The Central Bank of Nigeria (CBN) cash deposit order has continued to generate heated debates with many stakeholders warning of clear and present dangers, report Ibrahim Apekhade Yusuf and Charles Okonji

Wondering why the new policy regime announced by the apex bank on cash deposit is generating hoopla? A penny for your thought, nobody really likes to lose money under any guise! This sentiments clearly resonates with many people out there who have raised their voices above the din while expressing their misgivings over the CBN policy.

It would be recalled that the apex bank had through a circular on Sept. 17 stated that from Sept. 18 transactions will attract three per cent processing fees for withdrawal and two per cent processing fees for lodgement of amounts above N500, 000 for individual and N3million for corporate accounts with six pilot states including the FCT, namely: Lagos, Ogun, Kano, Abia, Anambra and Rivers states, while the nationwide implementation of the cashless policy will begin by March 2020.

Not at ease with policy

Business owners and operators in the informal sector of the economy have expressed concern over the fate of small businesses, saying the implementation of the cashless policy as announced by the CBN, which has imposed charges on deposits and withdrawals on banks’ customers.

Speaking with a cross-section of entrepreneurs over the weekend, they said the new policy regime by the apex bank was tantamount to extortion.

Nelson Ejiofor, who owns a chain of stores that deals on paints and building materials in Lagos, said, the policy was not well thought out.

According to him, the whole ideal of cashless policy, however, noble, was now being eroded with the stringent measures being introduced by the CBN.

“Initially, when they introduced the policy, I was all for it. But with the additional cost it will now impose on businesses, especially SMEs, I don’t think it is in order.”

Ejiofor, who said, he has since put a point of sales (POS) payment in place in some of his stores, however, noted that due to poor technology interface there are times customers are unable to make payment through POS, and have to resort to paying in cash.Echoing similar sentiments, Miss. Asabe Mikail, who is a major distributor with some of telecommunication accessories’ companies, said the policy didn’t have consideration for traders.

“The most annoying thing is that even in the so-called cashless transactions, these transactions attract charges too, even the Unstructured Supplementary Service Data (USSD) transactions attract charges, so is it not extortion?” she queried.

Anxiety over policy

Some stakeholders are of the opinion that the policy itself is not a bad one, but the timing is the problem considering the present state of infrastructure in the country coupled with the inefficiency of information technology.

However, the nationwide implementation of the policy is expected to begin by March 2020.

According to the Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, the latest cashless policy announced by the CBN Governor has generated understandable concern by a cross section of Nigerians.

Ajayi-Kadiri noted that there was no consultation, sensitisation, explanation or justifiable rationale for the introduction, as the policy was presented as the only way to achieve the much desired cashless or less cash economy.

He said, “The explanation given later was more of empathising with the banking public about the “inevitable hardship” the latest cashless policy would impose on them. It would also appear that the applicable percentages did not take cognizance of the already existing and long standing charges on withdrawals.

“Even though I agree with the CBN governor that it is in the public interest to promote an efficient payment system via the cashless policy, there is need to examine the route you choose to achieve that objective. I think this is the crux of the matter and appears to be a recurring decimal in the administration of our monetary policy interventions.

“There are clearly more than one road to the market. In this particular instance the CBN has at least, two options to achieve the latest progression towards the desired cashless economy to penalise non-compliance or to incentivise compliance. It would appear that the CBN has chosen the former.”

The DG reiterated that most of the small and medium scale industries operate at this level as well as those in the informal sector.

“There is also the concern over the inadequacy of the needed cashless economy infrastructure, which the Deposit Money Banks are not doing enough to upscale or do so at a disproportionate additional cost to the users. I will suggest that the CBN should further think through on what other options available to achieve the cashless policy, paying particular attention to the use of the carrot other than the stick,” Ajayi-Kadiri emphasised.

In the view of the Director General of Lagos Chambers Of Commerce and Industry (LCCI), Muda Yusuf, the cashless policy is no doubt a commendable initiative which has impacted significantly on the Nigerian economy.

The LCCI boss, who expressed a contrary opinion, said financial institutions should continuously strive to raise the level of confidence of citizens in the electronic payment platforms, adding that it will entail the reduction in ATM fraud, internet fraud and other fraudulent activities on the various electronic platforms.

Yusuf pointed out that there ought to be more incentives to encourage the citizens to use electronic payment systems, rather than penalties.

“The transitioning process requires robust enlightenment, consultations and stakeholders engagements. This is important because the economy is still over 50 percent informal and the literacy level in the country is still very low. The latest circular by the Central Bank of Nigeria should have given a much longer notice to economic players. The notice given for the effective date is extremely short. The circular was dated 17th of September while the effective date was 18th of September. This is just a notice of one day. This would have short term disruptive effects.”

Lending his voice to the issue, the Chairman, Lagos State Chapter of National Association of Small and Medium Enterprise (NASME), Mr. Solomon Aderoju expressed that the CBN proposed sanction on the defaulters for any transaction by individuals beyond N500, 000 to attract 3percent charges and that of cooperate bodies beyond N5 million to attract 5 percent would not affect NASME members negatively.

