Bank customers have expressed their dismay regarding the exorbitant fees being deducted from their accounts.
These charges encompass various categories, such as the electronic money transfer levy, transfer charges (ranging from 10 naira on amounts between 0 and 5000 naira, 25 naira on amounts between 5001 and 50,000 naira, and 50 naira on amounts exceeding 50,001 naira), ATM card maintenance fee, a 35 naira charge on ATM withdrawals after the third withdrawal from another bank’s ATM within the same month, VAT on every transaction, stamp duty charge, SMS alert charges, and account maintenance charges.
Charles Ohuche, a chartered accountant, also shared his thoughts concerning the high charges commercial banks deduct from customers’ accounts.
“The problem of excessive bank charges poses a significant obstacle to financial inclusion in the country. Many individuals are now turning to fintech companies instead of traditional banks, primarily due to the more affordable fee structures offered by these fintech platforms. The fees enforced by conventional banks are burdensome and have negative consequences. Although these charges may appear insignificant when viewed individually, their cumulative impact becomes evident when assessed over a year. It is alarming to realize the significant profits banks earn from these charges, often at the expense of their customers. This is the very issue that fintech companies are addressing, which explains why everyone seems to be turning their attention in their direction. Lately, I’ve found myself conducting most of my transactions with fintech accounts, particularly Opay and Palmpay, as they have gained considerable prominence”.
“When inquiring why individuals opt for fintech companies instead of traditional banks, they commonly cite the absence of excessive fees and the seamless nature of transactions conducted through these applications… These fintechs are gradually winning the hearts of customers. Their relatively low charges are a major selling point for them, and that’s why a lot of people are migrating to them”.
“Customers are becoming increasingly sensitive to the charges levied by commercial banks, including stamp duty charges, VAT, electronic money transfer levies, transfer charges, ATM card maintenance fees, and SMS alert charges. These fees are deducted from a single account, and their cumulative impact is felt by customers, particularly during these challenging times when people are already grappling with economic hardships in the country. The government and CBN should help with these bank charges; there should be a regulation to reduce these charges,” he stated.
A bank customer took to his Twitter account to share his experience regarding what he referred to as “hidden charges.” Olusegun Olukoga expressed his frustration over unexplained deductions from his bank account. He expressed concern about the imposition of undisclosed fees on customers by certain Nigerian commercial banks and called for a thorough investigation.
“My experience with GTBank @gtbank @gtbank_help lately calls for suspicion because I seem not to understand why any commercial bank should deduct as much as one hundred naira (N100) for every Ten thousand naira (N10,000) that enters my account. What I’ve observed over time is that the charges vary from fifty naira (N50) to five thousand naira (N5000); that’s based on my experience and without narration. That’s aside transfer charges from my account to third party, monthly SMS and ATM maintenance charges, as well as electronic money transfer levy,” he tweeted.
An anonymous branch manager from a prominent Nigerian bank shed light on the reasons behind the high charges during a discussion with our correspondent.
The branch manager explained, “It’s important to understand that many of these charges are imposed by the federal government. The government earns 50 naira on every transaction you make, and VAT also goes to them. We, as banks, are striving to survive in this challenging economy, but this is often overlooked. The government should be held accountable for these charges, not the banks. The stamp duty charge and VAT do not benefit the bank. We generate revenue primarily from ATM withdrawals, which incur a 35 naira fee, and SMS alert charges. Each SMS alert costs 4 naira, which is deducted at the end of the month. The total number of SMS alerts a customer receives in a month determines the amount deducted. These charges accumulate, leading to customer complaints when the total sum is deducted.”
