" ITREALMS: Banks intensify ATM awareness campaigns

Monday, September 08, 2014

Banks intensify ATM awareness campaigns

The Guarantee Trust Bank otherwise known as GTBank plc alongside Zenith plc, First Bank plc, as well as the United Bank for Africa (UBA) and indeed all the major banks in the country may have stepped up their awareness campaigns as the new Automated Teller Machine (ATM) charge takes off.

The recent pronouncement by the Central Bank of Nigeria to reintroduce ATM charges from September 1, 2014, is generating debates and comments from many quarters. Some Nigerian consumers see free ATM services as the least the banks can do. Some others consider it an entitlement. Many others are asking why now?

There however seems to be a great deal of misunderstanding by members of the public on how the new ATM charges will be structured and applied. Given Nigeria's new status as the largest economy in Africa and it's increasing strategic importance as one of the most attentive emerging market, the country is rapidly becoming integrated with the global financial market and practices.

It thus makes sense to do a comparative analysis of the regime of ATM charges around the world and see how Nigeria stands in the overall financial picture. However, let us first look at the Central Bank rationale for the new policy as well as the key components.

The central bank reintroduced ATM charges two years after it stopped the N100 fee per withdrawal on third-party ATMs. The original circular to this effect was signed by the CBN Director, Banking & Payments Systems Department, Dipo Fatokun.

He noted that the banks have been bearing the real cost of N65 each time their customers use another bank's ATM.

"However as a result of the unintended consequences of the decision, which has resulted in substantial cost burden incurred by banks in defraying the cost of the service, the payment structure for card carrying customers, is hereby reviews in line with present realities.

“The reintroduction of the N65 transaction fee is to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks. The new charge shall apply from the fourth withdrawal from another bank within a one month period. So the first three charges will still be paid for by the issuing bank. All ATM cash withdrawals on the same issuing bank will still be free. Banks are expected to conduct adequate sensitization of their customers."

The Director of Corporate Communications, CBN, Mr. Ibrahim Muazu, explained in a follow up statement that the new charge would help the banks to keep more ATMs serviceable across the country, thereby making banking more convenient for customers.

Muazu maintained that the new charge was not intended to discourage financial inclusion, adding that the CBN would not endorse any anti-customer policy.

“Charging of fees on interbank networks is a widely acceptable global practice. The new ATM charge will ensure that customers get better services, while increasing healthy competition among the bank. The transaction volumes at other banksATM had increased astronomically owing to the free cash withdrawal on other banksATMs. 

"Indeed, some customers were beginning to abuse the use of ATMs through countless daily withdrawals; this development has led to an increase in cash transactions, which negate the central banks cash-less policy. The CBN wishes, therefore, to reassure the public that the long-term interests and welfare of all bank customers remain the goal of all banking policies.”

Let us now take a closer look at how Nigeria compares with many other countries around the world, before we end up with some great tips for bank customers.

In Brazil, banks such as Bradesco, Banco do Brasil, Caixa Econômica Federal, Itaú and Santander operate their own nationwide ATM networks. These ATMs are conveniently located all over and there are no charges. However, fees are assessed if there is excessive usage of the ATMs (i.e. one makes more withdrawals than what's allowed by their monthly maintenance fee).

In Canada, most Canadian financial institutions are members of the Interac Association, a multi-bank ATM network founded by Royal Bank of Canada, CIBC, Scotiabank, Toronto-Dominion Bank, and Desjardins Group in 1984. Before the presence of white-label ATMs, most Canadian customers were only charged the standard Interac Network Transaction Fee when a customer was using an ATM not provided by the bank that held their account (historically $0.75 CAD, now $1.50 CAD). As the Interac network was opened up to more Independent sales organizations ("ISO")s and the potential for additional revenue from Service Fees were made available, most banks elected to impose the Service Fee in addition to the revenue that was generated from the Interac fee.

In Austria, cash withdrawals are free for any owner of an Austrian Maestro card. (Very few, small banks charge an extra fee when one of their own customers uses a different bank's ATM).

German banks charge fees for withdrawals at another bank's ATM. Usual fees are 4-5 EURO. All ATMs are connected to the national Girocard interbank network. The ATM owners do usually join one of the ATM groups that mutually lower or waive fees, so that customers can withdraw free of charge. The most extensive network of ATMs belongs to the savings banks associations ("Sparkassen") with 24,600 ATMs.

