Banks suspend Naira card transactions abroad

Commercial banks have joined the Central Bank of Nigeria (CBN) in the fight to save the naira by reducing dollar spendings abroad.

Banks have announced a temporary suspension of overseas Automated Teller Machine (ATM) naira card transactions to preserve foreign exchange reserves.

First Bank of Nigeria Limited confirmed the new development in an emailed note to customers. It said the move was in line with current economic realities.

It said it will suspend international transactions on its naira Mastercard from September 30.

The CBN rate sheet showed the naira exchanges at N430/$1 at the Investors’ and Exporters’ (I&E) forex window while the black market rate was at N710/$, creating an N280/$ premium between both rates.

Banks’ decisions followed consistent dollar scarcity and challenges faced by manufacturers and other real sector operators in sourcing foreign exchange from the economy.

Banking sources said banks were increasingly finding it difficult to fund their foreign-currency-denominated services, especially online forex transactions and overseas ATM withdrawals, as well as PoS usage overseas by customers.

First Bank said: “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.

“Please use your Visa Debit Multi-Currency Card, Visa Prepaid (USD) Card, and Visa Gold Credit Card to continue transacting abroad with limits of up to $10,000.”

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

Fintech firms – Flutterwave, Eversend, and other fintech platforms had also stopped virtual card services for international transactions.

In March, financial institutions cut the international spending limit on naira cards from $100 to $20 monthly.

Zenith Bank Plc has also sent emailed notes to customers on the new payment plan abroad.

The bank said: “Please be informed that we have temporarily suspended the use of Zenith Bank Naira cards for International Automated Teller Machine (ATM) cash withdrawals and PoS transactions.

“Additionally, the monthly card spends limit for web transactions has been reviewed from $100 to $20. This review is in response to today’s economic realities.

“If you have higher International spend requirements, simply visit any of our branches and request for foreign currency debit or prepaid card, which are available in US dollar, Pounds, and Euro variants.”

Stanbic IBTC Bank, Standard Chartered Bank Nigeria, and Guaranty Trust Bank had a few years back, announced the suspension of their overseas ATM card services.

Both Stanbic IBTC Bank and Standard Chartered Bank Nigeria advised customers seeking to carry out transactions denominated in foreign exchange to apply for dollar or pounds sterling debit credit cards.

According to them, the dollar or pounds sterling debit or credit cards will be linked to the customers’ domiciliary accounts.

This is despite the fact that the banks have in the past few months reduced the monthly total amount of forex-denominated transactions that customers can do, using their naira debit or credit cards via ATMs and PoS terminals abroad as well as online payments or transactions.

Findings showed that some banks had slashed their daily ATM withdrawal limit abroad from the $300 advised by the CBN’s Bankers Committee to $100 due to their inability to source for dollars to fund the transactions.

The CBN had expressed concerns over the indiscriminate and suspicious manner in which some bank customers were spending dollars and other foreign currencies abroad through their naira debit cards.

To reduce forex spending abroad, the CBN had directed that bank customers who spent above the $50,000 annual forex limit it imposed would be implemented and defaulters sanctioned.

The apex bank also took major steps to shore up dollar reserves in Nigeria and defend the naira.

For instance, CBN governor, Godwin Emefiele said banks should generate FX proceeds from exporters to give to their customers (importers). The bank set a $200 billion dollar earnings target to be achieved within three to five years.

The CBN also curbed access to the interbank currency market for importers bringing in a variety of goods. To conserve its dollar reserves, the bank said importers could no longer get hard currency to buy 43 items, ranging from toothpicks and rice to steel products and private jets.

The banks are also turning down payment requests from customers paying business partners abroad with naira debit cards.

They are now asking customers paying clients abroad to do so in the currency of the beneficiary’s country, not in naira. The new practice differs from the previous one where lenders debited the naira accounts of customers at the prevailing exchange rate and remitted dollars equivalent to the offshore beneficiary’s account.