••A Premium Times investigation reveals the cumulative impact of seemingly small deductions, from transfer fees to cybersecurity levies, pushing Nigerians towards neobanks as traditional institutions prioritize charges over customer relief.
What appears as mere kobo deductions with each banking transaction is silently but steadily eroding the financial well-being of millions of Nigerians, a Premium Times investigation reveals. From Abuja-based school teacher Ozovehe Blessing, who saw nearly 10% vanish on a simple N5,000 transfer and withdrawal for her brother, to Lagos traders processing multiple daily transactions, the accumulation of fees – often hidden or seemingly insignificant individually – creates a significant and often unaccounted-for burden on consumers already battling a biting inflationary climate.
Nigerians have long voiced their frustration over this “death by a thousand cuts” of banking charges, encompassing everything from ATM withdrawals and electronic fund transfers to card maintenance and the newly introduced cybersecurity levy. As detailed in a Premium Times report, the recent Central Bank of Nigeria (CBN) directives on ATM fees, effective February 11th, have further exacerbated the situation. Customers now face a N100 charge for every N20,000 withdrawn from ATMs not located within a bank’s branch premises, with off-site withdrawals potentially incurring a total cost of N600 per N20,000 due to added surcharges. While withdrawals from one’s own bank’s ATMs remain free, the increasing reliance on off-site machines in daily life makes this a limited consolation.
Beyond ATM costs, debit cards linked to savings accounts attract a quarterly maintenance fee of N50, while obtaining or renewing a credit card costs N1,000. For internet banking users requiring hardware tokens for enhanced security, an upfront cost of up to N2,500 further adds to the expense of accessing and managing their own funds.
The recent controversy surrounding the cybersecurity levy, initially proposed at 0.5% on all electronic transactions, highlighted the public’s sensitivity to additional deductions. While the CBN eventually revised this to a more palatable 0.005% following an outcry and intervention by the House of Representatives, it still represents another layer in the stack of fees Nigerians face. As the Premium Times analysis points out, even a seemingly small levy of N0.50 on a N10,000 transfer or N50 on a transaction exceeding N1 million, when combined with existing transfer fees (ranging from N10 to N50 depending on the amount), VAT at 7.5%, USSD charges of N6.98, SMS alerts costing N6, and stamp duties on eligible transactions, paints a picture of a financial ecosystem where simply moving and managing money incurs a constant stream of deductions.
The impact is particularly felt by small business owners like Olalekan Adewale, an Abuja-based frozen foods trader, who, as highlighted by Premium Times, loses nearly N85 on each N500,000 transfer to suppliers due to the compounding effect of these charges. This constant erosion of capital directly impacts their already thin profit margins and discourages the adoption of digital payment methods.
In this environment of escalating and often opaque charges, a significant trend is emerging, as noted by the Premium Times investigation: the rise of neobanks.
These agile, technology-driven financial institutions are increasingly becoming a lifeline for Nigerians, from tech-savvy youth to market traders, offering significantly lower transaction fees and more transparent service. Platforms like Moniepoint, as reported by Premium Times, charge a fraction of the fees levied by traditional banks for withdrawals and transfers, leading to a noticeable shift in consumer behavior. Traders like Adetifa Kemi in Abuja are opting for neobank-operated POS machines to avoid the exorbitant charges of traditional POS agents, while individuals like Mr. Adewale are drastically reducing their visits to traditional bank branches in favor of the cheaper and more efficient services offered by neobanks.
Economist Paul Alaje, speaking to Premium Times, argues that Nigeria’s traditional banking model is “outdated,” prioritizing “moneykeeping and charges on deposits” over lending and facilitating seamless transactions. He predicts a future where fintech companies, with their customer-centric approach, will increasingly challenge and potentially surpass traditional banks. Alaje further highlights a fundamental flaw: the difficulty faced by SMEs in accessing loans while banks seemingly focus on extracting fees from depositors to sustain their operational overheads.
The Premium Times report underscores a critical question for Nigerians: is the convenience of traditional banking worth the ever-increasing cost? As the cumulative impact of these seemingly minor deductions continues to bite, pushing individuals and businesses towards alternative financial solutions, traditional banks face a growing imperative to re-evaluate their fee structures and prioritize customer value over relentless charges. The silent drain on Nigerian wallets, as meticulously documented by Premium Times, is forcing a reckoning within the nation’s financial landscape.
