In 2016, you paid banks N138 billion for SMS alerts, other fees

folarin okunola

May 24, 2017 2:43 PM

Almost every banked Nigerian complains bitterly about these charges but the sheer size collectively made by just the top ten banks is staggering.

Mr. Godwin Emefiele, the Governor of Central Bank of Nigeria

You know those debit alerts you receive every month (or sometimes a couple times a month) about some “SMS” or “Maintenance” charge from your bank? Those seemingly pointless deductions your bank carries out on your account? Well, the top ten banks in Nigeria collectively made N138 billion from those “extra charges,” up 26 percent from N109 billion in 2015.

Almost every banked Nigerian complains bitterly about these charges but the sheer size collectively made by just the top ten banks is staggering. Some of the charges include: ATM card issuance, replacement and renewal charges; Hardware token and soft token issuance charges; ATM withdrawal charges; Funds transfer charges; bulk payments such as salary; and SMS alerts.

According to Oju Ogubunka, President of the Bank Customers Association of Nigeria (BCAN), banks can get away with replicating so many charges because there is little or no regulation of how banks charge their customers for these things, adding that it is also detrimental to the adoption of e-payment channels.

“The hiked cost will impact negatively on wider adoption of e-payments in the country. Banks, at the detriment of consumers, will further enrich themselves. Non e-payment channels that are cheaper are likely to witness higher patronage with some obvious implications,” says Ogubunka, according to a Vanguard report.

ALSO READ: We all don't care about "digital banking" as much as we think we do

The 11 percent decline in the amount of e-payment transactions in the month of April seems to lend credence to this argument — March was a record month in terms of e-payment transaction growth.

Just so you know how much money banks are making from these e-payment charges, they make up 30 percent of all monies made by banks on fees and commission, according to a Vanguard report. 30 percent!

Leading the way for the other banks is United Bank for Africa (UBA) — the Tony Elumelu-owned bank made N35 billion in e-payment fees in 2016, followed by FBN Holdings (N27.2 billion) and Access Bank (N21.3 billion).

No bank had better growth than Access Bank though. The Herbet Wigwe-led lender grew 446 percent from N3.9 billion in 2015 to N21.3 billion in 2016.

Many a time, companies in the private sector take advantage of loopholes and the failure of regulators to do their jobs and this is just one example. If the Central Bank of Nigeria (CBN) fails to regulate its stipulated charges, it only makes sense that banks would take advantage of it to enrich themselves.

In the end, Mr. Ogubunka does have a point — lax regulation like this will only serve to hurt the adoption of digital banking in the long run.

folarin okunola

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