E-Financial
Customers Bleed Under Burden of Charges as Banks Post N933Bn Profit
12 commercial banks had jointly pulled in N933.16 billion in profits and made N216.52 billion from charges on electronic transactions, as customers continue to complain of excessive fees that they are being charged in 2020, despite the pandemic and the downturn in economic activities.
According to Leadership, the banks are FBN Holdings, Access Bank, United Bank for Africa, Wema Bank, Sterling Bank, Zenith Bank, Guaranty Trust Bank, Stanbic IBTC, Ecobank, Fidelity Bank, Union Bank and FCMB had also seen an increase of 2.3 per cent in the revenue from fees and commission last year.
In total, they made N825.23 billion last year from fees and commission compared to N806.87 billion made in 2019 and to bank customers.
Fee and commission income of banks include account servicing fees, investment management and other fiduciary activity fees, sales commission, placement fees and syndication fees, revenue from electronic banking transactions, card maintenance fees and others are recognised as the related services are performed.
For many bank customers who spoke with Leadership about stamp duty charges, account maintenance charges, card charges as well as SMS alert charges which are the most complained about.
Many of them were of the view that the charges ought to be reviewed downwards further.
Whilst some were of the view that though some banks charge them unnecessarily, the charges are still reasonable.
The general consensus was however against the stamp duty charge, as all those whose opinion were sampled said there is no reasonable excuse for it other than to generate money for the government.
Aisha Ahmad, deputy governor, Financial System Stability, CBN, had mentioned that efforts are being put in place to lower the cost of deploying services by banks through many services initiatives.
According to her, a cut in bank charges had been one of the factors being canvassed for the country to be able to achieve its financial inclusion goals of the country as the CBN plans to achieve a financial inclusion target of 95 per cent by 2024.
In December 2019, the Central Bank of Nigeria had issued a revised guide on bank charges which became effective on January 1, 2020.
The guide had made some major cuts in fees that banks charge customers, one of such is the reduction in electronic transactions.
According to the guide, electronic transfers of N5,000 and below will have a N10 transactions cost plus VAT and transfers of above N5000 but below N50,000 now attract N25 charges plus VAT, while transfers above N50,000 attracts N50 charge plus VAT.
The charges on electronic transfers had been cut from N50 which most banks were charging.
As against the N65 previously charged by banks after third withdrawals on remote- on-us ATM transactions, the CBN had insisted that bank do not charge above N35 per withdrawal.
However customers complain that they are still charged N65 and some banks make the charge on every remote-on-us withdrawal, irrespective of if it is the first or second in the month.
Also, maintenance charges on cards was cut from N600 spread through the year to N200, a N400 shave off from what card holders would have to pay banks on an annually.
Also maintenance charge for foreign currency card holders was also cut down to $10 or its equivalent from the previous charge of $20 yearly.
Other major changes in the charges include removal of Card Maintenance Fee (CAMF) on all cards linked to current accounts.
Other reductions include Advance Payment Guarantee (APG) which was pegged at maximum of one per cent of the APG value in the first year and 0.5 per cent for subsequent years on contingent liabilities.
The guideline also stipulates an interest rate minimum of 30 per cent of monetary Policy Rate (MPR), the latest guide also stipulated that a one-off charge of N1,000 be applied to the issuance of cards, irrespective of card type (regular or premium) compared to N2,000 that was being charged by some banks. The same one-off charge of N1,000 applies for the replacement of debit cards at the customer’s instance for lost or damaged cards.
According to the guide, there will be no more charges for reactivation or closure of accounts such as savings, current and domiciliary accounts while status enquiry at the request of the customer (like confirmation letter, letter of non-indebtedness and reference letter) will now attract a fee of N500 per request.
On Current Account Maintenance Fee (CAMF), the Guide expressly stated that this would be applicable only to current accounts in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank. It emphasized that CAMF is not applicable to Savings Accounts.
As the 2019 Finance Bill became effective in February 2020, banks were required to deduct N50 stamp duty due on every transaction, from customers account.
The Bill which took effect in February last year stipulates that the N50 stamp duty charge would be levied on electronic payments above N10,000 as against payment above N1,000 which had previously been proposed.
The stamp duty charge is deducted on every transaction that is N10,000 and above irrespective of the account type, savings or current and then remitted to the Treasury Single Account resident with the CBN.
The N50 charge had been the source of squabble between the Federal Inland Revenue service and the Nigeria Postal Service last year.
