Cashless Economy: Banks’ Antics, Customers’ Agony

?Some banks recently raised their minimum account balances and also introduced different charges as part of measures to encourage the electronic system of payment in the country. These new steps have continued to generate a lot of controversy among the stakeholders. In this report, AMAKA IFEAKANDU captures? varied reactions
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The recent strategies adopted by the banks towards transforming the nation’s financial system into a cashless one have continued to generate a lot of argument among stakeholders.

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The deposit money banks operating in the country recently introduced different measures to discourage the use of cash in transactions within the country. ?
Some of the strategies, LEADERSHIP SUNDAY learnt, included an increase in the minimum capital desired to open an account and operating balances to levying of charges and compelling customers? to accept the automated teller machine (ATM) for banking transactions.
The investigation further revealed that cash withdrawal without the use of the ATM attracted charges between N100 and N200, depending on the bank.

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For instance, while the First Bank of Nigeria Plc. charged N100 for every transaction below N50,000 and N100 for issuing cheques below N100,000, the United Bank of Africa (UBA) charged N150 per transaction.

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However, while other banks like Intercontinental bank plc., Guaranty Trust Bank (GTBank) plc. and Diamond Bank charged N100 per withdrawal below N50,000,? customers of Stanbic IBTC? bank were charged? N150 per? banking transactions below N100,000 without the use of the ATM. ?
Apart from charges imposed on customers, banks have also unilaterally increased the minimum balance on personal savings account from N1,000? to amounts ranging from N10,000 to N25,000.

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The banks’ new levy and increment in operating balance, according to investigation was part of the strategy to discourage cash transactions and ensure the smooth take-off of the CBN’s cashless economy? pilot scheme coming up in December this year.
However, the CBN had, in July this year, insisted that the increment in the minimum opening balance was not part of its policy, and noted that it would not decide the way banks should carry out their businesses.

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“This is not a CBN policy. We do not prescribe how banks conduct their businesses, to the point that we begin to specify what the account balances of customers should be. ?
“We don’t micro-manage. Generally, we will not be happy to see banks actually conducting their banking by excluding small savers. We are going to find out what it is all about,”? the CBN added.

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Although some banks sent out messages via e-mail and text? messages to their customers as regards the new charges on withdrawal without the ATM, increment in savings account opening and operating balances, others were still trying to jump on the bandwagon of those who had set about implementing this new measure.
The First Bank had, last week, sent e-mails to its customers, and stated that it had increased? the minimum amount for opening savings account from N2,000 to N10,000 while the operating? balance was raised from N1,000 to N2, 000.

The message read, “In line with our resolve to continuously deliver exceptional service and further enhance the savings culture of our customer, there has been an upward review of the minimum opening balance on savings accounts from N2,000 to N10,000 and minimum operating balance from N1,000 to N2,000. This initiative takes effect from September 1, 2011.”

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Head of media of the First Bank of Nigeria Plc., Mr. Tunde Lasaki. who confirmed the increase in operating balance explained that the increment was “set to enhance customers’ saving culture”.
He stated that with the minimum opening balance of N10,000, customers were free to withdraw N8,000 from the account, leaving only an operating balance of N2000.
He said that saving money gradually would enable the customer, at end of the day, to build up the account into a larger saving.
It would be recalled that before now the United Bank for Africa (UBA)? had? announced that from July 1, 2011 its new minimum operating balance for both savings and current account to N25,000.

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The UBA had,? last week, informed all its customers whose balances were below N25,000 to use the ATM for future withdrawals.
It read, “Please, note your balance is below N25,000. Future withdrawals can only be made using your ATM”.
Defending the new operating balance policy, the executive director, finance, UBA, Mr. Emmanuel Nnorom, explained that while the bank was aware that the new rule would cause some inconvenience to its customers, it would not affect salary account holders, military/paramilitary personnel, and ex-service men.

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He maintained that, “salary/pension accounts, whether savings or current, overdraft/facility linked current accounts, loan accounts, savings/current accounts linked to deposits/investments, paramilitary/military/ex-servicemen accounts are exempted from the new minimum balance requirement.”
Providing further clarification on the issue, the UBA said it had taken measures to ensure that customers were “adequately served”.
The bank in a statement signed by its head, corporate communications, Mr. Charles Aigbe, said customers whose account balance were below the minimum requirement and are not able to upgrade between July 1, 2011 and September 1, 2011, would have the option of migrating to self-service channels provided by the bank.

