The Central Bank of Nigeria (CBN) has issued a circular excluding microfinance and mortgage banks from paying the processing fee for transactions above the cash withdrawal limit. This move is expected to support the above institutions’ efforts in bringing financial access to underserved communities.
The circular dated July 31 2023 also states that microfinance and mortgage banks must adhere to the existing cash withdrawal limit. Last year, the CBN released a circular announcing the new withdrawal limit to support the now-controversial currency redesign policy.
According to the two-page document, individuals can withdraw N500,000 across all banking channels weekly before incurring a 3% processing charge. For corporate organizations, the weekly limit is pegged at N5 million. Exceeding that threshold will induce a 5% charge.
Alongside the above provisions, individuals and organizations seeking to withdraw above the stated limit need to tender some documents. The documents are a valid means of identification, a Bank Verification Number (BVN), a Tax Identification Number (TIN) of both payer and payee, and a letter of approval from the financial institution’s MD/CEO approving the transaction.
How CBN’s new policy will benefit Nigerian fintechs
With the CBN now allowing fintechs to process cash withdrawals without the 3% or 5% penalties, it opens up a ton of opportunities. For instance, customers of traditional banks seeking an escape from the processing fees can now jump ship and choose to transact with fintech platforms instead.
Essentially, fintechs can increase their popularity and grow their customer base. This policy can also help them build momentum on the road to becoming mainstream options for the average Nigerian.
Kuda, Opay, and other fintechs have recently stepped up their game to address the gap in Nigeria’s financial services delivery. The naira scarcity is arguably one of the instances when tech-based financial institutions rose to the occasion. By enabling users to transact seamlessly most of the time, they endeared themselves to Nigerians.
This could be one of those situations where they shine, provided that they approach it accordingly. To truly benefit from this policy change, fintechs should improve their service delivery. For starters, they can upgrade their systems to reduce the chances of downtime and failed transactions.
They can also invest more in agency banking to widen access to rural communities with their unique solutions. Doing one or all of the above could give them the edge over traditional banks in the coming years.
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