Many banks had immediately begun deducting N50 stamp duty from all transactions above N10,000 made from bank accounts including savings, current and corporate accounts in the country in compliance with the 2020 Finance Bill.
In April last year, customers of Access Bank had attacked the bank on social media after it compiled and deducted three months’ worth of stamp duty charge at once.
After trending for more than four days on most social media platform the bank had tried restoring its image by offering to refund customers and pick up the stamp duty fees.
A female nurse, Uche Pius speaking with Leadership said “I don’t understand the bank charges, at times if you decide to transfer money on your mobile phone the bank charges suppose to be N10 but you will be seeing N100 as bank charges and there is no alert that the money was removed or anything.
“I think the bank charges need to be looked into. It is like there is nobody regulating it, they (the banks) just remove charges because they know nobody is going to the bank to complain about N50 or N20 it will just look ridiculous do they just keep doing it over time and nobody talks about it. It needs to be regulated and there should be an alert for it. It needs to be regulated.”
For Obinna Ani, a software engineer, his grouse is with the withdrawal charges as well as card and account maintenance charge.
According to him, banks charge more than they are supposed to and complaining does not do anything to rectify it.
“They said after eight withdrawals N65 will be deducted but at the end of the month instead of seeing N65 you will be seeing N300 or more than that as bank charges or liquidation and it can be deducted like three times in a month, at times even without using the ATM they still deduct money calling it maintenance or liquidation fee and it happens every month.
“I had to withdrawal all my money in that account. Unlike what we were told growing up that money in savings account appreciate, these days, money kept in savings account depreciate. A friend of mine who had like N100,000 in his account before he left the country came back four years later to meet an empty account. They were just deducting charges on an account that was not even in use.
A writer, Ngozi Stanley-Obi whilst noting that banks are businesses and need to make profit opined that some of the charges are unnecessary. Ifeanyi Chukwu, a videographer and editor, said on a monthly basis, his bank account take a hit from several charges.
“I have a savings and a current account. Charges on the savings are OK, but the charges on the current account are too much. With the volume of transactions I do, I get charged not less than N10,000 monthly. The charges are mostly stamp duty charges, which is from the government and SMS alert.”
Nigerians have more trust in Bitcoin-based systems than in traditional alternatives such as banks and government, a new report by Elastos, an open-source blockchain website, has stated.
According to its inaugural BIT Index (Bitcoin; Innovation & Trust), emerging markets are driving the adoption of Bitcoin, with Nigeria and the UAE leading the charge.
The report revealed that 66 per cent of Nigerian respondents and 35 per cent from Brazil had more confidence in Bitcoin-based systems than alternatives like banks or national governments, compared to just 16 per cent in Germany and 21 per cent in the UK.
The survey also revealed that 20 per cent of Nigerian consumers use Bitcoin to conduct transactions at least once a day, while 67 per cent would have more trust in Bitcoin to protect their life savings than traditional services like banks, local governments, and cash.
According to the platform, the research was compiled from online interviews conducted with 1,407 self-defined ‘tech savvy’ respondents in Brazil, Germany, Nigeria, South Korea, the UAE, the UK, and the US.
It stated that the interviews were completed by a third party, a registered market research company, between March 30 and April 4, 2024.
“When it comes to ensuring the integrity of online transactions, emerging market respondents also revealed their relative confidence in Bitcoin compared to alternatives,” it indicated.
According to the report, 66 per cent of Nigerian respondents and 35 per cent of Brazil have more confidence in Bitcoin-based systems than alternatives, such as banks or national governments, compared to figures of just 16 per cent (Germany) and 21 per cent (UK) who feel the same.
Meanwhile, Jonathan Hargreaves, Elastos’ global head, Business Development & ESG, described the BIT Index’s inaugural findings as indicative of the role the ‘global south’ was playing in the adoption of decentralised currencies such as Bitcoin.
“The BIT Index offers a fascinating and sobering insight into the industry. The fact that over two-thirds of Nigerian consumers and a third of their counterparts from the UAE and Brazil would feel more confident entrusting their life savings to Bitcoin rather than traditional financial instruments speaks volumes about the protagonism these regions are already playing.
“In many instances, the driving factor is the absence of viable, accessible alternatives to, for instance, conduct cross-border transactions or mitigate the impact of inflation,” he said.
According to Chainalysis, a cryptocurrency research firm, Nigeria’s crypto transaction volume grew year-over-year to $56.7bn in 2023.
