The Central Bank of Nigeria’s recent decision to eliminate the three free monthly interbank ATM withdrawals and introduce charges ranging from N100 to N600 per N20, 000 transactions has ignited worries among financial experts and industry stakeholders.
Analysts speaking exclusively with THE POINT cautioned that the new policy could discourage banking participation, drive more cash circulation outside the formal banking sector, and counteract efforts to promote a cashless economy.
Experts warn that the policy may disproportionately affect low-income earners and small business owners, making banking services less accessible.
They urged the National Assembly to intervene and push for a policy review before it negatively impacts consumers and economic stability.
The Managing Director of Distinct Touch Investments, Phillip Nduka, commended the CBN’s intention to ensure banks dispense cash through ATMs but expressed concerns over the high withdrawal fees.
He cautioned that these charges could contribute to inflation, inconvenience customers, and hinder Nigeria’s transition to a cashless economy.
“THIS DECISION WILL ENRICH THE BANKS BUT IMPOVERISH THEIR CUSTOMERS. IT MAY DISCOURAGE PEOPLE FROM DEPOSITING THEIR MONEY IN THE BANKS, WEAKENING TRUST IN THE FINANCIAL SYSTEM.”
“This excessive fee imposed on customers for accessing their own money is a disincentive to keeping funds in the banks,” Nduka stated.
He warned that small business owners and traders may avoid banking their earnings, preferring to hold cash instead, thereby increasing the volume of money circulating outside the financial system.
He also urged commercial banks to take a long-term view, arguing that policies discouraging customers from using banking services could erode public confidence in the sector.
“The CBN must balance efficiency in the banking industry with safeguarding depositors’ interests,” he added.
An economist and Registrar of the Institute of Finance and Control of Nigeria, Godwin Eohoi, described the policy as a hardship on Nigerians, warning that it could exacerbate poverty, erode purchasing power, and undermine financial inclusion efforts.
“This decision will enrich the banks but impoverish their customers. It may discourage people from depositing their money in the banks, weakening trust in the financial system,” Eohoi stated.
He called on the National Assembly to intervene, emphasizing that the policy contradicts the government’s financial inclusion agenda.
He noted that the CBN circular lacks clarity, and pointed out that eliminating the three free withdrawals and imposing N100 to N500 per N20, 000 transactions could significantly discourage the use of other banks’ ATMs.
“Customers may be forced to rely solely on their bank’s ATMs, which could create inconvenience if their bank’s machines are unavailable,” he stated.
He suggested that this shift might encourage banks to deploy more off-site ATMs, particularly top-tier institutions with extensive networks.
According to him, while the policy aims to regulate cash withdrawals and encourage digital transactions, it could lead to unintended consequences.
He added that banks may see increased revenue from non-interest income, but customers could turn to alternative financial solutions, such as mobile banking, USSD transactions, and fintech platforms, to avoid high fees.
The analyst added that ATM withdrawals might decrease as customers opt for larger, less frequent transactions to minimize charges.
“This change could drive a greater reliance on electronic payment methods, including point-of-sale (POS) transactions. However, those in cash-based sectors may struggle with the transition.
“One of the most significant concerns is the potential exclusion of low-income earners from formal banking services. Many of these individuals rely on cash transactions and may not have access to smartphones or digital banking literacy.
“While this policy aligns with Nigeria’s cashless economy vision, it risks creating barriers for individuals unfamiliar with digital banking,” Eohoi warned.
Experts fear that some customers may resort to informal banking systems to bypass high ATM fees, potentially undermining the financial sector’s stability and growth.
With mounting concerns from stakeholders, industry players are calling on the CBN to reconsider the policy and ensure that banking remains accessible and inclusive for all Nigerians.
SERAP gives CBN 48 hours to withdraw ‘unlawful, unfair hike in ATM transaction fees’
Also, the Socio-Economic Rights and Accountability Project has urged the Governor of the CBN, Olayemi Cardoso, to use his “leadership position to immediately withdraw the patently unlawful, unfair, unreasonable and unjust increase in Automated Teller Machine transaction fees.”
