• Sunday, June 23, 2024
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BusinessDay

Banking agents’ commissions make up 55% of customer charges

Nigeria’s big banks see 13% dip in interest expense as customers’ deposits hit 4-year high

Nigerian banking agents’ commissions make up 55 percent of the customer charges as nearly 2 out of 5 agents charge above the maximum fees stipulated by Central Bank of Nigeria (CBN), and report charging extra fees to make more money and on average, EFInA survey shows.

The CBN’s guide to charges by banks and other financial institutions stated that On-Us Agent (borne by customer) is to charge N100 for Cash-in (Deposit into Mobile Money Operator Wallet).

For Off-Us Agent (borne by customer), the CBN stipulates minimum charge of N50 subject to 1.5 percent of transaction value or N500, whichever is lower.

Agents sending to account holder under intra-Scheme Money Transfer are to charge minimum of N50 subject to 1 percent of transaction value or N300, whichever is lower.

Sending to non-account holder, a charge of minimum of N50 subject to 1.5 percent of transaction value or N500, whichever is lower, is stipulated in the guide.

BusinessDay finds out that across Lagos State, the agents are charging N200 per N10,000 when a customer does transfer or withdraws, instead of N150.

Financial Services Agents Survey 2020 report by EFInA shows that the agents charge 27 percent or N190 for ‘on us’ transfer instead of N150 stipulated by the regulator. For ‘on us’ withdrawal the agents charge N173 or 15 percent instead of N150 directed by the CBN.

Banking agents increased by 220 percent from 83,560 in December 2018 to 267,627 as at February 29, 2020, according to Shared Agent Network Expansion Facility (SANEF) as published by the CBN.

The 2020 roll out plan was expected to bring additional 232,373 agents to close out the year with the 500,000 agents.

The CBN, deposit money banks, Mobile Money Operators, and Super Agents on March 27, 2018, unveiled plans to roll out a 500,000 shared agent network within two years, to deepen financial inclusion in the country.

Investigation shows that the number of agents is more than the stated figure as more agents are opening up across the streets with no umbrella body to monitor their activities.

The rising number of banking agents springing up across every street corner is seen as a good development for the economy, but monitoring and regulating them becomes a challenge, stakeholders say.

Ayodele Akinwunmi, relationship manager, corporate banking at FSDH, says the big agents or super agents are licenced by the CBN. The agents, he says, interface with the customers.

“It is good for the economy as it enhances financial inclusion. Where banks cannot go to they can go there and help customers do their transactions such as cash transfers and withdrawals,” he states.

Financial services agents are profitable at an average of 27 transactions per day and a 73 percent profit margin, the report states. Despite being profitable, agents incur high start-up and recurring costs. About 2 percent of the monthly recurring costs are reported to be losses associated to fraud.

Non-dedicated agents have lower marginal costs (-26% start-up and -38% recurring), but lower average transaction per day (-12%) results in lower profits relative to dedicated agents.

Rogers Nwoke, national president, National Association of Microfinance Banks (NAMB), says agents are supposed to be regulated since they exist under regulations. CBN issues guidelines for it, so they should regulate it.

EFInA findings show 30 percent of agents are standalone and profitable. This highlights the need for the regulator to consider reviewing the current guidelines for agent eligibility.