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    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawals Above N500,000

    Tomiwa OnaleyeTomiwa Onaleye
    September 18, 2019
    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawals Above N500,000

    The Central Bank of Nigeria has released a circular that approves additional charges for cash deposits and withdrawals above 500,000 for individual accounts and 3 million for corporate accounts.

    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawal Above 500,000
    Godwin Emefiele, Central Bank Of Nigeria Governor

    Effective Wednesday, September 18, all cash deposits and withdrawals to deposit money banks (DMBs) will attract additional charges of 2% and 3% charges for transactions above N500,000 for individual accounts. 3% and 5% will be charged on transactions above N3 million for corporate accounts.

    The CBN explained that the new charges on cash-based transactions in banks are aimed at reducing (not eliminating) the amount of physical cash circulating in the economy while encouraging more electronic-based transactions (payments for goods, services, transfers).

    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawal Above 500,000
    Re Implementation of Cash-Less Policy

    However, the statement signed by Sam Okojere, Director of Payments System Management Department, revealed that the new charges currently apply only in Lagos, Ogun, Kano, Abia, Anambra, Rivers states and the Federal Capital Territory.

    To further promote a cashless economy and enhance the collection of applicable government revenues, the CBN also announced a downward review of the Merchant Service Charge (MSC) from 0.75 per cent capped at N1,200 to 0.50 per cent capped at N1,000.

    Impact of CBN’s cashless policy

    The new charges approved are part of the cash-less policy CBN introduced in 2012 to curb excesses in the handling of cash in the country. The plan of the commission was to use the policy to drive the modernisation of payment systems, reduce the cost of banking services and drive financial inclusion by providing more efficient transaction options.

    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawal Above 500,000
    CBN Financial awareness campaign

    The policy started with a pilot run in Lagos with a goal of general implementation by the year 2020.

    According to Trade Economics, as of August, Nigeria’s annual inflation had dropped but it was still a double figure – 11.02.

    Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawal Above 500,000
    Nigeria’s annual inflation chart

    With inflation rates and naira devaluation being a recurring problem, the addition of charges could negatively impact the livelihood of many average Nigerians. A significant percentage still lacks the financial literacy to understand that cashless policy.

    With the new charges, many Nigerians – for instance, traders who run high volume cash-based businesses – will incur exorbitant service charges for every 500,000 they save in the bank.

    That said, it is hoped that the new charges will encourage more Nigerians to adopt alternative business models. Fintech startups like Paga, Paystack, TeamApt, Kudi and Kuda now have an opportunity to attract Nigerians with cheaper, easier and effective alternatives to make transactions.

    The expected benefit of the CBN’s cashless policy like increased convenience, reduced risk of cash-related crimes, access to credit and financial inclusion are clear gains. But if the policy is not made accessible to the larger percentage of the country’s population, the charges could create an undesired effect.


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    Tomiwa Onaleye

    Tomiwa Onaleye

    Tomiwa Onaleye is a content writer that mines emotion bred from words. He is an avid lover of gadgets and Tech World. He graduated with B.Sc Mechanical from the prestigious University of Ibadan.

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