LEGALITY OF THE EXTRA CHARGES ON CARD PAYMENTS IN NIGERIA - Welcome to Lumenar's blog

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Tuesday, 29 September 2020

LEGALITY OF THE EXTRA CHARGES ON CARD PAYMENTS IN NIGERIA




Chinecherem Ubaka
"Why the extra charge? That's the commission for the bank"



I am certain that more than 40% of Nigerians have had cause to purchase items using their ATM cards via online transfer, mobile transfer, Point of Sales (PoS) terminals. This is in furtherance of the cash-less policy as well as digital economy in Nigeria.

In some supermarkets, e.g ACE Supermarket, Oke-ilewo, Abeokuta, whenever their PoS machine is not functioning as a result of network palava; you can either transfer or pay cash. Where you elect to transfer, you must add N100 to your bill in addition to bank charges. When I asked why the extra charge?  The cashier informed me that "it's bank commission".

The essence of card payments is to make life easier, facilitate e-transactions and e- commerce. However, the reality is that card payments are becoming a pain in the ass of many Nigerians due to the countless number of charges imposed on customers by the merchants and Payment  Solution Service Providers (PSSP).

What does the law say on Electronic payment channels in Nigeria?
The CBN has been empowered by the CBN ACT of 2007, to make policies and guidelines aimed at regulating the Nigerian banking industry and incorporating global standards in the Nigerian finance and banking space.

Thus, pursuant to the aforementioned act, the CBN issued out the Guidelines on Operations of Electronic Payment Channels in Nigeria, 2016, to promote the development of electronic payment systems as well as to facilitate effective and efficient systems for the settlement of transactions.

Art 1.1.1(b) provides that ALL ATMs should be able to dispense all denominations of naira. We know what this is not obtainable in Nigeria. For instance, you have N950 only left in your account, you have to beg a friend of yours to send at least N100 into the account in order to enable you withdraw the entire sum...i.e. N1000. Under normal circumstances, you should be able to withdraw at least N900 without bothering anyone.

Art. 2 and 3 of the guidelines provides for POS services.
Art. 3.4.5.5
"A merchant shall under no circumstances charge a different price, surcharge a cardholder or otherwise discriminate against any member of the public who chooses to pay with a card or any other electronic means". 

While some merchants adhere to the forgoing directive, others do not. Thus, to evade the charges, consumers are moving back to cash payments which defeats the essence of the cash-less policy.

With regards to web acceptance services, we have a problem with disclosure on the part of some of the merchants and web payment service providers.  It is sad when you discover that upon completion of the transaction, you receive a debit alert from your bank in the name of charges without prior notice.

Art. 4.5.2.9,
" Web Acceptance Services providers should provide information to customers on the charges applicable to each web payment option on it's website". 

The Guideline mandates all parties to e-payment channels in Nigeria to comply with its provisions alongside other guidelines issued by the CBN. Furthermore, it provides that where there is a conflict between the 2016 guideline and prior guidelines, the 2016 guideline shall prevail. 
Non- compliance with these guidelines shall attract appropriate sanctions from the CBN.


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