The charges on Automated Teller Machines (ATM) withdrawals which the Nigerian bank customers complain bitterly about is also being charged in United States of America (USA), even higher.
Specifically, charges on ATM withdrawals at other banks, or remount-on-ng us is N65 after the fourth withdrawal, but in USA, it is $1.50 on every transaction.
When in September 2014, the Central Bank of Nigeria (CBN) reintroduced N65 charge on transactions at other bank’s ATM, many Nigerian bank customers criticized the move, causing the CBN to abandon its regulatory role and taking sides with the banks to exploit customers through the policy.
But the CBN later explained that the decision was aimed at curbing frivolous withdrawals and abuse by ATM users.
Furthermore, Nigerian banks charge N1,000 for card replacement, while in USA; it is charged $5.00 or over N2,000 in local currency.
Pin change request is not being charged in the country but in USA, it is charged $0.50.
Other bank charges in USA include teller cash withdrawal $5.00, decline transaction for ATM only $0.25, ATM withdrawal international is charged $3.50+3 percent and live agent cardholder services is $1.00 per call.
However, the charges might look lower compared to that of USA but the challenge is that Nigerian financial institutions abuse this through excessive charges leafing to bitter complains by customers.
One of the transaction charges abused by Nigerian banks is Commission on Turnover (COT), which has been outlawed by the Bankers Committee following consensus by the chief executives and the Central Bank of Nigeria that it should end by January this year.
Other charges include SMS alert, account maintenance fee, debit card maintenance fee, stamp duty and ATM charges among others.
“Whilst I agree that bank charges are always controversial, I think it is also important to understand that banks still need to charge some amounts for value added services like SMS alerts. If we take this as an example, it is beyond the actual cost of each SMS but really the ability to provide the service requires hardware, software, integration and then the cost of maintenance,” Olayinka David-West, academic director and senior Fellow in Information Systems, Lagos Business School, Pan-Atlantic University, said in an emailed response to BusinessDay.
According to her, these fees need to be transferred to customers but cost models also need to be updated frequently to reflect changes in market dynamics.
Commission on Turnover (CoT), she admitted, has simply been replaced by an account maintenance fee that again can be explained by the banks as part of the cost of service provision.
Basically, irrespective of the label attached to the charges/fees, one common thread is the cost-to-use banking and other financial services.
“In our research on mobile money, we find that the parameters that determine cost vary but are also interlinked with the cost of doing business in the environment, amongst others. Unfortunately, as costs increase, organisations that are able to transfer these costs to the customers do so, whilst the untransferable costs are either absorbed by the companies. The only challenge here is how long will such organisations “subsidise” their customers? Or what price increase tactics will they adopt, gradual or immediate?”