SERAP urged him to “ensure that the exercise of CBN statutory powers and functions does not inflict misery on poor Nigerians and contribute to human rights abuses.”
The CBN recently announced that ATM withdrawals made at a machine owned by a bank but outside its branch premises will now attract a charge of N100 per N20, 000 withdrawn.
ATM withdrawals at shopping centres, airports or standalone cash points, will incur a N100 fee plus a surcharge of up to N500 per N20, 000 withdrawals.
Banks ‘are advised to apply the increased ATM fees with effect from March 1, 2025.’
In the open letter dated February 15, 2025 and signed by SERAP deputy director Kolawole Oluwadare, the organisation said, “The manifestly unlawful, unfair, unreasonable, and unjust increase in ATM transaction fees will hit hardest those at the bottom of the economy and exacerbate the growing poverty in the country.”
SERAP said, “The increase in ATM transaction fees ought to have been shouldered by wealthy banks and their shareholders, not the general public. The increase only benefits the CBN and commercial banks at the expense of poor Nigerians.”
According to SERAP, “CBN policies should not be skewed against poor Nigerians and heavily in favour of banks that continue to declare trillions of naira in profits mostly at the expense of their customers. The increase in ATM transaction fees would inflict misery on poor Nigerians and contribute to human rights abuses.”
The letter, read in part, “The increase in ATM transaction fees is also entirely inconsistent with the oft-expressed commitment by the government of President Bola Tinubu to address the growing poverty across the country.
“We would be grateful if the recommended measures are taken within 48 hours of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall take all appropriate legal actions to compel you and the CBN to comply with our request in the public interest.
“The exorbitant and unlawful increase in ATM transaction fees at a time the country is facing economic and financial crises would contribute further to the impoverishment of the population.
“Imposing exorbitant ATM transaction fees on socially and economically vulnerable Nigerians at a time several Nigerian banks are declaring trillions of naira in profits yearly is manifestly unfair, unreasonable and unjust.
“The increase cannot be justified under the Nigerian Constitution 1999 [as amended], the CBN Act, Federal Competition and Consumer Protection Act, and the country’s international human rights obligations.
“The patently unlawful, unfair, unreasonable and unjust increase in ATM transaction fees also inherently contributes to violations of the human rights of socially and economically Nigerians.
“The increase creates a two-tiered financial system that discriminates against poor Nigerians who may not be able to afford or pay the increased fees.
“While the government of President Tinubu has primary responsibility for protecting the rights of Nigerians, the CBN also has the responsibility to ensure that its practices and guidelines do not cause or contribute to human rights abuses.
“The CBN could play an important role in promoting economic opportunities for Nigerians where the majority of the people live in poverty.
“The CBN is failing to comply with the Nigerian Constitution, the Federal Competition and Consumer Protection Act and the country’s international human rights obligations in the exercise of its statutory powers and functions.
“The CBN is also compromising its stated mission to advance the management of the country’s economy, and ultimately, sustainable development.
“According to our information, the CBN through a Circular to all banks and other financial institutions dated February 10, 2025 stated that it has reviewed and increased the ATM transaction fees prescribed in section 10(7) of the CBN Guide to Charges by Bank, Other Financial and Non-Bank Financial Institutions 2020.
“Section 42(1)(a) of the CBN Act 2007 provides that ‘The Bank shall wherever necessary seek the cooperation of and co-operate with other banks in Nigeria to – (a) promote and maintain adequate and reasonable financial service for the public.’ It also provides that any policy of the CBN ‘shall be in the national interest.
“Section 1(c)(d) of the Federal Competition and Consumer Protection Act, 2018 provides that the objectives of the Act are to ‘protect and promote the interests and welfare of consumers’ and ‘prohibit restrictive or unfair business practices’ such as the exorbitant and unreasonable increase in ATM transaction fees by the CBN.
“Significantly, the provisions of the Federal Competition and Consumer Protection Act are directly binding on the CBN, as the provisions constrain the exercise of the statutory powers and functions of the institution.
