Analysts react as CBN introduces fee on ATM withdrawals from other banks

The Central Bank of Nigeria (CBN) has announced a sweeping revision to its Automated Teller Machine (ATM) transaction fees, effectively removing the three free monthly withdrawals previously granted to customers using other banks’ ATMs.

This policy shift, outlined in a circular dated February 10, 2025, is set to take effect from March 1, 2025, and applies to all banks and financial institutions operating in Nigeria.

Signed by John S. Onojah, Acting Director of the Financial Policy and Regulation Department, the directive was made public via the apex bank’s website on Tuesday.

The CBN stated that the review is part of efforts to address rising operational costs and enhance ATM efficiency across the banking sector. However, the decision has sparked mixed reactions from financial experts and bank customers, many of whom express concerns over the potential impact on access to cash and banking convenience.

The most controversial aspect of the revision is the complete removal of the three free monthly withdrawals for transactions on other banks’ ATMs, meaning that every such transaction will now attract a fee.

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According to the CBN, the revision is necessary due to rising operational costs and the need to improve ATM services nationwide. The regulator expects that the new fee structure will encourage banks to deploy more ATMs across the country while ensuring that financial institutions appropriately charge customers for the service.

“In response to rising costs and the need to improve efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020 (the Guide),” the circular read.

“This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service,” it added.

The decision is in line with CBN’s broader strategy to promote digital banking and reduce reliance on physical cash transactions.

The announcement has elicited mixed reactions from financial analysts, consumer advocacy groups, and banking professionals.

Dr. Samuel Olumide, an economist at the Lagos Business School, believes the move is part of CBN’s long-term goal of encouraging cashless transactions.

“The CBN is clearly pushing for a more digitalized banking system, and this move will likely drive more Nigerians towards alternative payment methods such as mobile banking, USSD transactions, and internet banking. However, the concern remains that a significant portion of the population, especially in rural areas, still relies heavily on cash transactions,” Dr. Olumide explained.

On the other hand, financial analyst and banking consultant, Aisha Danjuma, warns that the policy may disproportionately affect low-income earners who depend on ATM withdrawals for their daily transactions.

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“While the central bank’s goal of improving ATM efficiency is commendable, this policy could place an additional financial burden on ordinary Nigerians who may not have easy access to their own bank’s ATMs. Many customers, particularly those in remote areas, will find it difficult to absorb the extra costs,” she noted.

For many Nigerian bank customers, the new fees represent an unexpected financial strain, particularly amid ongoing economic challenges.

Michael Uche, a trader in Lagos, expressed his frustration, saying: “This is unfair to customers. I don’t always have access to my bank’s ATM, so I rely on other banks’ ATMs. Now, I will have to pay extra every time I withdraw. It feels like banks are finding new ways to charge us for basic services.”

Similarly, Grace Olayemi, a civil servant in Abuja, raised concerns about transparency in banking charges:

“The banks already deduct a lot in hidden fees. Now, they are removing the only free withdrawals we had on other ATMs. It will just make banking more expensive for regular people like me.”

With the March 1, 2025 implementation date approaching, banks and financial institutions are expected to update their systems and notify customers about the new charges.