Banks blame operating environment for high charges

By Tumininu Ojelabi Hassan

Bank customers have raised concerns over the outrageous charges being deducted from their accounts.

The charges include the electronic money transfer levy, transfer charges (10 naira on 0 – 5000 naira, N25 on 5001- 50,000 and N50 charge on 50,001- Infinity), ATM card maintenance fee, 35 naira charge on ATM withdrawals after a third withdrawal on another bank’s ATM within the same month, VAT on every transaction, stamp duty charge, SMS alert charges and account maintenance charges.

Funsho Abodunrin, a middle-aged man with a current bank account voiced his concern over the ridiculous bank charges while speaking 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 anyway. Keeping money in my account isn’t safe anymore then. How many transactions do I do on this account in a month to warrant a charge of N1800? In this 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 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 fumed.

Charles Ohuche, a chartered accountant also shared his thoughts concerning the high charges commercial banks deduct from accounts of customers.

“This issue of exorbitant bank charges will impede financial inclusion in the country. If you have observed, a lot of people now use these fintechs instead of traditional banks. That’s because they don’t charge like traditional banks. The charges of these traditional banks are killing. They seem little but when you calculate them at the end of the year, you will be surprised to find out how much these banks are making from us. This loophole is what the fintechs are fixing, that’s why it seems everyone is looking towards their direction. Most of the transactions I have done in recent times have been to fintech accounts especially Opay and Palmpay because they seem to have gained prominence.

“When you ask people why they have chosen fintechs over regular banks, they tell you it’s because they don’t charge like other banks coupled with the fact that transactions on these apps are seamless. These fintechs are gradually winning the hearts of customers. Their relatively low charges is a major selling point for them and that’s why a lot of people are migrating to them.

“Commercial banks deduct Stamp duty charge, VAT, Electronic money transfer levy, Transfer charges, ATM card maintenance fee, SMS alert charges just from one account. Customers are very sensitive to charges, especially now that everyone is complaining of hardship in the country. The government and CBN should help with these bank charges, they should be a regulation to reduce these charges,” he stated.

Deborah Ani, a bank customer expressed her disappointment at her bank for the excessively high charges while interacting with our correspondent.

“On Tuesday, 27th of June, I had N693.03 left in my account. I bought N500 airtime an I had N193.03 left. On Wednesday morning, I checked my mobile app then I realised i had 0 naira. Meaning, the N193.03 I had as at Tuesday was deducted. After a while, I received a credit alert of N8000, only N7,981.03 reflected in my account. Meaning that they deducted about N212 naira from my account. I checked my transaction history to know what the N212 naira was for, I didn’t see anything. Honestly, this doesn’t make sense. Why would you deduct N212 naira from my account without letting me know what it is for? This is exhortation. If I had a lot of money in my account as at then, I wouldn’t have noticed such an amount was deducted from my account. Most times, when I keep money in my account, they deduct charges. This doesn’t make any atom of sense to me. I stopped using USSD because of the charges. In 2019, they deducted N1700 from my account. When I went to the bank, I was told it was USSD charges. It was N20 for every transaction so it accumulated to N1700. Since then, I stopped using USSD for transactions,” she said furiously.

A bank customer narrated his experience concerning what he called “hidden charges” via his twitter account. Olusegun Olukoga claimed he experienced unexplained deductions from his account. According to him, the imposition of hidden charges on customers by some Nigerian commercial banks calls for concern and 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.

However, the banks on their part blame challenging operating environment for the high charges. The economic downturn, currency devaluation, inflation rate and high cost of operation continue to place roadblocks in the banking industry’s path. Contrary to people’s assumptions, the sector is facing an uphill battle to stay afloat and make profit amidst the economic crisis.

A branch manager of a top Nigerian bank while discussing with our correspondent on condition of anonymity revealed the reasons for high charges.

