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Concern mounts over failed ATM, debit card transactions

With the second wave of the coronavirus (Covid-19) pandemic fuelling speculation that the Federal Government may soon impose another nationwide lockdown, pressure is mounting on banks in the country to intensify efforts to address rising failed Automated Teller Machine (ATM) and debit card transactions complaints, findings by New Telegraph show.

Failed ATM or debit card transactions are transactions that have not been fully completed due to reasons that the customer is not responsible for, such as non-availability of cash in an ATM, time-out of sessions and network challenges.

Investigations by New Telegraph indicate that in major cities, such as Lagos and Abuja, there has been a noticeable increase, in recent months, in the number of complaints by bank customers relating to ATM transactions, in which cash is either not dispensed at the machines, but accounts are debited, or a debit card account is debited during a transfer, but the beneficiary card account is not credited.

Confirming the development in a chat at the weekend, a bank official in Lagos, who spoke on condition of anonymity, attributed it to increased pressure on banks’ electronic payment infrastructure occasioned by the surge in number of bank customers, who embraced electronic payment channels since the advent of the Covid-19 crisis. The official said: “ATMs are manufactured to have an average lifespan of between 7 and 12 years.

However, in Nigeria there are many ATMs that ought to have been replaced many years ago, but some banks, in trying to save costs, will prefer to keep maintaining and repairing such machines. Of course, with so many people now using ATMs due to coronavirus restrictions, old machines will frequently develop faults.”

In fact, the official said that as a result of the rising number of failed ATM transaction complaints in recent times, she usually advises customers to try to reduce their usage of the machine. According to the official, the fact that most banks have still not fully reopened branches that were shut in March and April last year in the wake of the COVID-19 restrictions and lockdown, has also worsened the failed transactions problem, as not only has the number of customers using electronic payment channels increased, many banks currently do not have the full complement of staff required to handle consumer complaints.

The Central Bank of Nigeria (CBN) had in late May last year revised timelines for the resolution of failed transactions, ATM dispense errors and refund complaints. It said the move was in line with its resolve to enhance the quality of service bank customers are given and that lenders should implement the revisions starting from June 8, 2020. Specifically, the apex bank stated that any failed ATM transaction that occurs when customers try to withdraw from their bank accounts must be reversed instantly, adding that in the event that instant reversal fails due to technical challenges, the amount must be manually reversed within a 24-hour period.

It further directed that the resolution for failed ATM withdrawals occurring when bank customers use their ATM cards on other banks’ machines should not exceed 48 hours. The regulator also advised lenders to ensure that all pending failed transactions/complaints are resolved “within two weeks starting June 8, 2020”.

It disclosed that “key service providers in the Nigerian payments system have also committed to establish an integrated dispute resolution platform for the industry and enhance their payment system infrastructure and processes to reduce incidences of transaction failure.” New Telegraph had reported in April last year that following lockdown measures announced by the federal and state governments to curb the spread of the coronavirus pandemic, lenders stepped up efforts to try to get their customers to adopt electronic payments. However, industry sources warn that unless banks move fast and effectively address failed transactions complaints, they could lose some of their customers to fintechs.

“Many of the people you find these days waiting patiently under tents, despite the pandemic, to try to get into banking halls, are doing so because they want to complain about failed ATM transactions and other such issues. So, it is a serious problem,” a marketer with a Tier 2 bank said.

However, New Telegraph also gathered that the #EndSars crisis in October last year, which resulted in the destruction of about 50 ATMs nationwide, affected lenders’ capacity to replace old machines. An industry source said at the time that apart from the huge cost implication (current price of an ATM cannot be less than N5million), it would take the industry nothing less than six months to replace the damaged ATMs and get them working. In its H1’20 economic report, the CBN had put the total number of ATMs in the banking industry at 19,040 as against 18, 913 in the corresponding period of the previous year. However, as analysts point out, the regulator, in its 2012 and 2018 CBN Financial Inclusion Strategy documents, set 93,000 ATM target for the country for 2020.

 

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