•Cardoso and Tinubu
As Nigerians navigate a period of severe economic strain, a growing concern has emerged: the mounting cumulative cost of electronic banking.
While individual bank charges are often backed by policy, their combined impact is eroding the disposable income of households and small businesses, fueling public frustration and raising fears that excessive fees may undermine the nation’s push toward a cashless economy, reports Saturday Independent.
As millions of Nigerians struggle to cope with persistent inflation, rising transport fares, higher electricity tariffs and declining purchasing power, a fresh burden has emerged to further strain already stretched household finances: the growing number of charges deducted by banks on almost every financial transaction.
From the First Instant Payment (FIP) transfer fee and the Interswitch (ISW) processing charge to the Electronic Money Transfer Levy (EMTL) — popularly known as stamp duty — the list of levies continues. Customers are also subject to the UPSC charge, Account Maintenance Fees (AMF), ATM withdrawal fees, SMS alert charges, card maintenance fees and cash handling charges. Many users argue that these cumulative deductions have become a major drain on their disposable income.
While most of these charges are backed by regulations from the Central Bank of Nigeria (CBN), payment infrastructure providers or government policies, analysts argue that their combined impact is becoming increasingly difficult to bear for millions of Nigerians already battling one of the country’s toughest economic periods in decades.
This growing public frustration has triggered widespread criticism on social media, with many bank customers questioning why electronic banking is becoming more expensive despite Nigeria’s aggressive push towards a cashless economy and financial inclusion.
For many salary earners, traders and small business operators who rely heavily on electronic transfers, every transaction now attracts multiple deductions, making digital banking considerably more expensive than it was just a few years ago.
Industry experts explain that some deductions are frequently misunderstood because customers receive debit alerts featuring unfamiliar abbreviations.
The FIP charge, for instance, is the standard electronic transfer fee for inter-bank transfers conducted through the Nigeria Inter-Bank Settlement System (NIBSS) instant payment platform. Similarly, ISW charges relate to transactions processed through the Interswitch payment infrastructure. Under the CBN’s Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, electronic transfers between N5,000 and N50,000 attract a maximum charge of N10, while transfers above N50,000 attract a maximum fee of N50.
The EMTL, or stamp duty, is a statutory government levy of N50 deducted on eligible electronic transfers of N10,000 and above.
Customers also pay AMF on current accounts to cover ledger maintenance and administrative services; savings accounts are generally exempt, except under specific circumstances involving heavy debit activity.
In addition, banks deduct recurring SMS alert charges, periodic card maintenance fees, ATM withdrawal charges for using other banks’ machines, and card replacement fees. Large cash withdrawals and deposits also attract processing charges; individual withdrawals exceeding N500,000 attract a three per cent processing fee, while deposits above the threshold attract a two per cent charge.
While each of these deductions may appear relatively insignificant in isolation, analysts argue that their cumulative impact has become increasingly burdensome, particularly for customers performing numerous transactions every month.
Customers Express Frustration
Many bank customers report that reconciling their account balances has become more difficult because multiple charges often accompany a single transaction.
Some have expressed confusion over newer deductions labelled UPSC, FIP and ISW, suggesting that banks should provide clearer explanations before introducing new transaction descriptions. For small businesses, these deductions have become yet another rising operating cost.
Lagos-based trader Funke Adeyemi noted that the numerous charges substantially reduce her monthly earnings. “Virtually every transfer attracts one deduction or another. When you calculate everything at the end of the month, it amounts to several thousands of naira. It may appear small individually, but together they take a significant portion of our income,” she lamented.
Analysts Seek Review
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), believes regulators should periodically reassess banking charges in light of prevailing economic realities.
According to him, with Nigerians grappling with inflation and reduced purchasing power, it is necessary to evaluate whether the cumulative burden of these charges remains sustainable. “The issue is not necessarily whether each charge is legal or justified; the concern is the cumulative burden,” Yusuf said.
Johnson Chukwu, Managing Director of Cowry Asset Management Limited, stressed the need for greater transparency.
“When customers understand why a charge exists and who receives it, public confidence improves. A lack of adequate communication creates suspicion, even where the deductions are legitimate,” he added.
Digital Economy at Risk
Bismarck Rewane, Managing Director of Financial Derivatives Company, warned that increasing transaction costs could undermine Nigeria’s digital payment ecosystem. “The objective of every modern payment system should be to make digital transactions cheaper, faster and more convenient. If charges become excessive, customers may revert to cash transactions, which defeats the objective of the cashless policy,” he noted.
Financial Inclusion Under Pressure
While Nigeria has invested heavily in expanding financial inclusion, analysts warn that if banking is perceived as too expensive, some users may reduce transaction volumes or return to cash.
Micro, small and medium enterprises (MSMEs) are considered the hardest hit, as repeated deductions significantly reduce their thin profit margins.
Need for Better Communication and Policy Review
Beyond reviewing existing charges, experts argue that banks must improve customer education.
Many customers remain unaware that some deductions are statutory government levies rather than bank revenue. Industry stakeholders recommend that banks issue clearer notifications and provide simple explanations via mobile applications, websites and other communication channels to improve public trust.
Consumer advocates are calling on the CBN and the Bankers’ Committee to undertake a comprehensive review of banking charges.
Some analysts suggest introducing discounted transaction fees for low-value transfers, reviewing recurring maintenance charges and harmonising deductions to reduce the overall cost borne by customers.
As the debate continues, experts insist that making electronic banking more affordable, transparent and user-friendly is essential for the success of Nigeria’s financial inclusion and cashless policy objectives.