The Central Bank of Ireland forbids all ATM usage fees, although the Government imposes a 5 Euro annual stamp duty on debit/ATM cards.

In Spain, there are significant variations in charges applied. A card issued by a Spanish Bank will normally expect to incurr a moderate fee from 0 to 1Euro to be applied to ATM withdrawals, where the transaction is conducted on an ATM operated and owned by the customers own bank. However outside this situation there is anecdotal evidence of significantly higher charges being applied where third party owner/operated ATMs are used.

In Sweden, most banks issue debit cards for an annual or monthly fee which includes free withdrawals in Sweden and within the eurozone. However, customers are subject to a fee if using a cash machine elsewhere. Some cards from some banks are, however, subject to fees also when used in the eurozone and some Swedish cash machines. Most of these cards are issued by savings banks.

The United Kingdom, a popular destination, used to charge ATM fees in the 1980s. The large numbers of free-to-use ATMs and the low average number of transactions at pay-to-use machines means that 97% of cash withdrawals in the UK presently remain free of charge.

Moving on to Hong Kong, there are three ATM networks there. ATM use is free of charge, except when a card is used outside of its respective home network. When a card is used outside the home network, HKD$15–30 is paid for service charge.

In Indonesia, banks generally do not charge a fee for ATM usage. However, when an ATM card is used outside the home ATM network, service charge will apply.

In Pakistan banks usually charge a fee of PKR 0 to PKR 20 per non user's ATM cash withdrawal. These fees are levied chiefly to offset banks' own costs at par only, without any profit margin whatsoever. There are two ATM switches operational in the country, 1LINK, hosted by a consortium of banks, and MNET, hosted by MCB Bank Ltd; and all Pakistani banks are members of one or the other switch as per the mandate of the State Bank of Pakistan, the country's central bank.

In the United States, prior to 1988, there was no surcharging of cardholders by ATM owners in the U.S. In 1988 Valley Bank of Nevada began surcharging "foreign cardholders" (meaning holders of ATM cards not issued by Valley Bank) for withdrawals at Valley Bank ATMs located in/near Las Vegas casinos.[22] Eventually, various regional ATM Networks, and ultimately the national networks, Plus and Cirrus, permitted ATM surcharging.

Before 1996, foreign ATM fees averaged $1.01 USD nationally. As banks and third parties realized the profit potential, they raised the fees. ATM fees now commonly reach $3.00, and can be as high as $6.00, or even higher in cash-intensive places like bars and casinos. In cases where fees are paid both to the bank (for using a "foreign" ATM) and the ATM owner (the so-called "surcharge") total withdrawal fees could potentially reach $11.

Moving to our continent, recent survey has found that South Africa has the highest ATM withdrawal fees out of a group of 27 countries which includes the likes of the United Kingdom and the United States of America (USA). An ATM transaction could sometimes cost as high as 16 Rands, about N240.60.

In line with the CBN directive, many of the banks have been educating their customers on the new charges, and helping them see, that ATM cash withdrawals are still free within the same bank network. The banks have tried to simplify the messages as much as possible in newspaper ads, website posting, radio announcements and other means.

GTBank, for example , which has one of the largest number of card holders, sent a circular to all their customers stating, "as a GTB card holder, it is free every time to withdraw in a GTB ATM. If you withdraw on another bank's ATM, it is free the first 3 times every month. Please note that for your convenience, GTB has deployed a great number of ATMs, placed strategically around the country."

As Nigerians get ready for the implementation of this policy, banking customers can take note of the following tips Tips on avoiding ATM charges.

Firstly, customers should be "ATM savvy" and be mindful that using ATMs that are outside of your own bank's network can cost you extra money. The simplest way to help avoid ATM fees is to use your own bank's ATMs whenever possible. To make it easier, research the location of your bank's ATMs or choose a bank with a wide network of ATMs

Secondly, Prepare a budget and plan for the cash you will need in advance so you can reduce the amount of ATM withdrawals you make. Budget accordingly. If youre forced to access cash from an out-of-network ATM — say when youre on vacation or traveling on business — take out more cash, to minimize your withdrawals.

Other cost saving ways is to make payments using a debit or credit card. There are no charges for using MasterCard or Visa and you can use your MasterCard to pay for goods and services as frequently as you desire.

Trust Nigerians, they will, soon get the full hang of the new ATM policy and strive to remain amongst the happiest people on earth! 

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