It stated that the country’s crypto economy continued to grow despite market turmoil in the space.
On the contrary, the government has been taking strong measures to restrict and clamp down on cryptocurrency exchanges and platforms operating in the country.
Central Bank of Nigeria (CBN) has awarded the country’s second Payment Terminal Service Aggregator (PTSA) license to Unified Payments, Nigeria’s premier financial technology company, following a rigorous and transparent process,
The move is targeted at enforcing existing requirement that all transactions from point-of-sale channels in Nigeria must go through a licensed Payment Terminal Service Aggregator (PTSA).
The CBN is enforcing the laws to clamp down on financial crimes and other market misconducts and it aligns with the CBN’s objectives to fully track all electronic transactions in Nigeria, given the propensity of using such transactions to fund insecurity, violent crimes, banditry, kidnapping as well as other vices.
According to one analyst, “By awarding a second PTSA license, the apex bank has proactively responded to industry operators who had expressed serious concerns about channelling all transactions through a single aggregator, the Nigeria Interbank Settlement System PLC (NIBBS), as has been the case for some years.
“With the new policy direction, payments service providers would henceforth route all transactions through either of the two licensed Companies.”
Other financial analysts and industry players have commended the Central Bank, affirming that “the move can be a massive step in the right direction. They also commended the open, transparent, and inclusive manner via which the selection process was managed, and the license awarded.
“The selection process, which lasted for months, began with an invitation for qualified organisations within the payment industry to submit an Expression of Interest document, alongside other requisite documentation and additional capital requirement of N1 billion.”
The new management of CBN decided not to give the license out without going through an open process – and for the first time in licensing a payment service provider – the apex bank went through a public bid process outlined in its publication of Friday, January 5, 2024, in different national newspapers. At the end of the process, Unified Payments emerged as the most preferred service provider.
Unified Payment Services Limited, also called Unified Payments or UP, is a shared service provider within Nigeria’s financial technology sector owned by a consortium of Nigerian banks. For over 26 years, the firm has provided payment technology to banks and other industry operators. The first and only non-bank entity that is a principal member and licensed acquirer of all of American Express, Mastercard, Visa, UnionPay and Payattitude. Unified Payments facilitates both local and international transactions.
Formerly known as ValuCard Nigeria Plc, Unified Payments led the way to introduce POS payments in Nigeria under its card scheme known as ValuCard which is the first payment card to be issued in Nigeria. The company later transformed into a scheme-neutral and option-neutral service provider enabling transactions under different schemes.
The company has continued to provide leading payment technologies and services, enabling different operators to leverage its capabilities and licenses, enabling prompt and seamless transactions.
Among the shareholders of Unified Payments are First Bank, Access Bank, United Bank for Africa (UBA), Guaranty Trust Bank Plc, Zenith Bank and Fidelity Bank. Other shareholders are Citibank Nigeria Limited, Ecobank of Nigeria Plc, First City Monument Bank Plc, Keystone Bank Ltd, Polaris Bank Ltd, Stanbic IBTC Bank Plc, Sterling Bank Plc and Wema Bank Plc.
Chartered Institute of Bankers of Nigeria, CIBN, has expressed support for the ongoing banking recapitalization exercise saying it will empower banks to lend more to the economy.
CIBN President, Dr. Ken Opara stated this yesterday while speaking at the annual lecture of the institute in Lagos, with the theme “Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity.”
Okpara noted that the volume of credit to the real sector activities namely agriculture, manufacturing and services is low compared to their critical role in driving economic growth.
Consequently, he called for more credit to the real sector, saying, “I propose that we consider offering more credit to these key sectors and particularly the agriculture sector. It is for this reason that the Recapitalization exercise is a welcome development.
“The recently announced upward review of the Minimum Capital Requirements of Nigeria by the Central Bank of Nigeria would further empower banks to extend more credit to the economy’s productive sectors.”
To address these factors impeding credit to the real sector, Okpara suggested that, “The government needs to improve further the ease of doing business and infrastructural development, such as power, roads, rail networks, etc.
“Setting up industrial centres where these companies can co-habit and share common infrastructure. Harmonize and reduce the various taxes and levies, including locating them in a single hub.
“Banks need to be deliberate in de-risking these companies via Capacity building programmes, and Advisory services.
Specialised Financial Institutions can be created in addition to the Bank of Industry (BOI), especially credit guarantee agencies and risk-sharing institutions, to further facilitate the deepening of credit as practiced in countries such as China which significantly transformed its economy.
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