CBN slaps new fees on Nigerians to revive ATMs, curb POS money agents

The Central Bank of Nigeria (CBN) has announced new Automated Teller Machine (ATM) transaction fees, set to take effect from March 1, 2025.

Under the revised structure, withdrawals made at a customer’s own bank ATM will remain free, but those from other banks, when done at those banks, will attract a fee of N100 for every N20,000 withdrawn. The CBN scrapped the provision that previously allowed customers three free monthly withdrawals from other banks’ ATMs.

Where customers use ATMs of banks other than their own, at an “off-site” or through a third-party vendor, a withdrawal would incur a charge of N100 plus an additional surcharge not exceeding N500 for N20,000.

Fees for international withdrawals using debit and credit cards will reflect the exact charges imposed by the international acquirer.

ATM woes

The policy is aimed at reviving banks’ dying ATMs and countering the rise of mobile money agents (POS operators) as competitors to traditional banks. A CBN memo to banks, signed by John Onojah, CBN’s acting director of the Financial Policy and Regulation Department, says that the move aims to improve efficiency and boost ATM deployment nationwide.

“In response to rising costs and the need to improve the efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020,” the memo said.

Over two million mobile money agents handle most daily transactions via point-of-sale devices across Nigeria, leaving banks starved of cash. These agents fill the gap left by frequently empty ATMs, especially as nearly half of Nigerian adults didn’t use regulated financial services in 2023, according to Enhancing Financial Innovation & Access. Nigeria also faces an ATM shortage—just 14 per 100,000 adults compared to Egypt’s 31—and many machines are often empty, according to the IMF.

Mobile money agents, who fill this gap, are found on nearly every street corner. They have grown rapidly due to high youth unemployment, the rise of fintech companies like Opay, Paga, and Moniepoint providing affordable POS terminals, and Nigeria’s persistent cash dependency. This dependency worsened after a failed currency redesign two years ago, which caused naira shortages and unreliable bank transfers.

Becoming an agent is easy: all it takes is a POS terminal, a busy location, an umbrella, and some cash.

They agents target cash-heavy businesses that would typically deposit funds in banks. While they get the cash, businesses get their money credited to accounts at higher fees than bank deposit rates. This has turned agents—buying naira from markets and gas stations—into competitors rather than allies of traditional banks.

While the CBN’s 2016 policy aimed to boost financial inclusion by promoting mobile agents, regulators now worry they’re undermining the formal banking system, weakening banks’ role in cash distribution and making it difficult for the CBN to control inflation and stabilize the naira.

“Having excess cash outside the banking system would render impotent policy issues on the cash reserve ratio and lending rate,” said Ijeoma Kalu, professor of economics at the University of Port Harcourt told Bloomberg.

Some analysts believe that’s why the bank’s effort to increase interest rate is not effective in fighting inflation. The CBN has raised interest rate to 27.5% but inflation soared to 34.8% in December 2024.

Roughly N4 trillion or 93% of total currency in circulation sits outside of banks as of September, according to central bank data. That’s up from 81% in September 2019.

“All that cash that would have come into the system for us to process and re-issue, are being held by these POS operators — we discovered it and we are working on it,” Olayemi Solaja, the CBN’s acting director of currency operations, told Bloomberg.

Financial exclusion and inflation

Now the central bank is trying to crack down on agents, although the bank said it is treading with caution, so it won’t “jeopardize our financial inclusion advocacy.”

In a December 3, 2024 circular, it threatened to sanction banks if they don’t fill their ATMs.

In the new memo to banks indicating increased fees, the CBN said, “This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service. Accordingly, banks and other financial institutions are advised to apply the following fees with effect from March 1, 2025.”

Critics argue that new charges is bound to increase the financial burden on Nigerians already grappling with high inflation and a cost-of-living crisis. “Despite the untold hardships they subjected people to, they still don’t seem to care much about the poor,” said Umar, Mai-Masara, wrote on X.

Others argue that as cash withdrawals become more expensive, many Nigerians may turn even more to mobile money agents, who often charge competitive rates and offer convenience unmatched by traditional banks. This shift could further erode the CBN’s grip on monetary policy, as more transactions occur outside the formal banking system.

Additionally, the policy risks deepening financial exclusion, particularly for low-income Nigerians who rely heavily on cash and have limited access to digital banking services. The new charges may discourage regular ATM use, pushing vulnerable populations toward informal channels that lack regulatory oversight.

The CBN claims the revised fees will ensure fairness in ATM service costs and attract more investments in the sector.

This article includes details from previous Bloomberg reporting.