“To me I think the National Assembly is on it to prevail on CBN for a longer window before its full implementation, though my members are concerned, but to a very large extent, it would not affect us much because our business is at the micro level. I don’t think any of my members can carry up to N500,000 at any point in time for a transaction because of the size of our business, but the policy is to support the cashless society that the government has been preaching so that society would be less vulnerable in terms of rubbery, and if in case of rubbery at gun point, the transaction could be traced.

Commenting on multiple deduction  for a transaction, Aderoju noted “In the case of multiple deductions in one traction when using POS and the delay in reversal of such transactions that most of us are complaining about, it is a gradual process because the country is lacking infrastructure, but I believe that we are growing and with gradual improvement in the information technology, we would soon get there. I think everything would normalize like it is in other countries, so we have to really emulate the way things are done in other countries. I don’t think that should be a problem any way.”

Cashless policy operates in other climes

Cashless policy which is just gaining traction in Nigeria has since taken root in other climes, mostly economically advance countries in Europe, America, and Middle East Asia.

A cashless society describes an economic state whereby financial transactions are not done by physical cash. For instance the Nordic countries conduct more cashless transactions than most Europeans.

The UK is the third most cashless society in the world, piped to the post by Canada and Sweden, which were found to be ahead of the trend in ditching cash.

The rankings were based on six metrics: the number of credit cards per person; the number of debit cards per person; the cards in issue that have contactless functionality; the growth of cashless payments over the past five years; payment transactions made using non-cash methods; and the number of people that are aware of what mobile payments options they have available to use.

The research, conducted by Forex Bonuses, looked at 20 of the world’s top economies, with only the top 10 ranked.

Canada topped the table because its citizens have more than two credit cards per person, and the majority (57pc) of payments are made using cashless methods. However, it had the lowest number of debit cards per capita of all countries included in the research, and only 26pc of its debt cards have contactless functionality.

In Sweden, 59pc of consumer transactions are completed through non-cash methods, and 47pc of citizens are aware of the types of mobile payment services available to them, making it the second most cashless country in the world, according to Forex Bonuses. In the UK, 41pc of cards have contactless functionality, and British consumers own 1.48 debit cards per capita, pushing it to third place in the charts.

China ranks at number six in the list. While the Asian superpower has strong scores for many metrics, it is let down by a lack of credit card usage and a high remaining prevalence for cash payments, using cashless methods for only 10pc of transactions.

Debit, credit and charge cards were used for 10.3bn transactions in the UK in 2016, a rise of 5pc on 2015, giving plastic a 54pc share of all retail payments by volume, according to the figures from the British Retail Consortium (BRC) in July.

It marked the first time that cards have surpassed the 50pc level in terms of volume of retail payments, with the popularity of plastic bolstered by the rise of different types of payment technologies such as contactless.

The use of debit cards in particular has grown, accounting for 8.1bn retail transactions last year.

How bank charges elsewhere

From available information, to make a profit and pay operating expenses, banks typically charge for the services they provide.

According to “MoneyRates.com,” one of the most common and straightforward fees banks charge is a monthly account maintenance fee for your checking or savings account.

The average monthly maintenance fee is more than $13 per month. That means $156 a year just for having the account. Many banks abroad will reduce or eliminate the monthly maintenance fee if you maintain a minimum balance in your account. The minimum can be anywhere from $500 to $1,000 or more. Unfortunately, if you fall below the minimum, you must pay the maintenance fee for that month. Worse yet, even if you maintain the minimum you are effectively giving your bank an interest-free loan. The bank can use a portion of your money to make money and you get nothing in return.

If you overspend the amount in your account (commonly known as ‘bouncing a check’) your bank can levy an overdraft fee, also known as a nonsufficient funds (NSF) charge. This can happen when you write checks against a recent deposit that hasn’t cleared the bank yet. In addition to the overdraft fee, which Bank rate says averaged about $33 per transaction nationally in 2017, your bounced check may result in an additional charge from the receiving party if it’s a business or other creditor.

If you deposit a check from someone else that bounces, you can be charged a returned deposit fee, which “MyBankTracker.com” says averages just under $13 per item. As you might imagine, this could also trigger overdraft or overdraft protection fees if you write checks against this deposit before you put additional money in your account. Returned deposit fees can occur due to insufficient funds, a stop payment or even a closed account on the part of the person who gave you the check to deposit.

If you have reason to go to your bank and get a cashier’s check – to pay someone who wants the assurance such a check will clear, for example – it will cost you. According to “MyBankTracker.com”, the average cashier’s check costs about $9.

In an age when most people read their bank statements online, it’s not surprising that many banks charge to print and send you a paper version. Fees vary but range from $1 to $5 generally.

Most banks let you use their automated teller machines (ATMs) free. If you use one outside your bank’s network, you may pay that outside bank a fee of around $4 or more. Your bank may also charge a similar fee for processing your use of an ATM outside your bank’s network. Some accounts refund all ATM fees or up to a certain limit per month.

Some banks charge a fee when you use your debit card (or bank card) to make a transaction. For those that do charge, the fee is typical $1 to $2. Interestingly, some merchants give you rewards in the form of cash back (or a discount) for making a debit purchase because the cost to them is lower. You aren’t likely to be charged a fee to use your debit card at an ATM unless it’s one that is not in your bank’s network.

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