Politics of ATM Charges Withdrawal

The Bankers’ Committee’s decision to suspend all charges accruing from the use of Automated Teller Machines (ATMs) of other banks may have adverse effect on the industry if the cost of removing the charges is not sustainable on the long run.
Investigations revealed that the so called big banks which incur huge costs of deploying the ATMs; cash management; maintaining the ATMs; and cost switching may be worst hit.
The Bankers’ Committee, a regular and compulsory meeting between the Central Bank of Nigeria (CBN) and all the managing directors of commercial banks operating in Nigeria had recently arm-twisted big banks into accepting to withdraw interbank charges on ATMs.
Smaller banks with fewer ATM networks had allegedly ganged up to coerce the big banks to open up their ATMs networks for their customers at no charges in the name of financial inclusion.
The big banks reportedly swallowed bait in order not to be seen as a clog in the wheel of financial inclusion programme.
However,  as new regime of nil transactions for cash withdrawals from interbank approaches, some banks are carefully evaluating the scenario that will play out in the new dispensation.
The emerging scenario may lead to the big banks subsidizing the smaller banks with limited ATM deployments and networks.
A medium sized commercial bank will immediately have access to a large pool of ATMs without incurring the associated cost of same deployment by the big ones.
On the long run, the parasitic relationship may have adverse effects on profitability of big banks because of the partners in the ecosystem must be paid for services rendered during the transaction.
A smart big bank however may adopt a close loop system where only cards issued by it can be used on its ATMs. Other ATMs cards from other banks will not be accepted.
The Bankers’ Committee had onSunday  said the decision earlier reached to suspend all charges accruing from the use of Automated Teller Machines  of other banks would be implemented from Monday, December 17.
Mallam Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria (CBN) and chairman of the Bankers’ Committee, revealed this while addressing journalists at the end of the fourth annual Bankers’ Committee retreat held in Calabar.
The committee had at its November meeting said the move was partly aimed at enhancing financial inclusion and encouraging ATM usage in line with CBN’s cashless programme.
Sanusi explained that the delay in implementing the policy was to allow banks configure their information technology infrastructure for the effective implementation of the policy.
“We have agreed on a final date of Monday, 17 December, 2012 for the kick-off when every bank will remove the charges. We allowed some time for banks that have not configured their IT to do so and stop charging and hopefully by 17th of December, you are not going to have any customer pay additional charges,” he said.