“What people don’t understand is that most of these charges are for the federal government. Federal government makes 50 naira on every transaction you make. VAT also goes to them. We are striving to survive in this economy, but people don’t understand. The government should be held accountable for these charges not the bank. The stamp duty charge and VAT doesn’t go to the bank. We only make money from ATM withdrawals which is N35 and SMS alert charges. Every SMS alert costs 4 naira which we deduct at the end of the month. All the SMS alerts a customer receives in a month is multiplied by 4 naira. The charges accumulate and when the total amount is deducted at the end of the month customers complain. Also, USSD is one of the reasons for high charges. Firstly, you will be charged 6.98 naira for USSD transactions, then you will charged for transfer which depends on the amount, the SMS alert charge is also included. That’s about 3 different charges for one transaction. Another way people incur extra charges is when they check their account balance. Every time you check your account balance via USSD, you will be charged 6.98 for USSD transaction and 4 naira for SMS alert. In a situation whereby you check your account balance 5 times a day, you have accumulated 20 naira SMS alert charge just in a day and 34.9 naira USSD charge in a day. Once you have a smartphone, it’s advisable to use the mobile application for transactions instead of USSD. You can use your email to receive alerts and confirm transactions instead of SMS. This way, you are charged for just ATM maintenance, ATM withdrawals after withdrawing thrice on another bank’s ATM and Electronic transfer levy,” she said.

In addition, she stated that banks are adopting cost saving techniques to reduce overhead costs and to enhance profitability despite the prevailing macroeconomic challenges.

“Before now, the bank usually provides everything we include in the budget. But now, every branch has a budget which they shouldn’t exceed. As a branch manager, what we do is make sure our expenditure for the month doesn’t exceed the budget because the bank won’t be responsible for it. Currently, the new rule in my bank is that, you should not be in the office later than 6pm. This is to save cost on diesel because we spend a huge sum of money on diesel. Once you leave the office later than 6pm, you will be issued a query. We can’t run the generator during working hours and also run it at night. When there is no one is in the office, the generator will be off. We had to enforce this new rule to reduce the usage of diesel. We make sure we round up our activities for the day before 6pm, so no staff member is expected to be working later than 6pm.

Another way we save cost is by reducing the usage of papers, we print only when it is necessary. For instance, when you have BVN related issues and you come to the bank. Instead of printing out the BVN, we send it to the office group chat. The person who authorized the transaction will pick it up from the group chat to complete the transaction. These are our ways of reducing cost,” she added.

She addressed the issue of retrenching employees, reducing salaries and allowances to reduce overhead costs.

“Let me speak for my bank, I can’t speak for every bank in Nigeria. The situation doesn’t affect salaries and allowances of staff members. The bank has been paying their employees their full salaries, I have been getting my full salary and allowances. I stated the cost saving measures the bank has adopted earlier. My bank is also not laying off staff. An employee can only be laid off due to a genuine reason but not because of cost. However, if a confirmed staff member is leaving the bank before two years of employment either due to relocation or for any other reason, you are expected to refund 2million naira to the bank which the bank used in training you. For you to be a full-time staff, you must have passed through training school which is fully funded by the bank. Despite the harsh economy, the bank spends a lot of money training employees, therefore losing our experts to relocation is a big loss for the bank. If you haven’t worked for up to 2 years and you resign, you will be asked to refund the training fee,” she clarified.

Underscoring the fact that some of the complaints of consumers are being discussed in higher quarters, the Nigerian Inter-Bank Settlement System (NIBSS) recently reviewed its electronic transfer charge, downward from N5 to N3.75k effective July 1, 2023. NIBSS addressed the payment solution service providers in the country in a letter dated May 31, 2023 revealing that it was reducing its fees to drive financial inclusion and support innovation.

“We are delighted to inform you that the board and management of Nigeria Inter-Bank Settlement Plc has approved a further reduction in the transaction processing fees on NIBSS Instant Payment from N5 to N3.75k effective July 1, 2023. In line with our commitment to drive financial inclusion and support innovation, we are also embarking on a volume-driven discount regime to complement this fee reduction and further details will be communicated in due course,” the letter stated.

Hopefully, the larger aim of the likes of NIBSS to promote greater financial inclusion would be accomplished notwithstanding commercial banks concerns over costs and profitability.