In pursuit of being able to post the highest turnover and profit at the end of each financial year, many Nigerian banks have resulted into using outrageous charges to meet their targets, all at the expense of customers’ ignorance.
With all kinds of deductions being carried out in the name of charges, it is now impossible for depositors, especially those using savings accounts to get back the exact amount deposited into the banks. Some bank customers who spoke to FinIntell said even the little interest banks worked on their deposits are systematically erased.
The Short Messaging Services (SMS) introduced by Nigerian banks to ensure the security of account status has now been turned into a major way of fraudulently profiting off customers. Banks still charge as high as N10.00 per SMS sent to a customer even when bulk SMS providers in the country offer less than N1.00 per SMS.
Displeased customers said even though the service is optional in some banks, the N10.00 charge per SMS alert for those who prefer phone notification is too high, adding that sometimes banks also make wrong and illegal deductions in the name of SMS service.
A prominent lawyer, who refused to be named because of a case in court, related his experience while stating that the unending attitude of the banks to the deductions has been at the expense of subscribers’ indifference.
According to him, “The banks are fraudulent. They are milking customers of hard-earned money using all sorts of gimmicks and excuses. A lot of people are not complaining because the amount involved seems small. But then it accumulates.”
“All these outrageous and illegal charges didn’t start this year. They’ve been doing it for some years now. I remember confronting my banker about three years ago to protest the charge of N105.00 on my account. At the end of every month, the sum of N105.00 was been deducted from my account even though there were no activities. When I demanded to know what the charge was for, I was told that it is monthly ledger fee. To me that was absurd, but there was nothing I could do because the few people I told about it were trying to laugh at me for complaining about N105.00 per month.
“Well, the situation has become worse now. My bank charges N7.00 per SMS. Of recent, I noticed that they sometime repeat the message sent twice. And guess what, I get charged for their ‘mistake.’ For example, if I give out a cheque and a withdrawal is made, then I will receive an SMS that withdrawal has been made from the account. That is supposed to cost me N7.00, but instead of receiving the message once, they send it twice and charge me N14.00. Then at the end of the month, they send another SMS stating that N14.00 has been deducted as charges for the month. Guess what again, that information has already generated another debit of N7.00 which will be deducted automatically at the end of the new month. So it is something like an endless loop of charges,” the barrister said.
Tope Alabi, a customer with First Bank, Oke-Odo branch in Lagos recently screamed, “And they will also deduct money for this alert,” when he had barely finished removing his Automated Teller Machine (ATM) access card before an SMS alert delivered on his phone that he has withdrawn N10, 000, a sum which to the amusement of others in the long queue, the machine did not pay him.
“They will reverse your money. You can check your account later sir,” one of the dark grey shirt security operatives advised, while the visibly angry Mr. Alabi claimed that truly the bank used to reverse the deduction, but “not the charges for the Text Messages. I think I will ask them to stop sending me this alert. They are thieves. All of them.”
For Jumoke Leshaodo, who was also in the queue, “the SMS alert service is good and helps to keep tab of one’s account, but the charge is too much. They know people just have to subscribe to that service because we need to monitor our accounts. But in all sincerity, it is too much.”
Profiting off the customers with a deliberate use of mathematical errors on their savings is another medium of ripping off depositors who entrusted their monies in the banks coffers.
According to Wale Oshibo, a Chartered Accountant, “Barely less than 20% of customers have the exact interest calculation on their savings, not to talk of other deductions. You get to the banks sometimes and before you know it, the rounded figure has been reduced by some naira and kobo. If you multiply those deductions by millions of customers, then you have the mathematical method of robbery.”
Pointing accusing fingers
FinIntell gathered from some of the junior staff interviewed in various banks that these unprofessional practices were actually the selfish decisions of their Executive members in ensuring the banks meet targeted goals.
According to them, most of the Nigerian banks’ staff are being employed on contract basis and placed on very poor salary structure, with a job security status that gives room to have them sacked at the blink of an eye. They claimed that the controversial SMS alerts and other unfriendly charges are some of the measures through which the likelihood of their promotion can come.
“Just bring the money. Make the money and you are good to stay and assured of been reckoned with,” a junior staff of Unity Bank, who pleaded anonymity for fear of being sacked, said.
First Bank’s Executives for instance are ranked amongst the highest paid in the country with its Directors in 2010 alone collectively receiving N3.66billion. Other banks also have their Directors been paid huge allowances, yet keeping the record of over 70% contract staffing at very low pay.
To confirm the alleged deductions by these financial institutions, some of the banks contacted by our correspondent affirmed the charge, which they claimed, includes all transactions made on the account of any subscribers.
