Zenith Bank Suspends International Transaction On Naira ATM Cards As Nigerians Decry Action Of DMBs

metro

1 year ago

Zenith Bank has joined the league of Nigerian banks that have suspended international transactions on naira cards

But the new approach by many Deposit Money Banks operating in the country has continued to elct condemnation by customers as their international transactions have been adversely affected.

According to a message to its customers, Zenith Bank said its customers will no longer be able to carry out any international transaction on their naira Automated Teller Machine (ATM) cards effective from January 9th, 2023.

This is coming barely a week after GTBank made the same announcement, which took effect on January 1.

The action has continued to compound the troubles of many Nigerians, particularly, those who shop online from international stores such as Amazon, and Apple Music, among others as they will no longer be able to pay with their naira cards.

Zenith Bank’s announcement increased the number of banks that have suspended international transactions on naira cards to 4, including First Bank and Standard Chartered Bank.

Specifically, Zenith Bank in a notice to its customers on Thursday said:

“Please be informed that you will be unable to use your Zenith Bank Naira cards for International Automated Teller Machine (ATM) cash withdrawals, POS transactions, and web transactions with effect from Monday, January 9th, 2023.
“If you have International spending requirements, simply visit any of our branches and request a foreign currency debit or prepaid card, which are available in US Dollars, Pounds, and euros variants.”
From reduction to suspension: In March last year, most Nigerian banks announced a $20 spending limit on international transactions using naira debit cards. This was because of a longstanding scarcity of foreign exchange and the Central Bank of Nigeria’s strict capital outflow regime.

In July, Standard Chartered Bank announced it has suspended international transactions on its naira visa debit card.

In September, First Bank also announced the suspension of international transactions on its naira Mastercard virtual card and visa prepaid naira card from September 30.

“Due to current market realities on foreign exchange, you will no longer be able to use the Naira Mastercard, Naira Credit Card, our Virtual card, and Visa Prepaid Naira card for international transactions. This will take effect on 30 September 2022,” First Bank said in a statement to its customers,” the bank stated.
Flutterwave, Eversend, and other fintech platforms had also stopped virtual card services for international transactions.

To GTBank, in the message it said, these cards would no longer be supported for international online and Point of Sale transactions. While the bank did not give reasons for this decision, it advised them to get dollar cards, which means they need to open dollar accounts.

The bank said, “Dear customer, we write to inform you that you will no longer be able to use your Naira Mastercard for international online and POS transactions effective 31st December 2022.

“Kindly note that you can use your GTBank dollar card for all your international spending requirements.”

However, although the banks gave their customers the option of dollar-denominated cards to enable them engage in international transactions, it is a pointer that naira-denominated cards are becoming useless outside the borders of the country.

But things were not always like this. It has been a long road to where naira-denominated cards are now. Users of naira-denominated cards were formerly allowed to spend up to $150,000 per annum ($12,500 per month) for international transactions. But in April 2015, the spending limit on naira-denominated cards for international transactions was reduced to $50,000 per person per annum or $4,166.7 per month. This soon dropped to $500 per month and then $100 per month. In the first quarter of 2022, holders of naira-denominated cards were limited to $20 international transactions. And in December, they were finally barred from transacting any international transaction with their naira-denominated cards.

Nigerians have been here before. In 2016, banks also suspended international payments on naira-denominated cards. In a mail to its customers at the time, Standard Chartered Bank blamed limited foreign exchange supply for its decision to stop supporting international transactions on naira cards.

Banks are not the only ones struggling to facilitate international transactions in the country. Fintechs are in the same situation. With every rising of the sun, a new fintech springs up and promises to help Nigerians facilitate foreign transactions. But like shooting stars, they are here today and gone tomorrow.

Fintechs such as Flutterwave and several others that used to have virtual dollar cards have since suspended services that facilitate international transactions.

A financial analyst, Friday Ameh claimed the issue has become a nightmare for most customers wishing to do international transactions.

A lot of Nigerians are finding it difficult to embark on dollar-denominated services such as streaming services, application fees, magazine subscriptions, domain renewal, etc. with their naira cards, a development that could see extinction of some online publishers from the business.

According to Ameh, the only option would be to open a domiciliary account, which is stressful, based on numerous demands from banks, such as at least two referrals, dscription of residential houses, among others.

It was gathered that naira cards from banks such as GTB, Access, and First Bank had stopped working on international platforms.

With this latest suspension on naira-denominated cards, Nigerians would have no choice but to turn to the parallel market to continue to enjoy subscription services.

This is because when CBN, which is the market marker when it comes to the FX market denies banks access to or does not allocate FX for funding of naira-issued dollar transactions, the banks have no choice but to suspend foreign currency payment on those cards, thereby booming activities of parallel market operators.

Nigeria gets most of its forex inflow from oil earnings, diaspora remittance, and foreign investments in form of Foreign Portfolio Investments and Foreign Direct Investments.

But oil revenue, which has been suffering from series of attacks and theft, makes up about 90 per cent of these earnings.

The World Bank recently disclosed that Nigeria’s foreign portfolio investments fell by $2.08bn from $2.15bn in 2010 to $72m by 2021. It added that FDI inflows into the country depreciated from $5.97bn in 2010 to $2.45bn in 2021.

In its recent report, it said, “FDI and FPI flow into Nigeria do not compare favourably with similar economies of the world, reflecting difficulties with FX availability, security concerns and other structural challenges in recent years.”

While the country officially attracted $60.22bn from its diasporan population from 2019 to 2021, most of it was for consumption purposes. According to the World Bank, remittance offers a critical lifeline for households in developing countries and helps to alleviate poverty, improve nutritional outcomes, and more.

During the CBN’s last Monetary Policy Committee meeting, a member, Robert Asogwa, said, “The recent drop in external reserves is, however, linked to the decline in oil exports even at a time of higher oil prices.”