“Specifically, section 2(1) the Act provides that its provisions ‘apply to all undertakings [such as the CBN] and scope of application to all commercial activities within, or having effect within, Nigeria.
“Section 2(2) provides that, ‘This Act also applies to and is binding upon- (a) a body corporate or agency of the Government of the Federation; (b) a body corporate; (c) all commercial activities aimed at making profit and geared towards the satisfaction of demand from the public.
“According to section 70(1) of the Act, ‘For the purpose of this Act, an undertaking [such as the CBN] is considered to be in a dominant position if it is able to act without taking account of the reaction of its customers or consumers.
“The Act prohibits abuse of dominant position by the CBN including charging excessive ATM transaction fees to the detriment of consumers.
“Section 104 of the Act asserts the supremacy of the Act over ‘the provisions of any other law’, such as the CBN Act. The only exception to the provision is the Nigerian Constitution 1999 [as amended].
“Section 127(1) of the Act also prohibits the CBN from making any policy or providing “any services at a price that is manifestly unfair, unreasonable or unjust.
“The CBN has clear responsibilities under the United Nations Guiding Principles on Business and Human Rights (UNGPs) to undertake human rights due diligence to identify and mitigate contributions to human rights violations of not only its own activities but also activities to which it is directly linked by its business relationships.
“The CBN has responsibilities under the UNGPs to take effective steps to avoid or mitigate potential human rights harm and to consider ending any charges or transaction fees where severe negative human rights consequences cannot be avoided or mitigated.”
New ATM policy mutually beneficial to banks, customers, says CBN
Meanwhile, the CBN says its recently announced policy imposing charges on cash withdrawal by customers from Automated Teller Machines of banks other than theirs, is mutually beneficial to both the banks and customers.
CBN’s Acting Director, Financial Policy and Regulation Department, John Onojah, stated this on a live television programme on Saturday.
He said that with the implementation of the new policy, the complaints of shortage of cash at bank ATMs will be a thing of the past, while banks will be helped to recover costs on the other hand.
“We have gotten the commitment of the banks to ensure that you don’t go to the ATMs and be told that there is no money. We have ensured that when you get to the bank, at least we have set a minimum of N20, 000 that you can withdraw at your own wish,” Onojah said.
“WE HAVE GOTTEN THE COMMITMENT OF THE BANKS TO ENSURE THAT YOU DON’T GO TO THE ATMS AND BE TOLD THAT THERE IS NO MONEY. WE HAVE ENSURED THAT WHEN YOU GET TO THE BANK, AT LEAST WE HAVE SET A MINIMUM OF N20, 000 THAT YOU CAN WITHDRAW AT YOUR OWN WISH.”
“The third one is to say that even in remote locations, you will have machines that are there, not on the bank premises. Then on the banks’ side of the banks, deploying machines is quite expensive, they are capital intensive, I wouldn’t tell you how much it costs a bank to deploy just one machine.
“And so, we need to be able to encourage them to at least do what we call cost recovery. It is a balanced circular that came out. While we look at the side of the bank, at least they should be to recover their cost, we also want to ensure that the consumer, the customer to the bank at any point in time has access to cash,” he stressed.
Onojah reiterated that the charges are only for withdrawal from other banks ATMs, adding that there are no costs for customers any time they withdraw money from ATMs owned by financial institutions that they bank with.
The CBN in a circular on Tuesday to all banks and financial institutions announced that customers withdrawing from the ATM of other banks would now be charged N100 per every N20,000.
“The three free monthly withdrawals allowed for remote-on-us (other bank’s customers/not-on-us consumers) in Nigeria under Section 10.6.2 of the Guide shall no longer apply,” the circular partly read.
The CBN directed banks and other financial institutions to apply the following charges with effect from March 1, 2025.
The CBN said for off-site ATMs – automated teller machines not on a bank’s premises – like those at shopping malls, eateries and other public places – a surcharge of not more than N500 per every N20,000 will apply in addition to the statutory N100 fee for withdrawals by customers of other banks’ ATMs.