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“The migration of customers to self-service e-banking channels and the mobile payment platform, U-Mo, is being undertaken through the various business offices of UBA, where the respective accounts are domiciled, in a simplified process, devoid of any hassles.
“These platforms provide customers much more convenience and access compared to brick and mortar-based services,” the statement added.
The executive Director, Resources, Mr. Kennedy Uzoka also said that in a bid to further minimise the inconvenience to customers as a result of the new measure, UBA, would ensure that “cheques drawn on all current accounts below the N25,000 minimum balance will be honoured and an auto alert generated and sent to the affected customer’s mobile phone and e-mail, with the information ‘below N25,000 account balance’ and advisory to regularise.”

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Meanwhile, the Guaranty Trust Bank (GTBank) had, in the second quarter of this year, increased its account opening for both current and savings account to N50,000.
It was also learnt that at the Zenith Bank an individual would not open either a savings or current account with less than N25,000 .
A staff of the bank who pleaded anonymity said that, “For one to open an account in any Zenith Bank branch nationwide, you would need at least N25,000.”
He also said that the opening and minimum balances were different, and that the minimum balance was the amount the customer would need to leave in the account.
Some banks’ customers who spoke to LEADERSHIP SUNDAY on condition of anonymity? said that the increment in the minimum account opening may discourage people from putting their money in the bank.

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They said that there was need for the CBN and banks to introduce policies that would encourage people to put their money in banks in order to reduce? funds? in the informal sector.
They stated that the? new measures introduced by banks had placed some customers in a tight situation, as they were still undecided about closing their account? and reverting back to the old system of banking? or “face the challenge of paying the charges”.
Bank customers also said that it was unfortunate that many banks in Nigeria fail to operate in accordance with global best practices.
They explained that the bank-customer relationship was meant to be a contract in which there was an obligation on the part of a bank to act in the best interest of its customers, but in Nigeria, banks sought to satisfy their own selfish interests, even if it eroded the rights of? their customers.
“For instance, as for the automated teller machine (ATM) cards, whereas its use by personal account holders is optional abroad, Nigerian banks have made it compulsory.? The ATM card is used to withdraw cash when banks are closed to the public at night and at weekends, but Nigerian banks force their customers to use the ATM card for cash transactions evenduring working hours.”

One of the bank customers, however, said that most painful was the fact that even when individuals lost some money through ATM fraud, they were not compensated by their banks.

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“In spite of the fact that banks force their customers to use the ATM card, they deny liability in case of? ATM and e-banking? fraud,” he added.
They also pointed out that the Nigerian legal system was lagging behind in terms of technology, and noted that a situation in which electronically-generated bank statements are not admissible as evidence in law makes nonsense of contracts between banks and customers as regards electronic banking.
They stated that banks violated customers’ rights by debiting them with unreasonable charges and failing to credit them with interest due to them (though the interest is fixed at a miserable 1.5 per cent per annum).

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This, according to customers, increased the risk of embracing electronic banking, because “no one will engage in a business that is not fair and just”.? Highlighting the demerits of? the electronic payment system in the country, they said, “Since there is no insurance plan for customers when they lose their money through ATM frauds it would affect the efforts of the CBN and banks to enthrone plastic cards and the e-payment culture in their determination to make Nigeria a cashless society.”
Commenting on bank charges on? transaction without the ATM, the managing director, H.J Trust and Investment, Mr. Harrison Owoh, said that banks had no right to force a product on customers, and added that it was the duty of the customers to decide whether to accept such products or not.
He said that although the CBN’s plan to transform the nation’s economy into a cashless one was a good initiative, the? use of the ATM and other electronic payment systems should not be imposed on customers.

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He explained that the banks were expected to embark on enlightenment campaigns to educate people more on the benefits of electronic banking, and stressed that forcing ATM? cards on customers would not solve the problem but help to contribute to the increase in ATM frauds.
“The? right thing to be done is for the nation’s banks? to embark on enlightenment campaigns, to educate customers on the advantages of the ATM for them to make a choice, but not to force it on them,” he added.

