• Wednesday, May 29, 2024
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Multiplicity of bank charges on our online transactions : To whose advantage?

Multiplicity of bank charges on our online transactions : To whose advantage?

The banking customers suddenly woke up early this morning, the 7th day of May 2024, to behold the news of the introduction of a “cyber security levy of 0.5 percent on the face value” of the amount being transferred, whose proceeds shall be remitted straight to the office of the National Security Adviser (NSA)! What a noble idea if only the proceeds were judiciously applied and properly utilised for the purpose for which they were being established!

The bugging questions the general banking customers are asking are that apart from the recently introduced “Cyber security levy,” which may appear to be a welcome development, especially as the proceeds from this angle will serve as a measure that will assist the government in contending with the issue of cybercrime and the likes, is that there are well over fifteen (15) additional charges that a bank customer will have to bear or suffer unjustly for the mere purpose of transacting a banking business or transaction over the internet protocol.

The long lists of these applicable bank charges include, but are not limited to:

SMS Alert Fees, Stamp Duty, Transfer Fees, POS Transfer Fees, ATM Transfer Fees, COT, VAT, Foreign Exchange Commission Fees, Online Transfer Fees, SWIFT Transfer Fees, Remita (RRR) Charges, Inter Bank Transfer Fees, Card Maintenance Fees, Card Issue Fees, VAT on SMS, Outflow/Inflow Charges, USSD Charges, Cheque Issuance Fees, and now Cyber Security Levy.

SMS Alert Fees: There is usually a short message service (SMS) alert fee to the tune of 4 naira for every notification you receive on your phone for the purpose of consuming a banking transaction over the web.

Stamp Duty: There is an accompanying stamp duty charge of 50 naira for every transaction of 10,000 naira and above.

Transfer fees: This is the fee charged for processing transfers on the part of banks on behalf of their customers. No doubt, this varies depending on the bank concerned, the amount being transferred, and the mode of the transfer used by the bank customer.

POS Transfer Fees: Bank customers also suffer from point of sale (POS) charges when transacting banking businesses via POS machines for online businesses.

ATM Transfer Fees: Customers are meant to be subjected to the automated teller machines (ATM) fees, especially when you use your bank cards on other banks’ machines after third withdrawals on a monthly basis or when you use the ATM machines to effect online payments or for the settlement of bills.

Commission on Turnover (COT): Charges ranging from 0.1 percent to 0.5 percent are being applied during online transfers, which are being borne by the same bank customer as commission on turnover (COT).

Value Added Tax (VAT): VAT is being applied at the rate of 7.5 percent of the transfer fee by banks or financial institutions, as the case may be.

Foreign Exchange Commission fees: This is being applied for converting currencies on international transfers between two or more bank customers.

Online transfer fees: Banks oftentimes charge what is known as an online transfer fee, especially for all manner of international business transactions.

Swift Transfer Fees: This is a fee charged for international transfers using the SWIFT network or platform.

Remittance Retrieval Reference (RRR) Charges: Banks also subject their customers to RRR charges especially when using their platform to affect our wards’ school fees.

Interbank Transfer Fees: This is primarily applicable when effecting transfers between banks.

Card Maintenance Fee: There is always a monthly card maintenance fee that banks subject their customers to regularly for the singular purpose of using their debit cards or other forms of cards.

Card issuance fee: This is applicable when a bank customer is being issued a new debit card or when an expired one is being renewed.

VAT on SMS: Bank customers are oftentimes subjected to a value-added tax (VAT) on short message services( SMS) received from their bankers.

Outflow/Inflow: The list is also not endless without reference to the issue of outflow/inflow charges that customers are meant to bear when funds either go out or come into the customer’s bank account.

USSD charges: There are unstructured supplementary service data (USSD) charges to the tune of 6.98 naira for online transfers to be borne once again by bank customers. It is imperative to state further that this particular charge also varies from bank to bank.

Cheque Issuance Fees: Banks charge their customers a check issuance fee whenever a new check booklet is issued to their customers.

Cyber Security Levy: The Central Bank of Nigeria (CBN) recently directed aLL banks to impose a 0.5 percent cybersecurity levy on some selected bank transactions.

To this end, funds are to be remitted directly to the office of the National Security Adviser (NSA).

I wish to implore my audience that these charges are subject to change and could vary from bank to bank depending on the amount being transferred and/or the transfer method that was used in the course of the transfer.

The bone of contention is not the bank charges per se that financial institutions are currently charging, but the main fact lies in the fact that these charges are becoming overwhelming and also overbearing in a nation where we are busy clamouring for financial inclusion and a cashless economy.

There is no doubt that these measures may be geared towards high-level revenue drives or generation for our financial institutions and banks alike, but to the detriment of the citizenry and the general populace at large.

There is a need for a wake-up call on the part of all stakeholders to critically take a holistic view on these overbearing charges before they cause more pain to the customers than the attendant gain to our banks in particular.

Written by Sir Kingsley Ndubueze Ayozie, MSc Finance, MBA, FCTI, FCA