As Nigerian banks continue to charge customers for ATM withdrawals, analysts question the rising cost of ATM withdrawals, with many arguing that these charges should be part of the banks’ operational expenses rather than an additional burden on users.
The Central Bank of Nigeria (CBN) in February 2025 announced a revised ATM transaction fees, eliminating the three free withdrawals per month for customers using ATMs from other banks.
Starting March 1, 2025, withdrawals from a customer’s own bank’s ATM will remain free, while using another bank’s ATM will incur a fee of N100 per N20,000 withdrawal. Off-site ATMs will also attract an additional surcharge of up to N500.
Analysts argue that banks, which already generate revenue from various fees, could afford to take on these costs as part of improving customer experience and driving financial inclusion.
However, others warn that removing these charges could impact profitability and the long-term sustainability of banking operations.
Watch full analysis here:
This was discussed at the 10th episode of Drinks and Mics, featuring industry experts, including Tunji Andrews, CEO and Founder of Awabah, Arnold Dublin-Green, Chief Investment Officer at Cordros Capital LTD, Ugodre, Founder of Nairametrics, and Samson Esemuede, MD/CIO of Zrosk who shared insights on the long-term viability of ATM charges in Nigeria’s banking sector.
The ATM charge debate
Ugodre questioned why banks continue to charge customers for ATM withdrawals despite already making significant profits. He acknowledges that banks incur maintenance costs for ATMs but argues that these expenses should be absorbed as part of their service rather than passed on to customers.
“So, people are wondering why do you have to pay that much? I mean, I’ve heard banks talk about ATM charges and cost of maintaining ATMs, but bank margins are still huge. So, why can’t it just be one of those costs that you absorb as part of your service?,” he said.
Tunji Andrews highlighted the higher charges Nigerians pay to POS operators compared to ATMs.
“There are a few things to this conversation. The first one is Nigerians, you and I, are paying significantly higher to the POS guys. Significantly higher. So, if you go to a POS guy to withdraw 5,000 Naira, I think they take 200 or something.”
Andrews emphasizing that ATM management is inherently expensive for banks, stated “ATM management is expensive for banks. It was always expensive,” he noted.
Should ATMs be a profit or cost center?
Ugodre argued that ATMs should be treated as a fundamental banking service rather than a revenue-generating venture. He suggested that banks should prioritize customer convenience over profit when it comes to ATM usage.
“Is it meant to be a profit centre for banks? Isn’t it a service?,” he said.
Andrews stated that banks view ATMs as an operational expense rather than a revenue source. He noted that if ATMs were restricted to only their customers, banks would incorporate them as a value-added service.
“If I create an ATM and it is specifically for my customers, I add it into my factoring as a value-add for my customers. But the fact is you’ve allowed it to be a situation where anybody can use,” he stated.
He, however, pointed out that most people no longer use banking halls for cash transactions. “The banks these days are filled with people making complaints, not people trying to do banking transactions, as against what it was maybe seven, eight years ago,” he said
He further argued that ATMs have become a financial burden for banks and should be profitable to justify their continued operation.
“For the banks themselves, ATMs have now become a nuisance. If I’m going to keep doing this thing, make it profitable for me to keep it, right?”
Global comparisons
Samson Esemuede, reflecting on his experience abroad, noted that in the UK, ATM withdrawals were always free, making it unusual to pay for cash access. Arnold Dublin-Green shared a similar sentiment, emphasizing that ATM charges seemed unnecessary.
Meanwhile, Andrews pointed out two critical costs associated with ATMs: power supply and cash maintenance.
“Two things that are critical to the maintenance of any ATM: power—it must have 24-7 power and a backup power system. This is expensive to put into an ATM to service people who do not pay,” he said.
Additionally, he highlighted how POS operators exploit ATMs by quickly depleting cash reserves.
“What happens to a lot of ATMs is that the ATM is packed with cash, and you’ve seen that the ATMs have had to restrict cash payouts to 5,000. The simple reason is that the POS guys just go to the ATMs and empty it,” he noted.
Should banks absorb ATM costs?
While some argue that banks should absorb the costs, others believe it is unsustainable.
Dublin-Green criticized banks for prioritizing fees over lending, urging them to focus on core banking functions and provide free ATM services.
“Banks should focus on lending to businesses and providing free ATMs instead of profiting from fees,” he said
While banks argue that ATM charges are necessary due to high operational costs, analysts and consumers remain divided on whether these expenses should be passed on to customers or absorbed by banks as part of their service offerings.