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The managing director, Jemico Leather Ltd., Mr. James Osoka, said that the increment in minimum account opening and different charges imposed on customers would go a long way to discourage people from imbibing the savings culture in the country.
He said that with the present state of things, the issue of banking transactions had become a way of educating the middle and upper classes, and added that small savers had been tactically “schemed out” from keeping their money in the banks.

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“ If documentation and other? requirements such? as National identity cards, driver’s licence, international passport, utility bills needed before one could open an account? could discourage people from depositing their money in the banks when the minimum opening? balance stood between N1,000 and N2,000, I wonder what will happen if? it is raised to N10,000 and N25,000,” he added.

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He said that the use of the ATM and other electronic payment systems should not be compulsory but optional, as it was the practice in the other parts of the world, and noted that it was wrong for banks to compel customers to accept ATM for banking transactions.
Admitting that the plan? to transform the nation’s economy into a cashless one was a step in the right direction, and noted that “it would not be done over night”.
He stated that the issuance of ATM cards should be done based on a customer’s request,? and noted that the idea of?? forcing people to accept the ATM had contributed to the increase in? ATM fraud within the country.

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Osoka noted that banks were not, in any way, encouraging customers to accept ATM cards,? and noted that besides charging N600 or N1000? to issue the cards initially, the same amount would be deducted? from customers’ accounts for the re-issuance of new ATM cards, after expiration due to banks’ selfishness.
The chief executive officer, Afripay, a subsidiary of UBA, Mr. Yinka Adedeji, who expressed the need for customers to use ATM cards for banking transactions,? said that with the introduction of the chip and pin numbers, ATM-related fraud had been reduced to almost zero.

“The innovation in the banking industry was designed to provide good service to customers, and as far as I am concerned, the increase in the minimum opening balance, and banks charges on transactions without ATM cards is a way? to discourage small savers from depositing money in the bank.? It? means that those receiving salaries below N20,000 will never dream of depositing money in banks.”

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Adedeji said that with improvement in information technology, electronic payment channels would be perfected for banking transactions within the next five years.
He said that transformation of the nation’s economy into a cashless one would go a long way to curtail high rate of armed robbery in the financial system.
Highlighting the benefits of the e-payment system, he said that with the introduction of the automated teller machine (ATM) the long queues in the banking hall had reduced drastically.

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“Overall, whatever the case, it was wrong for banks to make it mandatory for customers to? use ATM cards? in all their withdrawals. Besides, issuance of the ATM cards should be done based on customer request.? The CBN had, last year, directed that no debit card would be issued by banks without the knowledge of customer and that deposit money banks would be held liable for all frauds perpetrated with the use of the cards. The CBN’s directive stated that, “No debit card should be issued on an account without written request from account holders. Henceforth, deposit money banks (DMBs) shall bear liability for any fraud perpetrated with the use of cards printed without any official demand from the account holder”.

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The apex bank, however, instructed the DMBs to set and implement mandatory daily limits for ATM cash withdrawals, and added that all other related transactions, including POS and Web purchases, be subjected to stringent limits, as agreed and documented between the banks and customers, as it is the responsibility of the banks to ensure that the agreements automatically initiate a trigger when limits are exceeded.

It further ordered all card-issuing banks to deploy fraud monitoring tools with the capability to monitor the normal spending trends of a card holder, as well as automatically stop abnormal transactions that are perceived to be fraudulent, and added that “blocking shall only be lifted by express instruction of the card holder”.

Furthermore, the CBN directed that “the card holders be provided with a facility to block their account immediately the SMS alert is received” in respect of suspicious transactions, “so as to prevent further fraudulent transactions from being perpetrated”.

But despite the CBN’s directives, banks have continued to impose ATM cards on? their customers,? whether or no they request for it. With the foregoing, it is obvious that the banks are responsible for the present unfolding chaos in the financial system. Sadly, they have a penchant for frustrating the measures put in place by the apex regulator, despite constant measures to ensure that banks adopt international best practices. However, the buck stops on the table of the CBN, because they have failed in the aspect of monitoring and sanctioning erring banks. If the CBN had sanctioned one or two banks for? issuing ATM cards without the customers due approval, that would have served as a detterent to others banks who impose their products on their customers, violating their rights in the process. ?
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