Nigerian commercial banks suspend the use of debit cards at overseas ATM cashpoint machines

NIGERIAN commercial banks have suspended all cash withdrawals from overseas automated teller machines (ATM) except for customers whose cards are linked to domiciliary accounts and funded locally in what looks like a drive to conserve foreign exchange.

 

In 2015 when Nigeria's economy went into recession, banks stopped their customers from making cash withdrawals abroad, pointing out that they had no foreign exchange to fund such service. This happened after the Central Bank of Nigeria (CBN) reduced the amount of foreign exchange it sold to banks, blaming a fall in the price of crude oil and capital flight, which combined to create a dollar shortage.

 

Over the last year, however, some sort of normality has returned, with Nigerian depositors allowed to make cash withdrawals while abroad. Banks have also been encouraging travellers to open and fund dollar accounts, which aside having no spending limits, provide them the flexibility to spend at all times.

 

Nigerian lenders are also raising their card spending limits on point of sale (Pos) and online card transactions abroad, an indication of increased dollar liquidity and rising exchange rate stability. Over the weekend, Guaranty Trust Bank and First City Monument Bank raised their monthly card spending limits on overseas Pos and online transactions from to 3,000 from $1,000 and to $5,000 from $2,000 respectively.

 

However, the measure also contained a warning that international cash withdrawals have been suspended. This means that Nigerian customers who do not have domiciliary accounts will not be allowed to make withdrawals from ATMs while abroad.

 

Guaranty Trust Bank sent an email to its customers saying: “We would like to inform you that our monthly spending limit on your GTBank naira MasterCard has been reviewed to $3,000 from $1,000 for your international online and Pos transactions. Kindly note that international ATM cash withdrawal is still restricted.”

 

First City Monument Bank added: “Clothing, shoes, electronics, books, or whatever your needs are, our FCMB naira debit card gives you instant full access to $5,000 monthly to shop online."

 

About two years ago, during the height of the dollar scarcity, GT Bank limited monthly transactions on Pos and online transactions using cards to $100, £90, €130 and C$360. At the time, the prevailing dollar scarcity made it difficult for travellers to pay their hotel bills and make reservations and other transactions, using their debit cards.

 

Many banks which announced the suspension of their overseas ATM card services in October 2016 have all lifted the suspension and raised monthly transaction volumes for customers on foreign currency-denominated deals, including those conducted on Pos machines and online. The dynamics changed in April last year when the CBN introduced the Investors and Exporters Forex Window which has so far attracted over $53.9bn to the economy.

 

These dollar inflows have helped to strengthen the naira against the greenback and brought stability to the forex market. The forex window has largely removed the pressures from the parallel market rate which now, sometimes, trades at a discount to the Nigerian Autonomous Foreign Exchange rate.

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