CBNs New ATM Withdrawal Fees Spark Concerns

…It Will Frustrate Financial Inclusion, Cashless Economy, Says Experts

The recent decision by the Central Bank of Nigeria (CBN) to eliminate the three free monthly interbank ATM withdrawals and impose a fee ranging from N100 to N600 per N20,000 transaction has drawn mixed reactions from financial experts and industry stakeholders.

The analysts in an exclusive interview with THE WHISTLER argued it could discourage banking participation and undermine financial inclusion.

They warned that the policy may increase cash circulation outside the banking system, counteracting efforts to promote a cashless economy.

While calling for a review, they urged the National Assembly to intervene before the policy negatively impacts consumers and economic stability.

Reacting to the development, the Managing Director of Highcap Securities, Mr. David Adonri, commended the CBN for taking stringent measures to compel banks to dispense cash through ATMs.

However, he cautioned that imposing high fees on interbank withdrawals could contribute to inflationary pressures and inconvenience bank customers.

Adonri expressed worry over the policy’s effectiveness in advancing Nigeria’s cashless economy initiative. According to him, traders and small business owners who frequently handle cash may become reluctant to deposit their earnings into bank accounts, knowing that future withdrawals will attract substantial charges.

This, he warned, could inadvertently lead to an increase in the volume of cash circulating outside the banking system, counteracting the CBN’s efforts to promote financial inclusion and digital transactions.

“This excessive fee imposed on customers for accessing their own money is a disincentive to keeping funds in banks,” Adonri stated.

He further noted that if commercial banks adopt a long-term strategic perspective, they should reconsider supporting such a policy, as it could ultimately drive customers away and undermine public confidence in the banking system.

While acknowledging that the CBN has consistently introduced policies that favor banks, Adonri emphasized that the apex bank must prioritize its broader mandate of monetary stability and economic growth over sectional interests.

He urged policymakers to ensure that financial regulations strike a balance between promoting efficiency in the banking sector and safeguarding the interests of depositors.

An economist and president of the New Dimension Shareholders Association of Nigeria, Mr. Patrick Ajudua strongly criticized the Central Bank of Nigeria’s (CBN) recent decision to impose fees on interbank ATM withdrawals.

He described the policy as an unfortunate move that would impose further hardship on Nigerians, exacerbate poverty levels, erode consumers’ purchasing power, and undermine the country’s financial inclusion efforts.

Ajudua argued that while the policy may increase bank revenues, it would ultimately hurt customers by depleting their hard-earned money.

He warned that the introduction of these fees could have far-reaching consequences, including discouraging people from depositing their money in banks, making formal banking unattractive, and negatively impacting the nation’s savings culture.

“This decision will enrich the banks but impoverish their customers. It has broad implications, as some people may choose to withdraw their deposits, leading to reduced banking participation and weakening trust in the financial system,” Ajudua stated.

He further urged the National Assembly to intervene and advise the CBN to withdraw the policy, emphasizing that it contradicts the government’s financial inclusion agenda.

“As representatives of the people, the National Assembly should take action to ensure that this policy is reviewed. If left unaddressed, it could derail the financial inclusion objectives of the government,” he added.

The Director African Centre For Share Development and Capacity Building (ACSDCB), Prof Olu Ajakaiye, discouraged patronage of ATMs of other banks and create some inconvenience for consumers of ATM services.

Ajakaiye said the CBN circular is ambiguous and needs clarity.

The expert said the decision to stop the three free monthly withdrawal and imposing N100 to N500 fee and surcharge per N20,000 withdrawal may discourage patronage of ATM of other banks.

He said, “Since patronage of the ATM of the bank customer is free, this will encourage customers to patronize their bank’s ATM and discourage patronage of ATM of other banks.

“Patronage of ATMs of other banks on site is likely to be preferred by cusumers of ATM services if the ATM of their own bank are not available for whatever reasons.

“Patronage of off-site ATMs of other banks by customers is likely to be seriously discouraged. It is unclear if the charges apply when the amount withdrawn is less than 20,000. CBN may have to clarify.

“In general, the circular is likely to discourage patronage of ATMs of other banks and create some inconvenience for consumers of ATM services while reducing cost of ATM services to the big banks with large number of ATMs.”

He said the circular may also encourage deployment of more off-site ATMs especially by top tier banks.

A financial analyst on condition of anonymity also in a chat with THE WHISTLER said that the new policy, which aims to regulate cash withdrawals and encourage digital transactions, is expected to have far-reaching effects on banking operations, customer behavior, and financial inclusion in the country.

According to analyst, the policy could lead to increased revenue for banks, as they stand to benefit from a rise in non-interest income due to the newly introduced fees.

This change could improve profitability and further incentivize banks to promote alternative digital banking services. Experts also predict a shift toward mobile banking, USSD, and online transactions, as customers look for cost-effective ways to manage their funds.

Additionally, banks may need to reassess their ATM management strategies, including optimizing cash supply to ensure efficient service delivery.

On the consumer side, financial analyst believes the policy will likely lead to a reduction in ATM withdrawals, as customers may opt to withdraw larger amounts less frequently to minimize charges.

This behavioral change could drive increased reliance on electronic payment methods such as point-of-sale (POS) transactions and fintech solutions.

However, the policy may also cause dissatisfaction among customers who depend on ATMs for daily transactions, particularly those in cash-based sectors.

One of the most significant concerns raised by the analyst is the potential impact on financial inclusion.

He noted that low-income earners, who often rely on cash transactions, could be disproportionately affected, as the additional charges may make banking services less accessible.

“While the move aligns with Nigeria’s broader cashless economy agenda, there are concerns that it may create barriers for individuals who lack digital banking literacy or access to smartphones. Some customers may even turn to informal banking systems to avoid these fees, potentially undermining financial sector growth,” he said.

CBNs New ATM Withdrawal Fees Spark Concerns is first published on The Whistler Newspaper