Ikheloa, a banking expert told BusinessDay that charging card maintenance fee is like an incentive from CBN to banks who are the major drivers in its cashless initiative.
“Keeping ATMs functional (issuing, acquiring, switching, personnel etc) involves a lot of cost,” he said. “The maintenance fee I believe is a way of compensating the banks. ATM is of course at the centre of CBN’s cashless initiative and if they are putting pressure on the banks to ensure it always functional, there has to be a way of offsetting some of the cost.”
He further pointed out that although, banks outside Africa may issue and allow customers to transact with their debit cards for free, the foreign banks still collect one form of charge or the other, “maybe not directly called “Card Maintenance fee”.
“The idea behind those charges is basically the same as that of Africa. In Europe and North America, they collect what is known as ‘Monthly Account Maintenance fee.’ In addition some banks collect credit card maintenance fee and various other charges.”
Other charges that come with ATM transactions in Nigeria which are approved by the CBN include N65 after the third withdrawal within the same month.
Recently, the apex card directed that banks will be liable for a N10, 000 fine on every failed electronic transactions that is not resolved within 24 hours.