CEM INSIGHT | The digitization of banking operations which revolutionized the Nigerian banking sector has received a progressive acceptance by Nigerian bank customers having come with some suiting conveniences especially with cash withdrawal and transfer.
The issuance and use of debit card to withdraw cash from the Automated Machine ATM is one of those conveniences the digitization offered and was embraced by bank customers after the initial usual resistance innovations face.
The use of Debit Card or ATM Card, though considered to have brought some conveniences to banking transactions, it has also come with biting consequences in time and cash that has created substantial losses to customers some of which are directly from Central Bank policies. More throbbing of these costs that customers bear is that, none of these is a consequence of their fault or misuse but simply a policy they don’t even know the underlying reasons.
One of those policies has to do with trapped card in another Bank’s ATM. In the CBN policy guidelines for Card issuance and usage in Nigeria, policy no 4.5.0, it states that any trapped Card in the ATM shall be rendered unusable (by perforation) by the Acquirer and returned to the Issuer on the next working day. It means that if a card issued by Bank A is trapped in an ATM belonging to Bank B, it shall be forfeited by the card holder.
While statistics are not available on the volume of cards trapped and perforated, 14 out of the 15 persons that spoke with Continental Economy Magazine have experienced trapped card at least once. 11 persons have had their card trapped more than once and have to pay to obtain replacement.
Customers have found this policy oppressive when viewed from all sides according to those who spoke to Continental Economy Magazine. Customers have been stranded and subjected to psychological stress especially when it happens at odd time such as non office hours, weekends or public holidays. At these time, access to cash is definitely denied since there is no immediate avenues to have them replaced.
Mr John Alaki lives in Ogun State and comes to do his printing job in Lagos. His First Bank issued card was trapped in Zenith Bank ATM as he attempted to get some cash to aid his movement back home and take care of the usual weekend expenses.
He narrated his experience to CEM saying; ‘’at that moment, I became so disorganized and confused. The first worry was, how will I get home, and taking care of the weekend was another headache. ATMs around didn’t have finger print withdrawal. I had to result to begging colleagues for money at least to take me home.”
While trapped card deny customers access to cash, they also have to pay to obtain another one from an issuing Bank, an addition to the normal banking service charges and card maintenance fees the customers already bear.
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Card trapping can happen at any time within the span of the card. Ikenna obtained his card on Monday from a commercial bank and pay N1,100. The card was trapped in an ATM on Thursday the same week, he collected another one on Friday for another N1,100. He spent N2,200 to obtain debit card in a week.
Though customers incur cost for these occurrences, they most times have nothing to do with the conditions resulting in the trapping of the card. The only role they play in the whole process is that they utilized the technology offered them and for which they paid.
The commercial banks are seen by customers as inconsiderate in the whole phenomenon of card trapping and replacement. The truth is that, banks are simply implementing a policy handed them by CBN, in fact, a violation of the rule can earn them a penalty..
A Service Manager in one the commercial banks who pleaded anonymity, explained that all operations surrounding card are strictly regulated and monitored by CBN following the high level of fraud perpetrated by fraudsters through the use of the transaction instrument.
This corroborated explanation from a source close to CBN, on the card trapping policy. He explained that the motive behind the policy is purely security for the card holder and issuer. It is based on the assumption that there is a possibility of the information on the card being compromised before it gets back to the issuer, therefore, it should be destroyed.
While that in itself cannot be said to be an Ill motivated policy, the cost borne by customers in the replacement of the card they already have paid for is considered improper by them. A card is meant to last for three years before its replacement, having to pay for another one when it has not expired simply because it is legitimately and rightly used on the machine provided is considered as exploitation.
“If I misplace my debit card, or damage it, I have to pay for a replacement because it is entirely my fault just the same way I pay to have another sim card when the one am using is damaged or misplaced”; says Collins, a business man in Lagos
Mr. Dipo Fatokun who represented CBN in the Nigerian Electronic Fraud Forum (NeFF) stakeholders’ meeting in Lagos, described the policy as a global practice. He said this in 2014 while interacting with journalists on the sideline of the event.
Just as said by CBN source, Fatokun explained that the central bank introduced the policy in order to protect bank customers. He noted that because of the long process involved in returning the card to the issuer, there could be the possibility of a compromise.
Continuing, he said: “Somebody could say they won’t know the PIN. But there is what is called ‘Card Not Present’ transactions in which case you only need the information on the card and don’t need the PIN.
“So anybody who has the information on the card will be able to do ‘Card Not Present’ transactions. So that was why we came out with that regulation such that when a card it trapped, the issue of compromise will not be there.”
He however said in that same interview that the CBN was collaborating with banks to lessen the burden of the policy on cardholders.
He said: “We are working with the banks to ensure that when these cards are trapped, not because the customer did something wrongly, and a new card is to be issued to the customer, we are discussing on how it would be done such that the burden would not fall wholly on the cardholders.
Eight years down the line, customers still pay for replacement when card is trapped in ATM. All customers interviewed called on CBN to come true to their promise of shifting burden of card replacement from the customers since according to them, faulty machines and network failure are mostly the reasons the cards are trapped
“It is not our faults that card is swallowed by ATM and we are meant to pay for another one. CBN need to find a way to replace ATM card when it is swallowed by a machine. Charges on transactions including the card maintenance are already heavy us, we shouldn’t be paying for card replacement at all”; said Kikelomo Jonah.