Market News

BY  Omolabake Fasogbon

The excessive charges on basic banking services like withdrawals, transfer, and account maintenance, have continued to be a thorn in the flesh of Nigerians, who are already constrained by financial woes. 

Amid a series of outcry, criticisms, and even social media memes, the situation has remained unchanged, rather, newer charges emerge.

As of today, existing banks’ charges range from transfer fees, SMS alert fees, Value Added Tax, foreign exchange commission, ATM transfer fees and commission on turnover, POS transfer fees, interbank transfer fees, card maintenance fees, USSD charges, card issuance fees, cheque issuance fees, stamp duty, amongst others.

A 2022 financial report revealed that eleven banks realised over N714 billion from electronic fees and other forms of commissions in the first nine months of the year.

Thus in Nigeria today, no user of banking service is exempted from charges which would usually come in multiple transactions. This does not have to do with whether one is a low-ended or high-ended customer. Policies are there that cover all transaction strata. 

With all these, including recent charges introduced with the advent of digital banking, some Nigerians have expressed concern over excessive charges by the banks.

For instance, Mr. John Banji, a, wholesale grocer in Abulelegba, Lagos has stopped accepting transfer from customers buying items exceeding N10, 000 since the recently introduced government’s policy mandating N50 deduction on electronic transfers above N10,000. 

“The N50 deduction eats into my profit margin, and I’m already operating on a thin margin by losing N50 on such transactions. My kind of market relies on high-volume sales to make a profit. Hence, I’ve resorted to accepting cash payments for large transactions, except if a customer chooses to incur the cost,” he added.

Some SME operators have also returned to dealing in cash/keeping cash at home to effect daily transactions without incurring transaction cost. 

Financial analyst, Prof. Chiwuike Uba, highlighted the broader implications of these charges, noting that Nigeria already ranks among the countries with the highest bank charges in Sub-Saharan Africa.

 “The charges not only serve as a disincentive to savings but also heighten the economic challenges faced by Nigerians,” he worried.

Citing data from the Central Bank of Nigeria (CBN), he pointed out that a staggering 93.1 percent of the total currency in circulation was outside the banking system as of September 2024, up from 87.5 percent in the previous year, and rising to 94.3 percent in October 2024. 

“This trend underscores a significant barrier to financial inclusion”, he asserted. 

At the same time, Uba and other financial experts who spoke with THISDAY proffered strategies individuals could employ to outsmart these charges, instead of going about with cash. 

Uba posited that bank users should start looking at consolidating transactions to minimise charges, while also routinely monitor account activities to detect unauthorised fees. 

Also, of importance according to the financial analyst is leveraging opportunities for waived or discounted fees, and negotiating with banks. 

The Managing Partner at Empyrean Professional Services, Mr. Bamgboye Emmanuel, emphasised opening a strategic and right account to avoid unnecessary fees. 

“Grab an understanding of different banks accounts and their offers, then opt for low-fee accounts. It’s high time individuals started rethinking their banking habit,” he maintained

In addition, Emmanuel suggested breaking up large transactions into smaller amounts in cases where charges apply on lump sum deals. 

“Instead of transferring N10,000 or more that attracts a fee, why not transfer N9,500 or less to avoid the fee? Additionally, using cards for transactions is also economical,” he said. 

 On his part, President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, advised on minimising frequency of transactions and prioritising essential ones. 

“While it may be difficult to avoid all charges, consumers need to carefully evaluate the necessity of each transaction and look for opportunities to save, such as reducing transaction amounts where possible,” he added.

Enlightening bank customers regularly on high volume transactions, Managing Director of 171 Bureau De Change Limited, (BDC), Mr. Jamiu Amusa, stated that understanding banks’ policy to tailor to specific needs is crucial. 

Amusa noted that some banks operate a ledger balance account that imposes limits on account balances. 

Customers on such accounts, he explained, escape charges by keeping to the limit, adding that exceeding the agreed limit could incur charges for all transactions made in an account. 

He explained further that some banks have products that offer incentives to customers with high balances. 

“So instead of them even taking charges, they will rather credit customers,” he said. 

He enjoined bank users to engage in open communication with banks by constantly seeking advice on what they want. 

 “By understanding bank policies, negotiating with banks, and exploring alternative banking options, businesses can navigate the complexities of bank charges and minimise their impact on profitability”, he advised.