More Crisis As Nigerian Banks suspend ATM card usage abroad, online transactions

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Nigerian Banks


Banks
based in Nigeria have begun suspending their Automated Teller Machine
cards (debit and credit) from working overseas as dollar scarcity
continues to hit the economy badly.

Stanbic IBTC Bank,
Standard Chartered Bank Nigeria and Guaranty Trust Bank on Friday
announced the suspension of their overseas ATM card services.

Also
suspended by the banks are online transactions priced in foreign
currencies. This means that customers of the banks will no longer be
able to use their debit or credit cards to make online transactions that
are denominated in dollars, euros, pounds sterling and other foreign
currencies.

In a note to its customers on Friday
entitled: ‘Suspension of international transactions on naira debit
cards’, Standard Chartered Bank Nigeria said, “Please be informed that
effective immediately, your naira denominated debit cards will no longer
be functional for international transactions.

“This is
due to the current volatility in the foreign exchange market. Your
naira-denominated debit cards can only be used for local transactions at
Point of Sale terminals, Automated Teller Machines and online for
Nigerian retailers.”

In a text message to its customers
on Friday, Stanbic IBTC Bank similarly said, “Dear customer, kindly
note that effective October 18, 2016, your ability to carry out
transactions priced in foreign currency using our naira debit and credit
cards will be suspended. We apologise for any inconvenience in this
regard.”

Both Stanbic IBTC Bank and Standard Chartered
Bank Nigeria advised customers seeking to carry out transactions
denominated in foreign exchange to apply for dollar or pounds sterling
debit credit cards. According to them, the dollar or pounds sterling
debit or credit cards will be linked to the customers’ domiciliary
accounts.

GTBank also announced the suspension of the
ATM cash withdrawal service abroad. The lender also slashed its monthly
ATM forex transactions to $100.

In a notice to
customers on Friday entitled: ‘Review of the international spending
limit on your naira Master Card’, the bank stated, “We write to inform
you of the monthly spending limits currently applicable when using your
GTBank naira Master Card for international payments via PoS and online.
Previous monthly limit via PoS and online was $250; the new monthly
limit via PoS and online is now $100. Kindly note that ATM cash
withdrawal on your naira MasterCard is now only available in Nigeria.”

The
development will make students studying in the United Kingdom, United
States, Canada, Ukraine and other parts of the world to face more
challenges getting their monthly stipends from their parents.

Most of the students had relied on the ATM card withdrawal to get their monthly stipends from their parents before now.

This
means customers seeking to do foreign transactions will have to open
domiciliary accounts and fund same with dollars, pounds or euros
purchased from the parallel market at the prevailing exchange rates.

Although
other banks have yet to announce the suspension of ATM card services
abroad, findings by our correspondent showed that many lenders had
reduced drastically the amount that customers could withdraw via ATMs
abroad.

This is despite the fact that the banks have in
the past few months reduced the monthly total amount of
forex-denominated transactions that customers can do, using their naira
debit or credit cards via ATMs and PoS terminals abroad as well as
online payments or transactions.

As of last week,
findings showed that some banks had slashed their daily ATM withdrawal
limit abroad from the $300 advised by the Central Bank of Nigeria’s
Bankers Committee to $100 due to their inability to source for dollars
to fund the transactions.

Unconfirmed sources said some banks had reduced their monthly ATM withdrawal limit abroad to $100.

Top
banking officials close to the development told our correspondent under
the condition of anonymity that banks were increasingly finding it
difficult to fund their foreign-currency denominated services,
especially online forex transactions and overseas ATM withdrawals, as
well as PoS usage overseas by customers.

A top official
of Deposit Money Bank, who spoke on the condition of anonymity, told
our correspondent on Sunday, “We have to stop the services. Formerly, we
were sourcing forex at high prices and we were selling same to
customers at similarly high prices. But the situation is now tense; the
dollar scarcity has assumed a new dimension.

“This is
coupled with the fact that some bank customers are using the platforms
to do round-tripping. It is high time we stopped it.”

The
decision by some banks to suspend overseas ATM card services and online
forex transactions came barely one week after the CBN, through the
Bankers’ Committee, raised concerns about what it called the
indiscriminate and suspicious manner in which some bank customers were
spending dollars and other foreign currencies abroad through their naira
debit cards.

Consequently, the regulator said it had
concluded that bank customers who spent above the $50,000 annual forex
limit it imposed would be barred from the nation’s forex market.

The
Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, stated this
after the 329th Bankers’ Committee meeting held at the apex bank’s
office in Lagos on Wednesday.

She said, “In the CBN’s
move to manage the demand for forex, there was a rule that was put in
place that people were not allowed to withdraw more than $50,000
annually on their naira debit cards.

“For a while, the
policy has been abused by bank customers, and the CBN has not taken any
step to that effect. We have decided to take the step now to enforce the
rule. So, we want members of the public to remember that that rule is
in place.

“All your accounts are linked to a particular
Bank Verification Number. Now, that the BVN only allows you to withdraw
only $50,000 per annum, if people continue to breach that rule, they
will lose access to forex market.”

Dollar scarcity has been ravaging the economy after the price of crude oil, Nigeria’s main forex earner.

It crashed from $110 per barrel to around $44 per barrel from June 2014.

The nation’s foreign exchange reserves have been depleting since then.

On Wednesday, the country’s external reserves hit an 11-year low of $24.21bn, the latest data posted on the CBN website showed.

This
means a limited amount of dollars will be available at the official
interbank spot market, fuelling concerns over another round of
depreciation of the naira.

The foreign exchange reserves fell by $600m in two weeks before shedding $1bn in four weeks, the CBN statistics showed.

An expert at Ernst and Young, Mr. Bisi Sanda, lamented on the dollar pressure on the economy.

He said the Federal Government needed political will to address the issues fuelling dollar scarcity on the economy.

He
said, “The issue of dollar is very important to the economy. It is
predicated on the fact that we are a dollar-denominated economy. It
appears the government is still begging issues as far as the
import-dependent state of our economy is concerned.

“We
need to fix issues, we need to go back to the drawing board. The CBN
said between 2010 and 2016, a total of $11bn was sold to the Bureaux De
Change annually. We need to plug leakages in this area.”

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