An increasing number of bank customers in Nigeria have expressed their displeasure over what they describe as exorbitant transaction fees, posing a danger to the country’s financial inclusion efforts.
According to BusinessDay’s study of top Nigerian banks’ 2021 financial statements, fees and commission income increased last year.
Many customers have taken to Twitter to express their dissatisfaction with “outrageous” costs debited from their various accounts.
“I will liken the various deductions in every transaction done with our banks as multiple tragedies on Nigerians trying to survive this ugly economic situation,” a bank customer told journalists.
During his presentation, he described two of the country’s top banks as having the most hostile bankers.
“Late February, I had to close my current account due to the unnecessary deductions; even the bank’s staff could not explain,” the customer said.
“I discovered that after a transaction, I was charged ‘transfer commission’ of N20.00; I was also charged telco plus VAT N7.5 and USSD telco session charge, all in one transaction,” another customer, who lives in Ikorodu, said.
On April 1, 2022, a middle-aged woman from Festac, Lagos, revealed how she was charged N9.98 and N133.03 with no indication of what the charges were for.
“The excessive charges will slow down the rate of financial inclusion as customers will avoid operating a bank account. It’s been established by several surveys that customers are very sensitive to charges,” Ayodeji Ebo, an investment professional, said.
In the short to medium future, he believes that low transaction fees will be a big selling factor for banks, as clients will shift to banks with the lowest fees.
The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission published a joint announcement on March 16, 2021, instructing financial service providers to charge N6.98 per transaction for USSD services.
Another Twitter user said that a bank had been billing him for SMS notifications for over six years despite the fact that he had not signed up for the program.
“I have complained to the point that I am tired. I did not subscribe to SMS alerts and I don’t receive any SMS alerts whatsoever but still get charged for it anyways,” he said.
Non-interest revenue increased in several banks’ financial performance for the year ended December 31, 2021, especially among the systemically important institutions.
Non-interest income is earned by banks and financial institutions through non-core operations that contribute significantly to their total profitability. It includes, among other things, loan processing costs, late payment fees, credit card fees, service fees, and penalties.
According to Guaranty Trust Holding Company Plc’s annual report, non-interest income, which includes fees and commissions, net trading gains, and other income, increased by 17.1 percent to N180.9 billion in 2021 compared to 2020.
The increase in non-interest income was mostly due to a 39.4 percent increase in fees and commissions, a 9.9 percent increase in other income, and an 8.6 percent fall in net trading gains, according to the bank.
In 2021, Access Bank earned N118.59 billion in net fee and commission income, up 26.73 percent from N93.57 billion in 2020.
Non-interest income at Zenith Bank increased by 23% from N251.7 billion in 2020 to N309 billion in 2021.
Fees and commission income for FBN Holdings, the holding company for First Bank of Nigeria, increased by 18.47 percent to N103.77 billion in the first nine months of 2021 from N87.59 billion in the same period of 2020.
According to United Bank for Africa’s annual report, net fees and commission income increased to N158.64 billion in 2021 from N126.94 billion in 2020.
According to the CBN, a bank is anticipated to charge N10 for transactions under N5,000, N25 for transfers between N5,000 and N50,000, and N50 for transfers over N50,000.
However, some banks charge rates that are greater than those set by the CBN. According to newsmen, one of the tier two banks charges N26.88 for transactions of N10,000 to N50,000 and N53.75 for payments of more than N50,000.
“To worsen it, these deductions are taken from both the sender and receiver. The CBN should also tell Nigerians who is supposed to pay the charge of any transfer – is it the sender or receiver? But our banks and telcos are currently taking it from both sides,” a customer said.
He added, “The problem here is that the regulator may not be aware of these deductions, as the bankers claim. Also, the government programme on financial inclusion is being gradually suffocated by these multiple deductions, especially now that the banks have no interest to add to any savings. And the issue of mobile banking is also being seriously threatened.
“The CBN should come in at this time to curb these deductions in order to bring sanity to our banking sector.”