By Babajide Komolafe & Adaeze Okechukwu
For Mrs Julie Ebi, a Lagos Island based bureaux de change operator, the cashless policy is a bitter sweet experience that may be worsened by the recent reintroduction of cashless charges.

“More often, I have encountered difficulties using e-platforms to do business transactions both online and physically in the bank”, she told Financial Vanguard.

Cashless

In her opinion, the reintroduction of cashless charges, which commenced April 1, 2017, in Lagos and six states including the Federal Capital Territory (FCT) is coming too early in the life of the policy.

“The time frame to adjust to the change is too short. Awareness should be made highlighting the benefits of the policy”, she said.

The cashless policy was introduced by the Central Bank of Nigerian (CBN) in 2012 to reduce   the amount of cash circulating in the economy, and encourage more electronic-based transactions. Features of the policy include N500, 000 cash deposit and withdrawal limit  for individual bank customers, with 3 per cent charge on transactions above the limit; N3 million deposit and withdrawal limit for corporate bank customers, with 5 per cent for cash transactions above the limit.

Dominance of ATM cash withdrawal

However, in 2014, the charge for cash deposit was suspended while that of cash withdrawal was reduced, in order to attract more money into the banking system, and also allow time for awareness about the policy.

But some people believe that this action was one of the factors responsible for the continued dominance of ATM cash withdrawal, which stood at N4.7 trillion in 2016.

Commenting on this in an interview with Vanguard, Mrs. Olusola Longe-Okenimkpe, Divisional Head, E- Business and Collections, eBank, Heritage Bank Limited, noted: “When the policy started, the CBN set cash handling charge on daily cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. Equally, thresholds were also set for cash deposits. The charge was later reduced due to political pressure and that removed the bite and some of the incentives to drive merchants to alternative payment methods”.

Against this background the CBN on February 23rd, 2017, announced the reintroduction of charges on cash deposits and withdrawals in banks, which would take effect at different dates in different parts of the country.

In a circular announcing the charges,  Mr. Dipo Fatokun, Director, Banking and Payment System Department, CBN said: “Charges for cash deposit by individuals are as follows:  Less than N500,000, zero charge; from N500,000 to N1 million, 1.5 per cent; from N1 million to N5 million, two per cent charge; above N5 million, 3 per cent charge. “Charges for cash withdrawal by individuals are as follows: Less than N500,000, zero charge; From N500,000 to N1 million, two per cent; from N1 million to N5 million, 3 per cent charge; above N5 million, 7.5 per cent charge.

“Charges for corporate cash deposit are as follow: Less than N3 million, zero charge; from N3 million to N10 million, two per cent; from N10 million to N40 million, three per cent; above N40 million, five per cent. “Charges for corporate cash withdrawal are as follows: Less than N3 million, zero charge; from N3 million to N10 million, five per cent; from N10 million to N40 million, 7.5 per cent; above N40 million, 10 per cent.

“The new charges would take effect from April 1 2017, in the existing cashless states (Lagos, Ogun, Kano, Abia, Anambra, Rivers and the FCT). “The policy shall be implemented with the charges taking effect on May 1, 2017 in the following states: Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau. “The policy shall be implemented with the charges taking effect on August 1, 2017 in the following states: Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa Ibom, Ebonyi, Taraba and Nasarawa. “The policy shall be implemented with the charges taking effect on October 1, 2017 in the following states: Borno, Benue, Ekiti, Cross River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara. “The income generated from the processing fees charged above the allowable cash transaction limits shall be shared between the CBN and the banks in the ratio of 40:60 Existing exemptions remain sustained for: Revenue generating accounts of the federal, state and local governments (lodgements only); embassies, diplomatic missions, multilateral and aid donor agencies in Nigeria are also exempted from all processing fees relating to the cashless policy implementation.

“In view of the above, branches of deposit money banks in the affected states are expected to commence: the enlightenment of their customers on the cashless policy, including the limits; on cash withdrawals and deposits for individuals and corporate bodies, as well as the available e-payment options”.

While most bank customers who spoke to Financial Vanguard on this development commended the cashless policy and its benefits to individuals and businesses, some of them however shared the view of Mrs. Ebi about the need for more awareness before the commencement of the charges.

One them is Dr Paul Mbagwu, a business consultant and ex-banker. While he commended the introduction of the policy, he however noted: “The central bank has not done enough in terms of public enlightenment. Only then can people fully appreciate its essence.”

“Like anything novel, the cashless policy will take time to develop. Educating the populace about what you are trying to introduce to them is crucial. You cannot assume because a person is educated, he/she invariable knows what cashless policy is. To this end, public enlightenment is very important. The way you get people to accept what you are telling them is to sell the benefits to them. It is only rational that humans pursue their self-interest. ‘What will I get out of it? What is in it for me? ’ are common questions we all ask,” he added

Emphasising the need for awareness, Ebi noted that: “Some things about the withdrawal/deposit charges are still unclear. For instance, If I withdraw N600, 000 from my individual account, would I pay withdrawal charges on N600,000 or on N100,000?

But for Mr Bede Egbufor, post graduate student of University of Lagos, notwithstanding the low level of awareness, implementation of the charges should continue as scheduled. “The only challenge that might inhibit success of the policy will be the low literacy of the Nigerian populace. People are not adequately educated enough on the benefits of the policy. There is really no time that will be more convenient for CBN to commence this policy and people will not complain. CBN should go ahead with the policy, especially to check corruption”, he said.