CBN and the invalidation of cards in ATMs

The policy is not customer-friendly, whatever may be the bank’s reasons.However, the policy now cuts across all Nigerian banks, courtesy of a Central Bank of Nigeria’s directive to that effect. On Saturday, May 17, 2014, the Africa Independent Television (AIT) 8pm news had it that the CBN had directed banks to perforate and invalidate all […]

The policy is not customer-friendly, whatever may be the bank’s reasons.
However, the policy now cuts across all Nigerian banks, courtesy of a Central Bank of Nigeria’s directive to that effect. On Saturday, May 17, 2014, the Africa Independent Television (AIT) 8pm news had it that the CBN had directed banks to perforate and invalidate all ATM cards jammed in cash-dispensing machines, regardless of whether or not the cards belong to them. The CBN cited international best practices (an expression abused by Nigerian public officials), likelihood of such cards getting compromised, the need to protect bank customers, as being among its reasons.
No sooner did the CBN announce the directive than many Nigerians took it to the cleaners. The incidence of trapped ATM cards is a recurring problem which plagues bank customers in Nigeria. When a cash card gets stuck in an issuing bank’s ATM, the process of retrieval may be relatively easy, as a customer could recover it after a while, same day. That is, if the bank official in charge is willing to retrieve same from the machine. However, if one bank’s card gets trapped in another bank’s ATM, it may take weeks before the customer-owner recovers it. In the latter case, the customer is usually asked to pick up the card from the branch of his bank where same was issued to him.
To avoid this stress, some Nigerians now use their cards on only the issuing banks’ ATMs. This may be inconveniencing, especially if the issuing bank has no branch or ATM nearby. But it becomes a lesser evil vis-à-vis the trouble of being asked to visit the issuing bank branch to pick up one’s card trapped in another bank’s machine. Imagine an Abuja-based Bank A customer who travelled to Lagos, his card got stuck in Bank B ATM, and he was asked to pick same up at the issuing branch of Bank A in Abuja! What could be more inconveniencing, stressful and cost-intensive?
The problem of cards getting jammed in ATMs is traceable to system errors in the machines. It is analogous to cases where the machines fail to dispense cash to customers yet debit them. Bank customers are not to blame for these system failures and should not be penalised. The problems associated with ATMs in Nigeria are many.
One issue regarding this new policy is the length of time it takes an average Nigerian bank to issue or re-issue an ATM card from the date of application by a customer. It takes weeks. Most times, a customer visits the bank severally before he gets issued or re-issued a card, incurring monetary expenses and loss of man-hours in the process.
Secondly, there is the requirement by banks for customers whose cards are trapped in machines to pay for new cards. This is inequitable. Since the CBN directed banks to perforate and destroy cards trapped in ATM machines, it is only fair that it equally directs them to issue fresh cards to affected customers free of charge.
A related problem is the difficulty, if not the impossibility of having some ATMs dispense cash when one uses another bank’s card on them. Most times, when a customer persists in inserting his card, it gets stuck. It seems some ATMs are configured to recognise only cards issued by the owner-banks and some cards designed for select ATMs.
In January, 2014 I tried unsuccessfully to get cash from the ATMs of First Bank, Ecobank and Diamond Bank at Eke Ahiara, Ahiazu Mbaise, Imo State, using my GTB card.
Another snag with the use of ATMs is the recurring “out-of-service” and “out-of-cash” syndromes, especially with ATMs in heavy use, and during weekends and public holidays. On Fridays and days preceding public holidays, most bank customers hardly make withdrawals, trusting that ATMs will function and have enough cash.  Often, on such days, customers are forced to move from one bank to another in search of a functional and cash-backed ATM.
A way to get around the problem of risk associated with trapped cards is by banks ensuring that once such happens, the card is retrieved immediately and handed over to the customer. This should be regardless of whether the bank is the issuing bank or not. Such prompt response will surely reduce the chances of the card’s secret number getting compromised. It will also forestall the possibility of the card being used for any transaction which may not require the use of the secret number. After retrieval, customers should be advised to change their secret numbers.
If the CBN, banks and the ATM suppliers/operators cannot solve the incidence of trapped ATM cards, they should not pass the cost to innocent customers. Nigerian banks claim to have cutting-edge ICT and competent hands, yet their ATMs and computers are daily bedevilled by system failures. In addition to servicing their ATMs and computers frequently, banks should educate customers on the use of ATM cards at the point of issuance. Furthermore, the CBN and banks should carry out regular public enlightenment via TV and radio on tips for smooth banking transactions and the use of banking products.
Let us suppose a bank customer is unfortunate to experience repeated jamming of cards in ATMs; imagine how much he would pay for the several fresh cards his bank would re-issue. This CBN policy may seem and sound protective of bank customers, but it will surely subject them to untold expense and inconvenience. Therefore, the CBN is urged to suspend the policy and rethink it.
A related issue is the daily N140, 000 ceiling placed on ATM withdrawals. Purportedly to reduce congestion in banking halls, the CBN urged customers to use more of ATMs, POS, online banking, etc. It placed daily ceilings on across-the-counter banking transactions, and imposed penalties for any in excess. Yet, it equally laid a ceiling on daily ATM withdrawals. This double-edged policy can only hamper smooth business transactions.
Ogu, a legal practitioner, wrote from Central Business District, Abuja. ([email protected] <mailto:[email protected]>;).