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Where CBN erred on new bank charges, by telcos

By Adeyemi Adepetun, Gloria Ehiaghe and Victor Uzoh
27 December 2019   |   4:30 am
Days after the Central Bank of Nigeria (CBN) reduced bank charges, telecommunications operators still feel issues negatively affecting them have not been sufficiently addressed.

Central Bank of Nigeria

• ‘USSD services cannot be offered for free to banks’
• Minister, NECA, others laud charges slash

Days after the Central Bank of Nigeria (CBN) reduced bank charges, telecommunications operators still feel issues negatively affecting them have not been sufficiently addressed. The operators wondered why the CBN did not review the Unstructured Supplementary Service Data (USSD) charges, which had in October pitted them against the banks.

In October, the USSD charges became a national issue when the body of banks chief executives denied authorising telecoms operators to charge additional fees in carrying out such operations. The Minister of Communications and Digital Economy, Dr. Isa Pantami, had to direct the Nigerian Communications Commission (NCC) to stop MTN and other service providers from charging the proposed N4.

But the operators insisted on going ahead with the charges if the CBN and others stakeholders refused to adequately resolve the matter. They are now disturbed that in the new CBN reviewed charges, as contained in the “Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions” issued recently, the N4 charge on USSD was not addressed.

Among the new charges, which will take effect from January 1, 2020, is that in the transfer to other banks, an amount limited to N5,000 will attract N10; between N5,001 and N50,000 will attract N25; from N50,001 and above will attract N35.

Similarly, N35 is charged after third withdrawal on other banks’ ATM terminals, instead of the hitherto N65 on every withdrawal, and there will be no more maintenance charges of N100 per month (on current account holders), while N50 would be charged per quarter on savings account.

Also, there will be no more charges on closure of savings, current and domiciliary accounts. Besides, the guide discloses that maintenance charges/fees can only be charged on current account in respect of “customer-induced-debit-transactions to third parties & debit transfers /lodgements to the customers accounts in another banks.”

The President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, who spoke on the development, said the CBN, along with the NCC, would need to establish the exact charges telecommunications operators will apply for using their platforms for the CBN to achieve its digital financial services mandate and, by implication, increase the level of financial inclusion expected in 2020.

“It would indeed be an achievement if all charges to bank customers are removed when it involves bank-to-bank and point of sales (PoS) transactions, as it is clear that any charge applied will continue to stifle the acceptance of its usage with those struggling to make ends meet and will be a deterrent to those unbanked to use such services. The banks have to remove all charges to convince those that are unbanked. This is because the United Nations 2020 Sustainable Development Goals (SDGs) focuses on those in most need of elevation above the poverty line,” Teniola stressed.

The Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, wants the CBN to address the USSD issue.
“The charges on ATM by the banks are not the same thing as the USSD charges being applied on the banking customers. We insist that the USSD cannot be offered for free, to the banks. The USDD channels are provided for the banks at significant cost by the operators, the banks are using the channels to make money as they charge their customers per session of usage and it is only fair for the banks to pay the operators who provide and maintain the links round the-clock.

“We are aware that what the banks charge their customers per USSD session is multiple of what the operators are asking them to pay, and we maintain that it is unfair to insist that the operators should charge the same customers again for the same service for which the banks are already charging them (customers accounts),” Adebayo stated.

The Executive Secretary, ALTON, Gbolahan Awoniyi, who commended the CBN on the slashed ATM charges, asked the apex bank to urgently address the USSD charges.“It is a good development. I also think it was the USSD issue that triggered some of these changes. The matter should be looked into, the banks can’t be making money at the expense of the telecoms operators.”

On the implications of the slashing of bank charges for the sector, the President and Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uche Olowu, told The Guardian that it was not all gloom and doom for the banking sector in terms of loss of revenue.On the contrary, Olowu believes the CBN policy will help banks get more people into the system. “Clearly, once they get more people into the system, they will increase velocity, and then they will recoup in the long term.”

According to him, the charges have been a hindrance to the financial inclusion drive, as they mean a lot on the threshold, since they will reduce the burden on the people, who have been clamouring for the reduction of charges, given the evolution in the financial sector over the last few years.He said: “I think it’s a very good one, and it’s a welcome development. It is going to motivate more people to be financially included. We should commend the efforts of the regulator in reducing the charges so as to reduce the burden of the people they hurt more, who are actually the vulnerable.”

The Nigeria Employers’ Consultative Association (NECA) also commended the CBN on the newly released guide to charges by banks and other financial institutions, saying it would encourage Nigerians to be more aligned with the cashless policy in the country.

The Director-General of NECA, Dr. Timothy Olawale, said it would make financial services more accessible and affordable to various stakeholders in the economy. He called for the cancellation of N50 POS charge on stamp duty still in operation, saying it was a burden on Nigerians and businesses.Olawale drew the attention of the CBN to the Real Time Gross Settlement (RTGS) charge, which was reviewed upward from N750 to N950 for the transaction of N500,000 and above. “We are of the opinion that in the spirit of benevolence demonstrated by the CBN, if the charges cannot be reviewed downward to about N300, the status quo of N750 should subsist.”

Meanwhile, the minister of communications and digital economy has lauded the decision of the CBN to considerably reduce the cost of electronic cash transactions as well as ATM, card maintenance fees. According to him, the action by the bank regulator will greatly contribute to the actualisation of a digital economy, as lower service charges will encourage higher patronage of electronic services, especially in the financial services sector.

Pantami, according to a statement by his spokesperson, Uwa Suleiman, encouraged all decision-making institutions in the country to enact policies that will support and key into the digital economy policy of President Muhammadu Buhari. Meanwhile, efforts to get the apex bank’s response to the matter proved abortive. Several calls, text messages, and WhatsApp messages sent to the mobile number of the Director of Corporate Communications at the CBN, Isaac Okorafor, were not responded to as at press time.