Bank Charges Bite Harder: Nigerians Count the Cost of Everyday Transactions

 

Banking at a Cost: How Small Charges Are Quietly Squeezing Nigerians

In an economy already stretched thin by inflation and dwindling purchasing power, Nigerians are now feeling the pinch from an unexpected source: their own bank accounts. What once were mere service charges—often dismissed as negligible—are now quietly eroding personal finances and squeezing the margins of small businesses across the country.

Ozovehe Blessing, a school teacher in Abuja, shares a story that’s all too familiar. After transferring ₦5,000 to her younger brother at Kogi State University via her mobile banking app, she was charged a ₦10 transfer fee. When her brother withdrew the funds from an ATM outside his bank’s network, an additional ₦100 was deducted. Had he used a Point-of-Sale (POS) agent, the fees could have ranged from ₦300 to ₦500, depending on the location. In the end, the ₦5,000 shrank to ₦4,600 or less—before it was even spent.

This scenario plays out daily across Nigeria, a country where hidden charges have become embedded in the financial landscape. For many, the cumulative effect of these seemingly minor deductions has grown into a financial burden that’s difficult to ignore.

An Increasing Web of Charges

Bank customers are now grappling with charges attached to almost every financial interaction. From ATM withdrawals and fund transfers to card maintenance fees and SMS alerts, the average Nigerian’s wallet is constantly under pressure.

The Central Bank of Nigeria (CBN), in a bid to “streamline” operations and enhance service delivery, recently introduced revised charges for ATM withdrawals. On-site withdrawals—those made at ATMs owned by banks but located outside the branch premises—now cost ₦100 per ₦20,000 withdrawn. Off-site withdrawals at places like shopping malls or airports carry even steeper fees, with a surcharge of up to ₦500 per ₦20,000, making the total charge potentially ₦600.

ATM withdrawals from the customer’s own bank remain free, but that’s cold comfort in a country where long queues or unreliable machines often force people to look elsewhere.

Other fees include quarterly maintenance charges of ₦50 for savings account debit cards, ₦1,000 for credit card issuance or replacement, and up to ₦2,500 for internet banking hardware tokens. These costs come on top of a 7.5% VAT, a ₦6.98 USSD fee per session, and ₦6 for SMS alerts.

Cybersecurity Levy Sparks Debate

A new addition to this ever-growing list is the cybersecurity levy. Initially announced as 0.5% on all electronic transactions, public outcry prompted the CBN to revise it down to 0.005%. Still, for a ₦10,000 transaction, that’s ₦0.50; a ₦1 million transfer attracts a ₦50 charge.

While the figures seem small on paper, the frequency of these transactions—especially for businesses—makes the burden more apparent. Traders like Olalekan Adewale, who runs a frozen food business at FHA Market in Abuja, feel the squeeze. A single ₦500,000 transfer to his supplier now attracts ₦84.75 in total deductions. Multiply that across several transactions each week, and the effect becomes significant.

The real sting? Adewale’s suppliers also face deductions when using the funds, creating a ripple effect that diminishes the value of each transaction along the chain.

Neobanks to the Rescue

As dissatisfaction with traditional banks grows, more Nigerians are turning to digital-first financial institutions—popularly called neobanks—for relief.

Neobanks like Moniepoint are increasingly becoming the preferred option, especially among traders, artisans, and small businesses. They offer more competitive rates: a ₦20 flat fee for transfers, and 0.5% on withdrawals up to ₦20,000—lower than the fees charged by traditional institutions.

Adetifa Kemi, a trader in Abuja, now operates her own POS machine through a neobank. “Customers don’t always have cash, and POS agents charge too much. With my own machine, I don’t lose sales,” she said.

The convenience and affordability of neobanks are slowly reshaping commerce, challenging the monopoly once held by traditional banks.

Is It Still Worth Keeping Money in the Bank?

With deductions lurking at every step, many Nigerians are rethinking the value of keeping money in a traditional bank. Add-on costs like stamp duties (₦50 on transactions above ₦10,000), SMS alerts, VAT on service fees, and account maintenance charges leave many questioning whether the banks are serving them—or merely serving themselves.

Under the CBN’s cashless policy, individuals face 2% fees for deposits over ₦500,000 and 3% on withdrawals beyond that threshold. Corporate entities are hit harder: deposits above ₦3 million attract a 3% fee, while withdrawals cost 5%.

Even though the CBN maintains a regulatory framework through its Guide to Charges by Banks, and has fined institutions up to ₦2 million per infraction, consumer complaints about hidden fees and lack of transparency persist.

Traditional Banks Under Pressure

Economist Paul Alaje doesn’t mince words when describing the current banking model in Nigeria. He calls it “moneykeeping,” not banking.

“Banks are not lending. They’re simply collecting deposits and charging fees. It’s unsustainable,” Alaje said, adding that the current model relies heavily on depositors to sustain bloated operational costs—from luxury offices to large staffing.

He believes that fintechs and neobanks, with their customer-first approach and nimble operations, will soon replace legacy banks unless significant reforms are made. Investors, too, he says, will eventually take their money elsewhere.

For now, Nigerians are left navigating a complex and costly banking system—one where small fees add up to big losses, and keeping money safe may come at a price they can no longer afford.