The Central Bank of Nigeria’s recent decision to raise ATM withdrawal charges has raised fresh concerns about the country’s financial policies and their impact on everyday banking. Over the years, the CBN has promoted financial inclusion, urging Nigerians to embrace digital banking, mobile payments, and cashless transactions. However, its latest directive contradicts this push, potentially forcing customers back into physical bank services and increasing reliance on POS operators. For years, the CBN encouraged financial institutions to expand digital services, reducing dependence on physical branches.
It introduced policies that supported cashless transactions, streamlined interbank transfers, and incentivised mobile banking. Nigerians, in response, adapted to these changes, increasingly relying on ATMs, mobile apps, and POS services to handle transactions. But the new policy, which imposes higher fees on withdrawals from non-bank ATMs, threatens to undo this progress. Under the new rules set to effect from March 1, 2025, withdrawals from ATMs within a customer’s bank branch will remain free. However, using another bank’s ATM will now attract a charge of ₦100 per ₦20,000 withdrawn at on-site ATMs and up to ₦500 at off-site locations such as malls and petrol stations.
Its impact on customers and traditional banking halls.
Removing the previous allowance for three free interbank machine withdrawals per month adds to the financial burden on customers, making transactions significantly more expensive. The new withdrawal charges could drive more Nigerians back to the traditional bank system, creating the congestion that digital transaction was designed to eliminate. With customers facing hefty fees for using off-site ATMs, many will prefer to withdraw large sums at once, increasing pressure on bank branches. This would likely lead to long queues, delays, and frustration—an experience that online services were supposed to resolve.
But, the alternative for those who cannot afford to pay higher withdrawal fees is to depend more on POS operators. However, this comes with its complications. As demand for POS services rises, operators will likely increase their service charges, making cash transactions even more expensive for everyday users, which were experienced under the formal CBN governor, Godwin Emefiele. With Inflation already impacting household incomes, these additional costs will add to the financial strain of millions of Nigerians. This inconsistent policy raises broader concerns about its impact on Nigeria’s financial inclusion goals.
Economic implications and the threat to financial inclusion.
Two months ago, the Nigerian government, through the Central Bank, implemented a ₦50 levy on mobile transactions exceeding ₦10,000. This charge applies to both senders and recipients of transactions conducted via platforms like OPay, Moniepoint, and Kuda. For a country still working to bring more people into the formal banking sector, imposing higher withdrawal fees risks alienating low-income earners and those in rural areas. Many Nigerians have only recently begun to trust formal banking services, and policies that make withdrawals costlier could discourage further adoption. Furthermore, the ripple effects extend beyond individual banking habits.
Small businesses that rely on cash transactions may struggle with increased withdrawal costs, while merchants accepting POS payments may be forced to adjust pricing to cover higher operational expenses. As a solution, if the goal is to improve bank efficiency, the CBN should consider alternative measures rather than imposing additional costs on customers. One solution would be to encourage competition among banks by increasing the number of ATMs in underserved areas. Many Nigerians are forced to use machines from other banks simply because their bank has limited machines.
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Expanding the machine availability would reduce interbank withdrawals and lessen the financial burden on customers. Additionally, reintroducing the three free interbank withdrawals per month would help maintain a balance between convenience and Revenue generation for banks. Another critical aspect is strengthening the digital banking infrastructure. Failed transactions, delays, and high mobile banking fees undermine trust in digital financial services. If Nigerians are expected to rely more on digital transactions, the CBN must ensure that the system is reliable, efficient, and affordable.