The branch manager further elaborated on how USSD transactions contribute to the high charges. “Firstly, there is a charge of 6.98 naira for USSD transactions. On top of that, customers are charged for transfers, which vary depending on the amount, and the SMS alert charge is also included. This means there are three different charges for a single transaction. Another way customers incur extra charges is when they check their account balance via USSD. Each account balance check incurs a 6.98 naira USSD charge and a 4 naira SMS alert charge. If a customer checks their account balance five times a day, they accumulate a 20 naira SMS alert charge and a 34.9 naira USSD charge in just one day. To minimize charges, it is advisable for customers with smartphones to use the mobile application for transactions instead of USSD. They can also utilize their email to receive alerts and confirm transactions instead of SMS. This way, they are only charged for ATM maintenance, ATM withdrawals after three transactions on another bank’s ATM, and the electronic transfer levy.”
Furthermore, the branch manager mentioned that banks are implementing cost-saving measures to reduce overhead expenses and enhance profitability despite challenging macroeconomic conditions.
“Previously, the bank used to provide everything included in our budget. However, each branch now has its own budget that must not be exceeded. As branch manager, our goal is to ensure that our monthly expenses stay within the budget because the bank will not cover any excess. Currently, there is a new rule in my bank stating that no one should be in the office after 6 pm. This is to save costs on diesel, as we used to spend a significant amount on it. If anyone remains in the office past 6 pm, they will receive a query. We cannot run the generator during working hours and also run it at night. When there is no one in the office, the generator is turned off. We implemented this rule to reduce diesel consumption. We ensure that we complete our activities for the day before 6 pm, so no staff member is expected to work beyond that time.
Another cost-saving measure we employ is reducing the usage of paper. We only print when necessary. For example, when customers come to the bank with BVN-related issues, instead of printing out the BVN, we send it to the office group chat. The authorized person can then access it from the group chat to complete the transaction. These are our ways of cutting costs,” she explained.
She also addressed the issue of employee layoffs and salary reductions to reduce overhead costs.
“Let me speak for my bank; I cannot speak for every bank in Nigeria. The situation does not affect the salaries and allowances of staff members. The bank has been paying employees their full salaries, and I have been receiving my full salary and allowances. I mentioned the cost-saving measures adopted by the bank earlier. My bank is also not laying off staff. An employee can only be laid off for genuine reasons, not due to cost-cutting. However, if a confirmed staff member leaves the bank before completing two years of employment due to relocation or any other reason, they are expected to refund 2 million naira to cover the training expenses borne by the bank. To become a full-time staff member, one must undergo training fully funded by the bank. Despite the challenging economic climate, the bank invests a substantial amount in training employees, so losing our experts due to relocation is a significant loss for the bank. If an employee resigns before working for up to two years, they will be required to refund the training fee,” she clarified.
Addressing consumer complaints, the Nigerian Inter-Bank Settlement System (NIBSS) recently revised its electronic transfer charge, lowering it from N5 to N3.75k, effective from July 1, 2023. NIBSS communicated this change to payment solution service providers in the country through a letter dated May 31, 2023, stating that the fee reduction aims to drive financial inclusion and support innovation.
“We are pleased to inform you that the board and management of Nigeria Inter-Bank Settlement Plc have approved a further reduction in the transaction processing fees for NIBSS Instant Payment from N5 to N3.75k, effective from July 1, 2023. In line with our commitment to promoting financial inclusion and supporting innovation, we are also introducing a volume-driven discount regime to complement this fee reduction. Further details will be communicated in due course,” the letter stated.
With hopes of achieving the broader goal of promoting greater financial inclusion, the efforts of organizations like NIBSS may overcome concerns regarding costs and profitability for commercial banks.
Funsho Abodunrin, a middle-aged man who holds a current bank account, expressed his concerns about the unreasonable bank charges during a conversation with our correspondent.
“These banks are ripping people off. How can you deduct N1800 from my account just because I have a current account? This doesn’t make sense in any way. Keeping money in my account isn’t safe anymore. How many transactions do I make on this account in a month to warrant a charge of N1800? in present-day Nigeria? I have said it, if they continue, I will withdraw my money into another account and close my account with the bank. I mean, there is no justification for deducting such an amount from my account in a month all in the name of bank charges. This doesn’t even include the charges they deduct on every transfer,” He said.
