Naira Debit Cards: Banks protest EFCC harassment over forex rates

Banks have protested to the Central Bank of Nigeria (CBN) the harassment of their staff by the Economic and Financial Crimes Commission (EFCC) over foreign exchange rates charged for cross border transactions on Naira Debit Cards (NDC). Cross border transactions are payment for goods and services or cash withdrawal through ATM outside the country through debit cards linked to naira account in Nigeria.

 Vanguard investigation revealed that the EFCC in recent times arrested some bank staff based on petitions by card holders accusing banks of charging parallel market exchange rates for cross border transactions via naira debit cards. But in a protest letter to the CBN, the banks dismissed this accusation, saying that since the dollar for settlement for such transactions are not sourced from the CBN but from autonomous sources, they cannot use CBN rate to settle such transactions.

In a letter titled, “Harassment of banks by the Economics and Financial Crimes Commission over charges on FX Card Rates”, sent to the CBN on April 28, 2016, the banks complained that, EFCC has been going to banks and arresting staff of banks stating that card rate for cross border transactions should not be more than the CBN rate plus a margin of N0.50.

The letter stated, “As you will recall sir, the Central Bank of Nigeria does not sell foreign exchange (FX) to banks for settlement of international cards schemes for the cross border spend on our Naira debit card, most banks have had to be sourcing FX from autonomous market.

At several meetings of the CBN with Deposit Money Banks, it was reiterated that we need to protect the scarce FX of the country and limits were placed on cross border spend of naira debit ($300/ day for ATM withdrawal and a total of N50,000 p.a for ATM and PoS purchase per card). One the measures adopted by banks to discourage the abuse of usage was the card rate as most banks PTA/BTA at the CBN rate.

Any customer of a bank travelling with appropriate document can access the PTA window at $4,000 per quarter. Deposit Money Banks set the card rates based on a daily market competitor scan, thereby leaving market forces to dictate what the banks can charge their customers.

As the sole regulator of banking practice in Nigeria, we hereby request the CBN to urgently take steps to clarify to the EFCC that the banks have been allowed to offer the product solely on a market determined basis. This has become unavoidable in order to forestall further harassment by the EFCC”.
Source:Vanguard