According to a Skye Bank’s representative, Abiola, who responded to an email sent to the bank, “the transaction alert via SMS is N10.00 per message received.” The respondent further said, “Kindly note that you receive the alert only when a transaction is performed on your account (deposit or withdrawal). We have the email alert also which is free of charge, but to enjoy the service your email address must be registered on the account.”
Also, Margaret Odiete of First Bank in response to the email sent to the bank, said, “Sequel to the enquiry, there is no charge for email alert as it is currently free. However, the charge for SMS alert is N10.00 per SMS.”
Meanwhile, the criticism trailing the SMS charges has continued to increase because SMS service providers have general reduced the prices on bulk SMS platform which banks use. While some banks are blaming the telecommunication industry charges for the high cost of services rendered, the customers claim that even the likes of MTN, Globacom and Airtel are reducing their service charges with options of free SMS at will.
A banker with one of the new generation banks, Kolapo (surname withheld) told our reporter in an interview that the high cost of sending SMS may be ridiculous to customers, but “the banks see it as business and I believe you will also not want us to make losses as Banks. The better part of it is that it is an optional service. So, you may defy the need for the service and just rely on the e-mail alerts.”
Mr. Kolapo’s view of the SMS alert as a service which is expected to be paid for by the account holders however contradicts the position of the Central Bank of Nigeria’s (CBN’s) declaration on the role of the banks in controlling card fraud, which is one of the reasons behind the potency of the service subscription.
Position of the law
In a Circular to all Deposit Money Banks (DMB) on August 30, 2010, titled, CIRCULAR ON THE NEED TO COMBAT CARD FRAUD, the CBN had stated that “following the increase in the spate of complaints by ATM cardholders on fraud, it has become necessary for all DMBs to put measures in place in addition to the existing guidelines to stem the tides.”
Consequently, all DMB are hereby directed to implement the following: “DMB’s must send SMS alert to the telephones/e-mail addresses of all card holders whenever there is a debit transaction via payment cards. Evidence of the dispatch of such messages would be required in cases of non-reciept of the alerts by the account holders as a result of telephone network failure,” item four of the seven directives stated, and was signed by A.S. Atoloye, CBN’s Director in charge of Banking and Payments System Department.
However, despite the directives given to the banks relating to alerts issued on card trasactions, most of the banks have been alleged of even deducting more than what should have been taken for the alert services, while also deducting the ATM service charge as well.
An Information Technology expert Gbolade Adewumi described the dishonest charges as an “insensitive attitude” of the banks. “It is wickedness for a business interest to think that making money can be done at a reckless expense of the other parties involved,” he said.
“If they (banks) truly think that rendering such services is a way to make huge profit, then I am happy to announce to them that Banking is not about SMS alerts. It should be about Mobile banking. There are a lot of things that we can do using our GSM and we’ll gladly pay for, not just about deducting what we can’t really describe as services.”
“Considering the low number of Nigerians with email addresses and those that have the type of phones to confirm an email notification at an instant time, then you will understand that SMS alerts deliver faster to more customers than any other means. Now, imagine just 50million subscribers paying N10.00 per SMS twice every month, that is ridiculously too high. So, I think our banks should start considering the use of the Bulk SMS platforms to have charges as low as 50kobo per SMS,” Mr. Adewumi advised.
In another view, a Lawyer and Financial advisory consultant, Lucky Iluobe, said, “Banks should not be blamed for the charges collected because the customers have never protested against it.” The lawyer however said it is actually possible to retrieve the illegal charges if customers are ready to challenge the practice.
With about eighteen banks in the country holding over 50 million individual and corporate accounts, Nigerians had expected to see opportunity for healthy competition amongst banks which would have brought down the high charges on services.
More complaints
“I got SMS alert from my bank about the cash I withdrew. Later that day, I got another alert that I have been debited for the SMS alert. The following day, I received another alert that N50.00 has been debited from my account for SMS alerts. Then about 3days later, I received another one that N100.00 has been debited. Ah! Imagine if this is done to one million customers nationwide, that is N100 million,” a customer claimed online, describing Nigeria as the only place in existence where that is possible.
Another customer said she prefers going around with her Blackberry and always receive the bank’s alerts through emails. “I know SMS is safe and more accessible to customers; I was using the Ecobank SMS alert before now, but because the service rendered by the bank is too expensive, so I choose to receive notifications by emails instead.”
