By: Emmanuel Omotayo Johnson
E-mail: oluwadamipe7@gmail.com
The Central Bank of Nigeria (CBN), in its circular on ‘Guide to Charges by Banks and other Financial Institution in Nigeria’ issued on 20th of December, 2019, makes provision for banks and non-bank commercial institutions to charge a sum of N50 quarterly card maintenance fee on every cards linked to savings accounts. Among other things, the guide also makes provision for an individual cashless policy rate of 2% of every cash deposit above N500,000 and 3% of every cash withdrawal above N500,000. The regulation is billed to take effect from 1st January, 2020.
Keywords: Central Bank of Nigeria, Banks, Card maintenance, Cashless policy.
Pursuant to the provision at Page 20, Clause 10.4.2 of the guide, every credit or debit card holder will pay an aggregate sum of N200.00 annually (i.e. N50 every 4 months) to the bank his/her account is operated purportedly for the maintenance of the card. This new regulation by the CBN has been greeted with much discontent especially among the banks customers’ populace.
Popular amongst those who have voiced out their discontent about the regulation is one Lagos State based lawyer, Mr. Olumide Babalola who has described the regulation as “…exploitative, unreasonable, done in bad faith… and merely an avenue to generate income for commercial banks at the expense of the public.” The lawyer determined to see a change of the regulation has urged the Federal High court in Lagos State to issue an order of perpetual injunction restraining the CBN and others from charging the quarterly N50 card maintenance fee in the interest of the public.
This is not the first time that there have been popular complaint about the CBN trying to enrich the commercial bankers at the expense of their customers, but the current fuss generated by the latest regulation by the CBN cooees for a need to consider the rationality and justifiability of the purported N50 card maintenance charge.
Why Card Maintenance?
One perplexed customer recently posed a question to the CBN on their Twitter handle, “Please why do banks charge us N50 each which they call card maintenance when in actual sense I paid before getting the ATM card?”
Pius Ikheola, a banking expert once disclosed to the “BusinessDay” that charging card maintenance fees is like an incentive from the CBN to banks who are the major drivers in its cashless initiative. In his words:
“Keeping ATMs functional (issuing, acquiring, switching, personnel etc) involves a lot of cost. The maintenance fee I believe is a way of compensating the banks. ATM is of course at the center of CBN’s cashless initiative and if they are putting pressure on the banks to ensure it is always functional, there has to be a way of offsetting some of the cost.”
Compensating and enriching the banks at the expense of their customer to say the least is most irrational; the N50 quarterly charge for card maintenance cannot be justified for a number of reasons.
Firstly, by the combined effect of Page 20, Clause 10.5.1 and Page 20, Clause 10.6.1 of the Guide, it is a common practice that bank customers make a N1,000 (one-off charge) issuance fee for the collection of debit or credit cards from the bank. Ordinarily, this payment of its own is sufficient enough to maintain the card (assuming any such maintenance exists at all).
As if this is not enough, in the event of damage, loss or expiry of the cards, the bank charges an additional fee for the replacement or renewal of the cards as the case may be. [See, Page 21, Clauses 10.5.2, 10.5.3, 10.6.2 and 10.6.3 of the Guide).
The factual question to be asked is: who in fact maintains the card? The answer to this question is not farfetched. It is a known fact that upon the issuance of the cards by the banks they remain in the customer’s physical custody until they expire or get lost or damaged. Since the physical possession of the cards is always with the customers, maintenance of the cards in the strict sense of it is done by the customers and not the bank.
The N50 quarterly card maintenance fee is another method of institutionalizing public extortion in the country. The fee is unjustifiably against public interest and a conspicuous money-making channel devised by the CBN to enrich the commercial banks at the expense of their customers.
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