A customer of Guaranty Trust Bank (GTBank), Nkechi Handsome, in her response said, “I bank with GTBank and have told them not to send me SMS notifications. Email is okay. Recently however, they made it mandatory for everyone to be sent SMS notifications, whether you requested it or not. I complained and complained and even filled the indemnity form that I do not want to be sent SMS. What irks me more is the N10.00 per SMS knowing that they are making at least N8.00 profit off me per SMS. Thankfully a few days ago, they sent me this email:
Compulsory signage
“RE: GeNS –YOU SPOKE, WE LISTENED. Thank you for maintaining a banking relationship with Guaranty Trust Bank Plc. Our sincere objective has always been to provide you with memorable banking experiences and ensure you perform your transactions safely, conveniently and quickly. This commitment influenced our decision in February 2012 to sign all customers for the Guaranty Trust Electronic SMS Notification Service (GeNS). Feedback from our various channels however indicates that stakeholders would prefer to retain the choice to sign up for the service.
“Consequently, we have delisted all customers that did not personally request for the GTBank GeNS service from enjoying SMS transaction alerts going forward. To request for this service, please visit any Guaranty Trust Branch nationwide. Please note that each SMS alert costs N10.00 (Ten Naira) only.”
Confirming the true status of the deduction, a staff of the Complaint Unit at GTBank, Afolashade Okelarin, in response to an email sent to the Bank, said, “Please note that SMS charge is the N10.00 charged for all instant SMS notifications sent to your phone, whenever there are transactions on your account.”
A group had also in 2009 laid complaints of the unscrupulous bank charges and went ahead to open a website called ‘Movement of Nigerian Bank Customers ’ to tackle the issues relating to illegal fees.
The group had on July 4, 2009 published an open letter to the then newly appointed Central bank Governor, Mallam Lamido Sanusi, asking him to look into the illegal practices of the banks.
According to the letter which read in parts, “In Nigerian banks today, indeed it is very easy to open an account; as easy as just being at the bus-stop at the right time. But after the account opening, it gets very ugly. Charges that were not mentioned at account opening stage start springing out of nowhere. Ridiculous among these charges are ledger fees (what’s that by the way?), ATM maintenance charges at the end of every month, internet access charge and these are just to mention a few,” Signed by Honorable Alugo Abdulazeez.”
Recommendation note
In a recommendation note, a senior staff of one of the new generation banks reiterated the fact that illegal deductions exist in banks, however, he advised on the way forward. “I am a banker and I’m really impressed the way we take issues affecting us as a Nation. Let me start by saying that no institution, industry or sector can be more developed than the country in which they operate. So we must first acknowledge that most problems raised are typical of us as a Nation.
“On the banking side, I acknowledge that outrageous charges exist, I acknowledge that ATM problem exists, I also acknowledge that manpower problem exists, but these problems are not cast in stone. Competition exists to check most of these problems. Also, asking your bankers for a waiver for some of the outrageous charges like upcountry transfer fees, cost reduction etc is not a bad idea at all,” he recommended.
Short Messaging Service, according to an ICT expert, Tolu Abidoye, is really the cheapest and most accessible means of communication. “That is why you will have the communication industries using it for promotional services.
“The Banks are all connected to service providers, who serve as their SMS Gateway and through this they can buy SMS in millions at cost that are as low as 50Kobo. The template to do this has been built into their operational running software as an application, which some people call APPS. Immediately the operations are carried out, the command automatically send the message to the phone number as activated to the service. So, I cannot personally see any reason why the fee should be that high. Maybe, it is because nobody is asking questions about these charges. I think just like we have shareholders forum, it is time to start having customers forum and let the banks hold town hall meetings with customers to know what they like and do not like,” Mr. Abidoye said.
International Practices
Ayodeji Gbaye, a Nigerian resident in the UK and Financial Advisor, decry the non-improving nature of banking operations in Nigeria, especially in comparison with the international competitors.
In his view from the banking and accounting operational practices in the UK, Mr. Gbaye said, “Banking around here is far different from Nigeria. For instance, nothing like COT on current account, no charges whatsoever or deduction for SMS alerts. They practice conventional banking because government makes sure they have shares in most of the banks. So the banks job is to ensure even circulation of fund to all sector of the economy.
“Collection of cheque books is even free. The only thing they charge me for, and that I am aware of, is if I overdrew my account. And they will send an alert to notify me of what I have done. But they will only charge me when I refuse to pay up before the end of the working day.” He however advised that the CBN should always have customers on its mind anytime policies are put in place or formulated.
Truly as claimed that banks in the UK really don’t charge for SMS alert, Barclays of England on its website advised its customers saying, “keep track of your cash with free Text Alerts to your mobile phone. We’ll notify you by text when you get close to your limit or when a large amount comes in or out of your account. All Text Alerts are free and fully secure.”
